What Entellus has done is develop a more flexible and less complicated set of tools.

Another mark of JNJ's position in this market is the fact that Entellus pays the company a double-digit royalty for access to key sinuplasty patents. Johnson & Johnson acquired market leader Acclarent in 2010 (for $765 million) and the Relieva Spin balloon system is the leading system in the OR market.

Balloon sinuplasty has been around for about a decade now, and Johnson & Johnson ( JNJ) has done a lot to advance the field. On the 'lucrative' point, though, not all private insurers cover the procedure, so there is still some risk/uncertainty here.Įntellus is not exactly a pioneer in this market. Entellus is trying to position its tools as a way of growing the market outside of the operating room, as balloon sinuplasty can be performed in a physician's office and this is generally more lucrative for the physician doing the procedure (and often more convenient for the patient). Relative to FESS, balloon sinuplasty performed with Entellus's tools results in less bleeding, a much shorter recovery time, less pain, and similar reduction in symptoms (often measured by the Sino-Nasal Outcome Test, or SNOT-20).Ībout 30% of FESS procedures done at present are hybrid procedures that also involve sinuplasty. The balloon 'remodels' the sinuses, which is a nice way of saying 'breaks the small bones', and in many cases opens the patient's sinuses. After administering a local anesthetic, the doctor inserts a dilator into the sinuses and once in place, the balloon is inflated. This does mean cutting and removing tissue (or sometimes just altering/reshaping), but it's not considered a major procedure and recovery times are often under a week.īalloon sinuplasty is an even less invasive procedure in most respects. Sometimes all that is needed is an enlargement of the passages by removing abnormal/obstructive tissue (like a polyp), but in other cases a more involved procedure is needed like uncinectomy (removal of the ucinate process) and/or antrostomy, ethmoidectomy, and turbinectomy. About one-third to one-half of these people (around 500,000 per year) ultimately end up getting functional endoscopic sinus surgery (or FESS).įESS isn't a specific procedure, but rather a group of procedures performed in a similar way. For around 5% of people, though, the issue is chronic and serious enough to merit treatment from an ENT. Sinusitis is a fairly common issue and for most Americans it is really no big deal - take some over-the-counter or prescription medication and the systems generally resolve. Third, even if Entellus dominates the office market, I don't see enough revenue or profit potential to make the valuation truly compelling at this price. Second, Entellus is a small player competing with some very large rivals. First, there's still ample controversy regarding the proper role of balloon sinuplasty within the treatment of chronic sinusitis. I have some issues with this as an investment idea, though.

That said, key questions remain as to the true market potential for office-based balloon sinuplasty and the willingness of ENT specialists to adopt this technique (and Entellus's tools). Entellus offers an appealing solution to the balloon sinus dilation (or balloon sinuplasty) market, with a system that is smaller, more flexible, and less complex than rival systems. Entellus Medical ( NASDAQ: ENTL) checks a few attractive boxes within the med-tech space - namely, a less invasive procedure that can be performed in a physician's office instead of a hospital.

Entellus ultra balloon system