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2016-11-16

Opportunity to buy the dip

Detta är en betald analys på uppdrag av Episurf Medical utförd av analysföretaget Jarl Securities på uppdrag av Analysguiden.

Episurf reported net sales below our as well as the market’s estimation. Looking beyond the numbers, things are starting to happen. We still see upside opportunity as the current share price does not reflect the full potential.

Episurf is a med tech company based in Stockholm, Sweden. Episurf develops, prod-uces and sells knee implants for patients with early stage osteoarthritis (OA). The number of patients is growing and the available treatment methods have shown to be clinically insufficient. This creates a treatment gap on which Episurf intend to capitalize.

The company’s implants are tailored to fit the patient’s specific anatomy and cartilage damage. Together with the company’s unique cartilage damage assess-ment tool, numerous benefits are created. The technology is a completely new offer and salesforces are currently focused on Europe. The company is in discussion with the FDA to enter the world´s largest market, the US. The ambition is to submit its application for approval in 2017.

Low activity over the summer holiday season was expected and this was reflected in the numbers for the third quarter. Nevertheless, the clinical report presented in June was well received by the clinical users. The impact was reflected in 28 new approved orders in Q3 but it did not have the immediate effect on sales that we expected. The reports highlight the fact that it takes time for a new technology to get established on a conservative market. It also highlights the management team are delivering on their stated 2016 objectives.

We still have high expectations in the long run for the technology. We remain bullish and keep our recommendation, Buy. We do cut our projection for the full year 2016 but leave the projections for 2017 and on unchanged. We expect a steep increase in the sales conditional to a continues flow of new and supporting clinical data. An investment in Episurf gives the possibility to high accompanied with high risk. The growth is expensive and the costs are not covered by the revenues, as for all early stage companies commercializing innovation.

 

Källa: Jarl Securities

Författare Jarl Securities

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