The company hosted a CMD in mid-September where management presented its long-term views. There were also several interesting presentations from KOLs in the industry, discussing the benefits for patients and doctors of the Episealer implant system. We believe Episurf Medical is moving rapidly in the right direction and that the clinical documentation is improving (and very strong). Based on the longer-term outlook, we have adjusted our fair value to SEK1.9-6.5 (1.3-3.9).
Clinical documentation key for future sales success in our view. In recent years, the documentation supporting the outcomes for the Episealer implant system has strengthened significantly. At its capital markets day in mid-September, the company focused on all aspects of its operations but, in our view, the rapidly increasing clinical documentation and presentations by KOLs in Europe were the highlights.
Long-term follow-up from first trial indicates very low revision rate - a positive in our view. In the Stålman paper (see our 8 September 2020 note), patients were followed for up to seven years; revision rates remained low and clinical outcomes high. In our view, having this type of data to support the implant system makes it much easier to convince new customers on a broader scale (and not only tech-savvy early adopters). In addition, the European multi-centre trial should be published in the autumn. As far as we understand, the data appears very compelling.
KOLs clearly positive for the implant system. Several large volume users in Europe reported their experience with the implant system, and all the features we normally consider positive were highlighted by the KOLs as bringing real value to doctors and patients.
Ambitious targets communicated. The company believes a c30% market share in its niche is reasonable over time, and highlighted that the target is c15% market share in the US some three years post-launch (estimated for c2024). Given the alternatives available today, we believe this is realistic, but the question of a potential partner in the US market remains. We believe the choice of actual partner should affect the likelihood of reaching that target in the specified time-frame.
Forecasts updated and fair value adjusted. We believe the market-share targets are ambitious but doable, especially with the strong clinical outcome data seen lately. Based on the new clinical data seen this year, we have increased our longer-term market-share assumptions and as a result increased our fair value to SEK1.9-6.5.
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Patrik Ling | DNB Markets | Equity Research | Senior Analyst Healthcare
DNB Bank ASA
Regeringsgatan 59 | Stockholm | Sweden
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