Their upside scenario target also remains at $5.00. GLTA

November 22, 2022 Opsens Inc.

FQ4/22: Revenues slightly below estimates;

Positive early feedback on SavvyWire

Our view: OpSens reported FQ4/22 (Aug-qtr) revenues at $9.1MM, below RBCe ($9.5MM) and consensus ($9.4MM). Revenues were down sequentially (-10% q/q) as expected due to catch-up sales in FQ3 in Japan. Management noted positive feedback from doctors on SavvyWire with adoption and commercialization tracking ahead of internal expectations. The company expects increased adoption of OptoWire as SavvyWire ramps up as both wires utilize the same OptoMonitor device.

Key points:
FQ4/22 revenue of $9.1MM (-10% q/q and +12% y/y) below RBCe ($9.5MM) and consensus ($9.3MM). Included in the $9.1MM were total medical revenues of $7.9MM (+9% y/y), with FFR and dPR sales of $5.7MM (+7% y/y). Other medical revenues were $2.2MM (+10% y/y). Industrial revenues were $1.0MM (+46% y/y), above RBCe ($0.8MM). Gross margins of 48% were below RBCe (52%) and prior quarter (51%). Operating expenses of $8.5MM (+8% q/q) were above RBCe ($7.8MM), as the company invests ahead of the commercial launch of SavvyWire in the US in 2023. FQ4 net loss of $4.0MM was below RBCe ($3.1MM loss) and consensus ($3.8MM loss). OpSens ended FQ4 with $23.8MM cash.

Updates on SavvyWire. Management noted, after a successful limited CDN release of SavvyWire, that OPS has now transitioned into an expanded but controlled market release of SavvyWire. As of today, the company has launched SavvyWire to 9 CDN accounts, with ~200 units shipped. More than half of the customers have re-ordered, suggesting strong market acceptance. In the US, after receiving FDA approval in mid-September, OPS has completed a limited release with more than 60 cases completed at 5 US centers. The company has extended the launch to ~10 centers and expects to reach ~20 centers in the first wave of US commercialization.

Outlook. Management expects GMs to improve sequentially, led by a higher share of OptoWire revenues from the US (direct sales force) and increasing share of SavvyWire (higher GM profile). Management anticipates that the current sales team (doubled in FY22 to ~20) to be sufficient to cover all major US volume centers for the successful commercialization of SavvyWire. As it relates to LV pacing while using SavvyWire, management expects a learning phase in the US but ultimately sees it as a positive item, given a greater value proposition associated with LV pacing (reduced number of steps and costs).

Maintaining $4.00 PT. Following FDA approval for SavvyWire in the key US market, we have revised the multiple on TAVR cash flows to 1.0x from 0.8x previously as we remove the uncertainty related to regulatory approvals. However, we expect a slower ramp-up of SavvyWire as the company conducts a phased launch of the device. We now expect peak market share of ~25%. As a result of these changes, our PT remains unchanged at $4.00.