Nevro takes a hit after insurers deem Senza therapy experimental

Shares in Nevro (NYSE:NVRO) took a hit yesterday after investors learned that a pair of insurers in Pennsylvania and Tennessee tagged therapy using its Senza spinal cord stimulation device as experimental.

The Senza device, which won an FDA nod in May 2015, is designed to deliver high-frequency electrical impulses of up to 10,000Hz  to the spinal cord to avoid the tingling sensation known as paresthesia that bothers some SCS patients. The FDA approval allows Redwood City, Calif.-based Nevro to label the device’s HF10 therapy as superior to conventional spinal cord stimulators.

But effective July 25, Highmark Blue Shield will consider HF10 therapy as experimental and investigational for all indications, drawing criticism from a medical society and prompting investors to send NVRO share prices down nearly -3% yesterday, to a $70.03 close.

Leerink Partners analyst Richard Newitter said there’s good precedent for Nevro after a similar decision by Blue Shield Alabama was overturned.

“While clearly a negative development, we point to several factors that support our view: (1) NVRO has already had a similar negative decision from BCBS Alabama overturned, providing a direct precedent to look to; (2) NVRO’s best-in-class data provide a level of evidence that has been validated by not only FDA approving the device and allowing for the superiority data in the label but also by Medicare, which not only covers HF10/Senza but believes the data support an even higher level of reimbursement via the pass-through payment. We are making no changes to estimates on this news and actually continue to believe there is significant opportunity for both near- and long-term upside,” Newitter wrote yesterday in a note to investors.

In April, Nevro said it won pre-market approval from the FDA for new surgical leads designed to be used with its Senza spinal cord stimulation device. The company closed an over-subscribed debt offering last week, grossing $172.5 million.

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