HPV/LSIL On Pap Smear ThinPrep liquid-based Pap. Normal squamous cells on left; HPV-infected cells with mild dysplasia (LSIL) on right. See also File:Low-Grade SIL with HPV Effect.jpg – Another example of LSIL with HPV changes. File:High-Grade SIL.jpg – High-grade squamous intraepithelial lesion (HSIL). (Photo credit: Wikipedia)
HOLX : NASDAQ : US$20.98
Hologic is a women’s health company that offers medical imaging, diagnostic and therapeutic products to hospitals, imaging clinics, private practices, and labs through a 625-rep direct sales force as well as select independent distributors. The company develops and markets products that address a range of women’s health concerns, including breast cancer, cervical cancer, menorrhagia, osteoporosis and preterm birth and others.
APTIMA HPV GETS ENDORSEMENT
Reiterating BUY following Thursday’s announcement that Hologix and Quest Diagnostics entered into a five-year, non-exclusive agreement for
women’s health testing. Quest, already a user of ThinPrep, looks to add HPV, CT/NG, and Trich.
Better late than never for Aptima HPV. We view the Quest agreement as a strong endorsement for the HOLX Aptima HPV test and believe it should serve as a testament to other labs.
Possible lateral implications to competitive landscape. We believe Quest may look to standardize tests and suppliers under its Invigorate program, possibly resulting in HOLX capturing more CT/NG and HPV business at the expense of BDX and QGEN,
No change to estimates. We estimate another six months for Quest to offer Aptima HPV. Given, we already model 2014 HPV sales of $55M, +90%, our estimates stay intact for now. However, additional contracts could spur upside to estimates.
Aptima HPV offers fewer false positives. Recall that the Aptima HPV test (CIN3=95.7%) showed sensitivity similar to HC2 (95.3%) while
superior to cytology (73.3%). Specificity for Aptima (CIN3=90.3%) compared with cytology (90.8%), while HC2 was lower (84.9%).
Our $26 price target assumes a 16.8x multiple on our C2013E EPS of $1.55.
Posted by jackbassteam on June 11, 2013
Commercial Irradiator (Photo credit: NRCgov)
NDZ : NYSE : US$7.76
NDN : TSX
Nordion Inc. is the sole surviving operating business following the divestiture of other core divisions of MDS, Inc. The company’s competencies involve the processing of isotopes, leveraging of existing nuclear infrastructure for the timely delivery of products, and the adherence to regulations governing the nuclear industry. Nordion has three main operating segments: Medical Isotopes, Sterilization Technologies, and Targeted Therapies.
All amounts in US$ unless otherwise noted.
Nordion will report Q2 results after market close on Wednesday, June 5 and host a conference call at 10am the following day. We project higher revenue YoY as demand for Mo-99 is expected to increase due to the extended shutdown of the competing Petten reactor, partially offset by a seasonally weak quarter for Co-60 deliveries. The recently announced sale of Targeted Therapies is a positive step in Nordion’s ongoing strategic review process; however, we believe that it is Nordion’s next steps that will be most important to fully unlocking shareholder value.
Strategic review highlights individual segment value. Nordion has completed the first step of the strategic review initiated in January. We believe that the continuance of this process could realize at least $10.50 per share of value with the sale of the Sterilization business.
Significant challenges for Medical Isotopes remain. We believe that uncertainty around the future of the NRU and funding for research into new sources of Mo-99 provides little clarity for this segment.
Looking for GammaFit traction in 2013. Nordion’s Sterilization segment is a stable source of cash flow, underpinning our DCF and sum of the parts valuation. We expect that signs of market growth driven by the launch of GammaFit would be positive for the stock.
We value Nordion based on a DCF analysis, using a WACC of 10.5% and a terminal growth rate of 1.0%. We note that, even if we assume zero value for Medical Isotopes, our SOP valuation comfortably values Nordion at more than US$10.50. Our DCF valuation, supported by an SOP analysis, backs our US$11.00 target price and BUY rating.
Posted by jackbassteam on June 4, 2013
English: An artificial pacemaker from St. Jude Medical, with electrode. Français : Un Pacemaker de la compagnie St. Jude Medical, avec son électrode. Nederlands: Een kunstmatige pacemaker van St. Jude Medical, met elektrode. (Photo credit: Wikipedia)
STJ : NYSE : US$45.15
St. Jude Medical is a large medical device company targeting large cardiovascular and neuromodulation markets — namely cardiac rhythm management (pacemakers and implantable cardioverter defibrillators), atrial fibrillation (surgical/catheter ablation and advanced mapping/diagnostics), heart valves, vascular closure and spinal cord stimulation.
MULTIPLE HEADWINDS & DISCONCERTING TRENDS; DOWNGRADE TO SELL
We downgrade STJ to SELL from Hold, owing primarily to: 1) questionable earnings quality, 2) our bearish view of the product pipeline relative to
competitors in key growth markets (e.g., TAVI, renal denervation), 3) potential for continued share loss in its largest business (i.e., CRM), and 4)
overextended valuation based on the key metric in our mid/large-cap valuation methodology (i.e. P/E/Growth).
We maintain our $35 price target (1.4x PEG X 2014E “pro forma” EPS of $3.93), representing over 20% potential downside from current levels.
We highlight questionable earnings quality, noting divergence of GAAP to non-GAAP EPS since 2010. “Non-recurring” expenses have
accelerated over the past 4 years, raising a red flag about the recurring nature of what management categorizes “non-recurring” expenses.
This should also instigate real reflection on the part of investors as to which “earnings number” should be used as a basis for valuation.
We do not believe STJ’s offerings in new med-tech markets – namely TAVI, renal denervation, LAA, PFO – will meaningfully contribute to
revenue or EPS growth over the foreseeable future. We think the bull case regarding Durata – i.e., no smoking gun (yet) a la Riata – is largely baked into the stock. That said, Durata could potentially re-emerge as a headline risk at some point in the future.
STJ trades at 1.6x PEG to our 2014 “pro forma” EPS estimate, which is a premium to the historic 1.5x large-cap med-tech median multiple, notwithstanding GAAP/non-GAAP EPS divergence.
Posted by jackbassteam on May 29, 2013
English: The illustration shows the major signs and symptoms of heart failure. (Photo credit: Wikipedia)
SSH : NASDAQ : US$5.45
Sunshine Heart develops, manufactures and markets C-Pulse, a minimally invasive assist device to treat Class III heart failure. C-Pulse, which received C.E. Mark in July 2012, is based on the proven concept of intra-aortic balloon pump (IABP) technology. Unlike IABPs, C-Pulse does not come in contact with circulating blood, which should negate thrombus formation and stroke risk. The company is listed on the Australian exchange and NASDAQ.
SOLID PROGRESS IN U.S. AND EUROPE; REITERATE BUY RATING
Sunshine Heart announced Q1 financial results that were in line with our expectations. What’s more, the company reported meaningful progress on its efforts to achieve U.S. regulatory approval for the C-Pulse system. During Q1, the company received IRB approval of the first U.S. trial site and activation of a second site (Minneapolis VA Medical Center), and appointed a surgical principal investigator (PI) for its COUNTER HF pivotal trial. In Europe, SSH announced that the German Heart Institute-Berlin has been activated as the first center for its OPTIONS HF post-market trial. The company is in the process of getting ethics panel approval at seven additional centers across Germany, Italy and the UK, and expects full activation of these sites by Sept. 1. We expect several patients to be enrolled in its European post-market trial through the balance of 2013 and 2014.
We remain positive on the long-term prospects for SSH’s differentiated technology in the treatment of Class III heart failure, thus reiterate our BUY rating and $12.50 price target.
SSH reported a Q1 net loss of $4.4M, or ($0.47) per share, a shade below our expectation of a net loss of $4.5M, or ($0.48) per share.
SSH is discussing with physicians in the feasibility trial weaning additional patients given the positive effects on these sick patients during the feasibility trial.
Complete feasibility study data expected to be published in major medical journal later this year.
Posted by jackbassteam on May 16, 2013
TEAR : NASDAQ : US$7.96
TLB : TSX
TearLab Corporation has commercialized a proprietary tear testing platform, the TearLab Osmolarity System, that enables eye care practitioners to test for highly sensitive and specific biomarkers using nanoliters of tear film at the point of care. Their first product measures tear film osmolarity for the diagnosis of dry eye disease (DED). The company is headquartered in San Diego, California.
TEAR crushed our Q1 bookings estimate driven by strong growth in its
Master’s program with large ophthalmology practices. We expect the
strong ramp to continue through FY13. We raise our price target to $10
Strong Q1. TEAR reported very strong Q1 revenues of $2.5M (up 54% sequentially), which topped our/Street’s $2.2M estimates. TEAR booked 388 orders, well ahead of our 234E. TEAR placed 324 instruments in Q1, well ahead of our 114E and up from 103 in Q4.
Master’s program paces growth. Multi-instrument placements into high-volume group ophthalmology practices accounted for over 40%
of its 388 bookings. Use of implementation specialists is helping practices implement testing.
Strong ASCRS sets up Q2. TEAR had a good show at ASCRS, which gives us added confidence in our Q2 forecast of 375 orders.
Sales force. TEAR ended Q1 with 27 direct reps, up from 23 in Q4.
Model update. We increase our 2013 and 2014 revenue estimates to $15.5M (from $13.4M) and $30.1M (from $27.1M), respectively, as its Master’s program gains traction. Additional investment in sales and marketing spend keep our EPS estimates intact.
We raise our price target to $10 from $8, which assumes a 5x P/S multiple to our 2015E sales of $65M, discounted at 15% to 2014.
Posted by jackbassteam on May 15, 2013
C-3PO vs. Data (137/365) (Photo credit: JD Hancock)
XOMA : NASDAQ : US$3.13
XOMA, Ltd. operates as a biopharmaceutical company that discovers and develops commercialization antibodies, and other genetically-engineered protein products to treat immunological and inflammatory disorders, cancer, and infectious diseases.
UPGRADING TO BUY, RAISING TARGET TO $8
Upgrading to BUY, raising target to $8 on increased confidence of gevokizumab (gevo) succes in non-infectious uveitis based on new supportive Ph2 data released yesterday. This data resembles earlier Ph1/2 data supporting gevo’s potential benefit in Behcet’s and noninfectious uveitis. We are raising our pNPV-based target to $8 based on increased chances of gevo’s success in inflammatory eye disease.
$(0.30) GAAP EPS missed our estimate/consensus of $(0.20)
Top-line Ph2 Servier data of gevo in 15 Behcet’s uveitis patients gives us increased confidence in Ph.3 success. Yesterday XOMA discussed this new top-line data on its call and anticipates partner Servier will present and publish the full data in the near future.
Catalyst-rich Q4/13 and H1/14 with data from three pivotal NIU trials coming. We see positive read-through for all three from yesterday’s new Servier data.
Posted by jackbassteam on May 10, 2013
Medifast (Photo credit: socialwoodlands)
MED : NYSE : US$27.71
Medifast is a medically approved weight loss program that utilizes patient education and Medifast branded meal replacements that are manufactured by the company and sold through the company’s website, call center, independent health advisors,
We continue to expect growth and improved profitability that should support the valuation. This year’s diet season should add to the fundamental momentum.
Overall a solid Q1 as EPS of $0.43 came in ahead of our/the Street’s
$0.33/$0.34 estimates and guidance, while sales of $96 million
were also ahead of forecast/consensus.
Health Coach growth accelerated to levels not seen since late 2011,
while productivity gains continue. Clinic same store sales
decelerated notably given a challenging compare, but a fourth
consecutive quarter of profitability was achieved.
Guidance for Q2 once again fell short of our and the Street’s
expectations and reflects continued conservatism.
Raising F2013E EPS to $1.76 from $1.71 on modestly higher sales
and profitability assumptions. F2014E EPS resets to $2.02 from
$1.96 on incremental profitability gains.
At 13x 2013E EPS ex. the $4.90/share of net cash, the valuation remains model. Increasing price target to $30 from $27.50.
Posted by jackbassteam on May 10, 2013
The Human Body — Cancer (Photo credit: n0cturbulous)
EXAS : NASDAQ : US$9.21
Exact Sciences Corporation is a molecular diagnostics company focused on the early detection and prevention of colorectal cancer. It is developing a patient-friendly, stool-based (sDNA) test known as Cologuard, for the early detection of colorectal pre-cancer and cancer. Cologuard has completed validation studies and has commenced its pivotal study for FDA review. The company employs 50 people and is based in Madison, WI.
We believe FDA will approve Cologuard given its superiority to FIT/FOBT and increase compliance rates for colon cancer screening. We raise our price target to $14 from $13 and reiterate our BUY rating.
Q1 takeaways. EXAS reiterated its enthusiasm following recent release of top-line data that demonstrated superiority over FIT; notably with 42% and 66% pre-cancer sensitivity for polyps > 1cm and 2cm, respectively. EXAS estimates 7-year cumulative precancer sensitivity rises to 90% with repeat testing on 3-yr. intervals.
Timing remains on track. We do not expect any changes to the timeline for dual path approval: third module submitted to FDA by June; FDA advisory panel later this year; FDA approval by early 2014; and a CMS coverage decision shortly after.
Commercialization strategy. EXAS will initially target the 1% of PCPs that order 20% of the FIT/FOBT testing in the U.S., and focus on health care systems with strong existing screening programs. EXAS expects to build its own CLIA-lab and may seek a partner to help with operational aspects.
Service strategy. EXAS seeks to become a value-added partner, making it easy for doctors to order Cologuard. EXAS looks to send kits to patients, provide patient follow-up, and track patient use, ensuring high rates of compliance.
Posted by jackbassteam on May 3, 2013
The lumbar region in regards to the rest of the spine. (Photo credit: Wikipedia)
NUVA : NASDAQ : US$20.94
NuVasive is a pure-play differentiated spine company focused on the design, development and marketing of products for the surgical treatment of spine disorders. The company has gained significant mindshare in the spine community with its minimally invasive XLIF (extreme lateral interbody fusion) technique and proprietary nerve avoidance system. The company markets its products through a direct sales force
We reiterate our BUY rating following solid Q1/13 results that confirm our thesis that NuVasive represents one of the top value names in orthopedics. We note strength across all key business units in Q1/13 including XLIF both US and OUS. Additionally, 2013 is set up to be a year of major initiatives as the company garners initial sales from Japan as well as multiple new product launches into the US markets.
Q1/13 revenues of $159.5M grew 5% Y/Y, with US lumbar, US cervical, and OUS all growing at above market rates.
NuVasive noted strength across its key business units including XLIF, driving US and OUS growth.
2013 guidance was reiterated with revenues of $655M (+6% Y/Y) and non-GAAP GM’s of 74%, OM’s of 14% and EPS of $1.00.
IP Settlement with Medtronic removes some risk and OIG Fraud Alert on PODs could provide a tailwind.
We are raising our price target to $26.00 from $25.00. Our valuation is based on our 2014 non-GAAP EPS estimate of $1.06 applied to the 24.4x P/E multiple.
Posted by jackbassteam on May 2, 2013