EDAP TMS (EDAP) Story Turns Lackluster Following FDA Panel Vote on Ablatherm HIFU; Northland Cuts PT to $2

Northland Capital has EDAP TMS (Nasdaq: EDAP) at Market Perform and cuts its price target from $3.50 down to $2 following news that an FDA panel voted down Ablatherm HIFU for treatment of low-risk prostate cancer.

Analyst Suraj Kalia noted the following points:

• As we said in our Q1 note dated 05/16/14, "The most important catalyst for this story, in our view, is the upcoming FDA panel date announcement, Bear in mind, there have been no prostate cancer CDRH panels that have been held in the last 10 years. Hence, the significance of the EDAP panel is all the more important. While the devil will be in the details; if the overall risk / benefit ratio of the Ablatherm is equivalent / better than other more radical procedures, then a positive panel vote "could" be in the cards."

• Also, data from the pivotal trial was not released prior to the briefing document. Hence we went into the panel somewhat blind. While company commentary was hinting towards positive results and a "productive" interaction with the FDA, we confess the briefing documents came as a total surprise.

• While it is easy to speculate on the competency of the PMA submission, the way the docket was prepared, the company presentation at the panel meeting, or for that matter, the way the trial was conducted, we feel it is a moot point to rewrite history or peel the layers of the onion at this stage.

• What matters is that it is most likely that EDAP's HIFU will probably never enter the US markets. While it is possible that medical centers are created in Mexico or the Caribbean where medical tourism for US patients is facilitated for HIFU treatments, we don't think it is something we are enthused about or for that matter believe will be germane to sustainable growth in the story.

Overall, the analyst sees a rather lackluster story moving forward.

For an analyst ratings summary and ratings history on EDAP TMS S.A. click here. For more ratings news on EDAP TMS S.A. click here.

EDAP TMS S.A. closed at $3.42 yesterday.

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