Axonics Modulation Technologies (AXNX) is a small medical technology company with a big future, suggests Joe Duarte, editor of In the Money Options.

The $3.4 billion market cap medical equipment company focuses on the treatment of bladder and bowel incontinence. Sure enough, this is not glamorous stuff. I certainly hear related complaints about these issues in my medical practice on a regular basis. But it is a real health problem, which is finally getting a viable solution.

Consider the fact that according to a 2014 CDC study, 51% of non-institutionalized persons over age 65 in the U.S. had some sort of bowel or bladder incontinence episode. Many develop chronic problems which can lead to frequent infections and worsening of underlying illnesses. 

Moreover, the condition is more common in women than men. And it affects its sufferers both physically and psychologically. The same study estimates that the market for incontinence related products maybe as large as $19.5 billion annually.

This includes all the products required to treat or manage the condition as well as the related losses of productivity and miscellaneous costs which may be associated with the condition. 

Perhaps the most important fact to consider is that as the population ages and chronic conditions such as diabetes increase, so does the incidence of incontinence.

The company has a two-pronged strategy — with two products which are making a huge difference to incontinence sufferers. One is its sacral stimulator — an electronic implant which sends impulses to the nerves that control muscle tone and regulates the bladder’s ability to contract — thus reducing incontinence. The technology is not the same, but is conceptually similar to that of a cardiac pacemaker.

The other is an implantable permanent gel that is placed into the wall of the urethra and adds bulk to the weakened muscles and thus reduces or prevents leakage. Sales of both continue to grow steadily. The company is currently not profitable, but does have sufficient cash on its balance sheet. (For disclosure, Joe Duarte own shares in AXNX.)

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