Research Note - Opsens Inc. (OPS:TSX,$3.03|BUY $4.00 TARGET) FDA Approval De-Risks TAVR Story
This morning, OPS announced it has received 510(k) FDA clearance for the SavvyWire. This comes in line with the guided September/October timeframe. While FDA approval was already assumed in our model, we think that the announcement meaningfully de-risks the OPS TAVR story and increases the probability of being acquired by a large-cap medical device company. Opsens will be unveiling the SavvyWire at the TCT Conference this weekend before beginning its limited market release of 100 procedures in five medical centres across the U.S. OPS plans to commercially launch the SavvyWire in the U.S. in January 2023. OPS recently completed 60 procedures in Canada as part of its limited market release and plans to start its commercial launch in Canada later this month.
An overview of the TAVR opportunity can be found below.
Aortic valve stenosis occurs when the heart’s aortic valve narrows, restricting blood flow from the heart to the aorta and the rest of the body. TAVR is a minimally invasive procedure to replace the narrowed valve which results in much shorter hospital stays for patients, improved efficacy and cost savings. The global TAVR market is currently 200K+ procedures and ~$5B in sales, and is expected to grow to 400K procedures and ~$10B in sales by 2027 (15% CAGR). TAVR is the fastest growing procedure in cardiology given its various advantages for both patients and doctors.
The SavvyWire is an intelligent pre-shaped structural guidewire that provides integrated pressure monitoring, improving efficiency and clinical outcomes as doctors can execute multiple steps of the procedure without changing devices while only using a single access point. The SavvyWire is the first and only sensor-guided TAVR solution, providing doctors continuous and accurate hemodynamic measurements. Our assumptions for the SavvyWire can be found in Figure 1.
We remind readers that Edwards Lifesciences (EW:NYSE) is the largest aortic valve manufacturer in the world but does not produce a TAVR guidewire, making it the most natural acquiror of OPS. Of the major manufacturers that do produce guidewires – Boston Scientific (BSX:NYSE) and Medtronic (MDT:NYSE), neither have a wire that can be used to perform continuous pressure measurement. We believe this will allow Opsens to carve out significant market share in TAVR or get acquired by one of the aforementioned companies at 8-10x sales.
Valuation: We continue to believe OPS will gain solid market share in TAVR due to the various key advantages of the SavvyWire (mentioned above) with potential to become the dominant guidewire in 3-5 years. Furthermore, with the easing of COVID restrictions at hospitals and the new GPO sales channels, we are expecting accelerating sales growth from the FFR/dPR segment in FY2023. We are maintaining our BUY rating and our $4.00/share target price based on 5x 2023E sales ex-TAVR and 2.5x 2025E TAVR sales.