Bringing light to interventional cardiology field.
Could this little Canadian biomedical company be our next multibagger opportunity?
The company that I am excited to share this month is in my own field of cardiology.
This is a little known company among US investors. But interventional cardiologists and general cardiologists are well aware of the significant contribution this company has made in the field of interventional cardiology.
Opsens Inc (OPS.TO, OPSSF) is a Canadian medical device company that manufactures OptoWire used in the treatment of blockages of coronary arteries. Optowire is a fiber optic pressure guidewire. It uses light to measure pressure difference between blockages in the heart arteries. Before OptoWire/pressure measurement wires were available, the cardiologists used to visually estimate and make decisions to implant stents, which is a very imperfect way of making decisions.
When a patient develops chest pain, the physician orders a stress test of the heart to see if chest pain is due to blockages in heart arteries. If a stress test is abnormal, the cardiologist performs coronary angiography. Angiography means direct visualization of heart arteries under X ray. The cardiologist visually inspects the arteries under fluoroscopy (a form of X Ray) to look for narrowing and estimates the blockages and, based on an estimated severity of >70%, a stent is deployed. This is based on visual estimation. There is a lot of subjectivity whether the given narrowing is 50%, 60% or 70%.With pressure wire measurement, if the fall in pressure is greater than 20%, it signifies significant stenosis and the current standard of care dictates implantation of the stent.
OptoWire has now been used in a total of 150,000 procedures worldwide. Opsens’s business of assessing coronary artery disease’s blood flow provides stable, high-margin revenue stream that is growing steadily by winning market share from incumbents. It has superior technology and has been well received in the cardiology circle. Its core business, Optowire, has TAM of 1 billion and commands a 3% market share in the US but has 15% market share in Canada and Japan. Phillips and Abbott’s command 88% of FFR market share. Market share is expected to increase due to superior technology and greater visibility of the product.
However, in addition to its core business, I am excited about the company’s pipeline product for the transaortic valve replacement (TAVR) market.
What is TAVR ?
Source: D8406_Patient_Brochure_-_Aortic_Stenosis.pdf (edwards.com)
It stands for transcatheter aortic valve replacement. Aortic valve, the main valve of the heart, gets narrowed with aging. It leads to decreased blood coming out of the heart to the vital organs and entire body. After the valve is severely narrowed and symptoms start, the only treatment is replacement of the valve. This condition is seen in elderly population and open heart surgery usually is very risky. In this situation, the surgeon can implant the valve without the need for open heart surgery as shown in the picture below. This is the fastest growing market in cardiology.
Opnsense has developed a guide wire (wire that helps transport the valve to the aorta) which makes the surgery more efficient.
Different approach of transcatheter aortic valve replacements
Source: D8406_Patient_Brochure_-_Aortic_Stenosis.pdf (edwards.com)
If one looks closely at the picture above, the valve has been deployed and there is grey wire traversing the valve and the tip of the wire is situated in the left ventricle. The guide wire developed by Opsens Inc will be able to deliver the valve, pace the left ventricle and simultaneously provide pressure measurement. Currently available guidewires can only deliver the valve.
Opsens expects to commercialize this guidewire by mid 2022. Recently it got approval to conduct 20 patients in-man study as a part of the approval process with Health Canada. This study is expected to be completed in the next several weeks. It will eventually apply for FDA approval after this study.
I reached out to a couple of my interventional colleagues who perform TAVR. They were excited to hear about Savvywire. They assert that it might help reduce complications of TAVR by reducing the number of catheters that need to be inserted. The biggest advantage of Savvywire is that it can pace the left ventricle eliminating the need for inserted separate pacemaker wire. Not to mention, it can help deliver the valve as well as provides real time pressure measurement. Although we don’t know the exact pricing, after talking with management, I came to know that it will be priced competitively.
Financials
What are the risks?
It is a very small company. It doesn’t trade in US exchanges. Either investors have to trade via Canadian exchange or over the counter. The stock is volatile due to small cap and relatively illiquid shares. If the 20 in-man study that is being conducted doesn’t show the data we are anticipating the stock price will drop precipitously.
Sizing the opportunity:
Its core business, Optowire, has TAM of 1 billion and commands a 3% market share in the US but has 15% market share in Canada and Japan. Phillips and Abbott’s command 88% of FFR market share. Market share is expected to increase due to superior technology and greater visibility of the product.
I am really excited about the TAVR opportunity. Current TAM of TAVR is 3.5 B and it is expected to grow 18% CAGR reaching 7-8 B by 2026 ! If the company is able to get FDA approval by mid 2021 and commercialize the SavvyWire, it will be the next big leg for growth. In the next few years, the company could reach > 100 million dollars in revenue and the company itself could be valued at a few multiples from current valuation. Currently the company is trading around 250 million dollars valuation.
Date: 9/30/2021 closing price $2.41
I am long $OPSSF
Disclaimer: The stocks mentioned in my newsletters are not intended to be a list of buy recommendations but rather some ideas for your watchlist. Perhaps they end up in your own portfolio after you conduct your own research and due diligence. Some of the stocks mentioned in my newsletters have smaller market capitalizations and therefore can be more volatile. I always encourage everyone to do their own research and due diligence before buying any stocks mentioned in my newsletters. Please manage your portfolio and position sizing in accordance with your own risk tolerance and investment objectives.
Small question - should the FDA approval for SavvyWire come in 2022 (since we’re already in Q4 of 2021 and it looks like they’ve just announced the Human Clinical Trial for TAVR on 10/13. I’m reading your last paragraph and trying to build a timeline in my head.
Larger question for a med device newbie - what’s the normal sequence to get a device approved here in the US? R&D -> Trials -> FDA approval -> profit?
Excellent write-up. Seems like a great opportunity and , as a cardiologist, this is square in your “circle of competence.”. My concern lies with the recent run-up in share price. Sometimes, companies this size will need to raise capital. For now, I might buy a small slither just to keep it in sight. Later, if there is an offering, I will definitely get a nice sized chunk. Thanks for putting this on our radar.