Why Transmedics (TMDX) will transform solid organ transplant landscape.

$TMDX

TransMedics (TMDX) is a very interesting company which is on a mission to revolutionize solid organ transplantation. 

Please watch this video on YouTube to get an idea about this device:

When donor is available; the transplant surgical team flies to a hospital where donor is located. Usually donor and recipient are several miles if not hundred of miles apart on occasion. They will harvest the organ and transport the organ back to the hospital where the recipient is located.

Believe me or not, the organ is transported literally in a picnic ice cooler which is standard of care. There are only disadvantages and practically no advantage other than it costs minimal using a picnic ice cooler. The surgical team is not using an ice cooler to save money; they use it because there is no approved device to transport solid organs.

This is where TransMedics organ care system (OCS) comes into play. 

It is a device where surgeons can temporarily put the organ during transport and the goal of the device is to provide a similar environment to the organ if it were inside the human body.

TransMedics has OCS systems for heart, lungs and liver. It is working on OCS kidney.

Disadvantages of Ice cooler

Most of the organs transported in the ice cooler go waste. It can’t be used. Only 20-30% can be successfully transplanted. The surgical team can’t go beyond a 6 hours window. Maximum hours the organ can stay in an ice cooler is six hours. After six hours in the cooler the organ will start to become dysfunctional.

The OCS system solves both problems. The utilization of organs goes up to 80% and there is practically no limit on how far the surgical team can reach to harvest the organ.

This will increase solid organ transplant volume which in turn benefit more patients who are waiting in the transplant list. This is a tragedy that many patients are dying waiting for suitable donors.

I believe that OCS (Organ Care System) will transform all solid organ transplantation but more so for heart transplantation.

So far, the heart can only be transplanted after brain death. With OCS heart, the heart can be transplanted after circulatory death. This is entirely new paradigm and it is estimated to increase transplant volume north of 40%.

Potential catalysts in 2021

1. FDA approval of OCS Heart DBD (Donation after brain death) indication

2. FDA approval of OCS Liver DBD and DCD indication

3. Publication of OCS Liver Protect Trial results

4. Read of OCS Heart DCD results

Why will it be more than a 10x opportunity?

I like to invest when a company is creating a new market. Right now there is no device approved for solid organ transportation other than picnic ice cooler. After this device approval, all three stakeholders involved (patients, surgeons and hospitals) will benefit. Due to the device, more organs will be transplanted safely; more organs which otherwise would go waste would be utilized, more patients will get new lives, and surgeons will be able to help more patients. 

The company estimates the total addressable market in the US is about 8 billion dollars. After listening to several presentations by transplant surgeons, it appears to me that the surgeons are waiting for this device approval so that they can help their patients. There is practically no other competition for TransMedics scientific research and unilateral support from the transplant community. If they can command 25% of their addressable market, the company will have a multi billion dollar valuation. The company trading at 600 million is a steal.

I am long TMDX.