Our view: OpSens announced a four-year extension to its current Abiomed supply agreement. Recall that the ongoing supply agreement was signed in 2019 for five years ending 2024. After today's announcement the agreement with Abiomed is extended through April 2028. We view this development as a slight positive for OpSens and believe that the agreement extension highlights the strength of the company's technology. The next major catalyst for the company is the potential approval of SavvyWire by Health Canada (May-Jun) and the USFDA (Sep-Oct).
First impression:
Extension of supply agreement with Abiomed: OpSens announced a four- year extension of its supply agreement with Abiomed to supply critical component for Abiomed’s Impella heart pump through April 2028. Recall that the ongoing supply agreement with Abiomed was signed in 2019 for five years. The contract included mutual renewal clauses and, as such, we view today's announcement on the supply agreement renewal as a slight positive. OpSens generated revenues of $8.1MM from OEMs in FY21 (~23.5% of total revenues).
Upcoming catalysts. Management, during the FQ1/22 earnings call, noted that the company was in discussions to sign a number of new contracts and expected to announce at least one contract with a major GPO in the coming months. On the regulatory approval timelines for SavvyWire, management expects approval from Health Canada in May'22-Jun'22 and a potential approval from the USFDA in the Sep'22-Oct'22 timeframe. OPS will also file a regulatory submission for SavvyWire in Europe this year. We note there are near term headwinds for OPS due to Omicron but reiterate our positive outlook on the company as procedure volumes normalize and SavvyWire receives approval in OPS's key markets (here).
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. We recently lowered the risk profile of SavvyWire following several positive developments over the last year and increased our OPS PT to 4.00 (here).