Improving the risk profile of SavvyWire; price target increase to C$4.00
Our view: OPS’s TAVR guidewire (SavvyWire) has had several positive developments over the last few months including the successful completion of the 20-patient in-human study and the final submission to US and Canadian regulators earlier this month. We are now more confident on potential launch and commercialization of SavvyWire. Accordingly, we increase the multiple associated with the SavvyWire cash flows from 0.6x to 0.8x (although still below 1.0x to reflect uncertainty until the final regulatory approvals are received). As a result, our price target increases from C$3.50 to C$4.00.
Key points:
Lowering the risk profile of TAVR guidewire (SavvyWire). Over the last six months, there have been several positive developments related to OpSens’s TAVR guidewire (SavvyWire) including the successful completion of the 20-patient in-human study and the final submissions to the US and Canadian regulators earlier this month (here). Thus, we are now more confident on the potential launch and successful commercialization of SavvyWire. Accordingly, we increase the multiple associated with the SavvyWire cash flows from 0.6x to 0.8x as part of our outlook and valuation.
PT increase and estimate revisions. The higher multiple 0.8x (vs. 0.6x previously) associated with the SavvyWire cash flows reflects the lower risk profile of SavvyWire vs. our Apr-21 note (here) when we first introduced the TAVR guidewire estimates in our valuation. Lowering the risk profile of SavvyWire results in our PT increasing from C$3.50 to C$4.00. Our forecast cash flows associated with SavvyWire are still valued below 1.0x to reflect the uncertainty until the final regulatory approvals are received. We reduce our estimates (see RHS) to take into account the worsening of the COVID-19 pandemic with the spread of Omicron in OPS’s key markets.
Upcoming catalysts. The company anticipates the US FDA approval for SavvyWire in late summer or fall of 2022 and an approval from Health Canada prior to that time (see Exhibit 1 for anticipated approval timelines for SavvyWire). OPS may run additional clinical studies for Savvywire based on the feedback from KOLs. Management expects the trials to cost ~$3– 5MM. See Exhibit 3 for other anticipated near-term catalysts.
SavvyWire could potentially become a new standard of care as part of the TAVR procedure. Currently, the TAVR procedure typically requires the use of an echocardiogram and pacemaker in addition to a guidewire. SavvyWire can deliver the valve and perform continuous pressure measurement simultaneously. We believe time/cost savings and efficacy benefits could allow OPS to ultimately command a 35–40%+ share of TAVR guidewire supply in its current markets (US, Canada, EMEA, and Japan). TAVR is a ~US $4B+ global market which we estimate to grow at an 11–12% CAGR to ~US $7B+ by calendar 2025, with the number of procedures increasing from our forecast of ~200K in 2020E to 300K+ in 2025E. See our in-depth note here for more details on our positive outlook for SavvyWire.