Admedus Ltd (ASX:AHZ) has received a buy recommendation from the New York based Maxim Group.
Maxim has applied a $2.00 12-month target price. Admedus last traded at $0.35. The following is an extract from the report.
A Heart Valve Patch that Goes the Distance
- We recently met with two key opinion leaders in cardiovascular surgery: Dr. Sloane Guy, Associate Professor of Cardiothoracic Surgery & Director of Robotic Cardiac Surgery at Weill Cornell School of Medicine/NY Presbyterian
Hospital and Dr. Bart Meuris, Associate Professor from the University Hospitals of the Leuven Institute in Belgium, to discuss Admedus' CardioCel product.
- The anti-calcifying feature of CardioCel patch is capturing the interest of highend KOLs who are early adopters in heart surgery and heart repair. Recall that Admedus phase II follow-up data showed no signs of calcification at seven years post-implantation of its patch, thus reducing the need for followon surgeries. Anti-calcification, coupled with strong mechanical properties and durability, makes CardioCel an attractive alternative to the current bioprosthetic heart valve options. As KOL awareness builds, we see CardioCel potentially becoming a surgeon-preferred biomaterial for heart valve repair surgeries.
- As a reminder, Admedus recently announced the departure of CEO Lee Rodne, and Chairman of the Board Wayne Paterson is now acting as the interim CEO. The company plans to address the results of its restructuring initiative this
- Conclusion. Admedus is working to build its focus on the global commercialization of CardioCel patch. We see the patch as a potentially disruptive product in the $2.5B heart valve repair and replacement market. As KOL awareness increases, we expect sales traction will follow.
CardioCel is a bio-implant sourced from bovine pericardium that is engineered via Admedus' ADAPT® platform, resulting in a durable, collagen-based scaffold with strong mechanical properties and resistance to calcification, while supporting native cell infiltration, growth, and differentiation for repairing cardiac and vascular defects.
It is processed by a proper decellularization regime, optimized crosslinking, and adequate detoxification to avoid any immunological response that could potentially trigger a calcification cascade, thus rendering calcific degeneration postimplantation.
In July 2015, Admedus announced positive long-term data from the CardioCel phase II study, which showed no follow-on heart procedures related to CardioCel, nor were there any signs of calcification seen.
Admedus' focus is first and foremost on regenerative tissue for heart valve repair and replacement in pediatric and adult patients with congenital heart defects.
Supported by strong clinical data (no signs of calcification reported in seven years post-implantation), CardioCel appears to be what we believe is a next-generation xenograft tissue product, a biocompatible bio-scaffold that elicits minimal immune response, has durable flexibility and elasticity, and has a long shelf life (two years).
One other trait that makes CardioCel a distinguishing competitor, in our view, is its strong resistance to calcification, while still providing sustainable mechanical properties.
This is the key to CardioCel’s success, because it eliminates the need for patients to undergo frequent post-implantation surgeries for replacement due to tissue degeneration.
We believe CardioCel has the potential to reduce the number of future surgeries required and open up more market opportunities in other clinical indications.
CardioCel also targets the large aortic and mitral valve market, and the company worked with KOLs to generate preclinical data.
Our model only includes CardioCel in CHD and heart valve repair for conservatism.
We use a risk rate of 30%, equally weighted and averaged, across FCFF, SOP and dEPS to derive our $2.00 price target.
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