Dive Brief:

• Axonics Modulation Technologies has given a bullish assessment of its near-term chances of replacing Medtronic as the dominant force in the sacral neuromodulation market.

• On a call with investors Wednesday, Axonics CEO Raymond Cohen said the U.S. launch of the r-SNM System has exceeded his expectations, adding that Medtronic may be “a little bit surprised by the velocity [at] which things are happening in the marketplace.”

• Medtronic plans to counter by securing FDA clearance to sell a new sacral neuromodulation device, which it contends has an advantage over r-SNM in terms of size and other features.

Dive Insight:

Axonics received approval for r-SNM in three indications in the second half of last year, clearing it to sell the implantable, rechargeable device for treatment of bladder and bowel dysfunction​. The r-SNM system is the first rechargeable SNM system approved for sale worldwide, and the first to secure full-body MRI conditional labeling.​The approvals ended Medtronic’s long stranglehold on the market.​

Equipped with $120 million raised in an IPO, Axonics sought to quickly win market share, establishing a sales team while taking on more clinical specialists and adding production capacity to meet rising demand. This week, Axonics published fourth quarter results, reporting U.S. sales at $8.4 million.

With 30% of its 1,000 target centers now using its device, Axonics expects sales to rise in the coming quarters. Axonics has shied away from giving sales guidance, but CFO Dan Dearen was unequivocal when asked if the company is comfortable with analyst expectations that first quarter and full-year revenues will total around $15 million and $88 million, respectively. 

“The short answer is absolutely yes,” Dearen told investors.

Dearen’s confidence is underpinned by the first months of the r-SNM launch. Axonics calculated it would need to do business with 220 of its 1,000 target centers, which collectively handle 80% of the sacral neuromodulation cases in the U.S., to hit its sales goal. Having already cleared that target, and secured repeat business while continuing to add more centers, Axonics contends it is well positioned. 

While Medtronic is unlikely to roll over and let Axonics steal the sacral neuromodulation market away from the company, Cohen observed that he has yet to see the competition hit back with an effective counterpunch.

“Nothing has changed. We're competing against the company that, let's face it, they've had this market all to themselves for 20 years. So I think, if anything, they’re maybe a little bit surprised by the velocity [at] which things are happening in the marketplace,” Cohen said.

However, Medtronic contends the battle is far from over.

EVP Brett Wall last month acknowledged that analysts expect “some near-term slowing ... given the competition.” Still, Wall touted a new device “about half the size of the competitive device” to make his case.

Already available in Europe, Wall said it “has been received very well,” and Medtronic is planning a late spring launch in the U.S. That could theoretically derail Axonics’ growth plans, but Cohen is skeptical of Medtronic’s timeline and the threat.  

“I'm not so sure we're going to see that product in the spring,” Cohen said. “The second thing is you know the question is how is that clinical study going with respect to this new product? And the only answer to that question is, oh, there is no clinical study.”

Cohen contends that the design of r-SNM and the clinical data supporting it will enable Axonics to retain the accounts it has won in recent months. The situation in Europe, where both devices are available, may provide some pointers to whether that is likely to happen but it is an imperfect analog to the U.S.

Cohen said the CE marking of Medtronic’s device had “zero impact” on r-SNM.

“This is not where the action is. Ninety percent of this business is in the United States. That's what's going to move the meter,” Cohen added.