Vitrolife

Xvivo Perfusion

Surgical Science Sweden

BONESUPPORT

In March 2020, CERAMENT G was given the Breakthrough Device Designation status by the FDA for the indication of bone infection. On June 16, it was also granted the designation for the indication of trauma. These designations are aimed at novel medical devices that help patients suffering from life-threatening or irreversibly devastating diseases or conditions. The designation aims to introduce these devices quicker to the market and offers the following (general) benefits:
<ul>
<li>More direct interaction with the FDA</li>
<li>Higher priority by the FDA to take it through the regulatory process</li>
<li>FDA may allow part of the data to be collected at the beginning of its post-market phase</li>
<li>The MCIT (Medicare Coverage of Innovative Technology) also allows national Medicare coverage on the FDA approval date, avoiding an often-lengthy process to achieve reimbursement after its regulatory approval</li>
</ul>
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While the FDA has struggled with processing new medical devices since the pandemic started, we highlight that the Breakthrough Device status certainly adds confidence to our belief that there will not be a delay in the PMA process. Moreover, considering its high priority by the FDA, we also emphasize that an eventual PMA approval could come earlier than we have currently factored in (the end of 2022). However, we do not yet modulate this into our sales model. Just as CERAMENT G received NTAP (New Technology Additional Payment) awarding it a USD 3,9k increase on the DRG reimbursement (for bone infection), we argue that such a ruling could materialize for the trauma indication, as well.
Base Case of SEK 94
On the back of a slight increase in its anticipated market penetration, as well as a potential NTAP for trauma, we raise our Base Case slightly to SEK 94 (90). From today’s levels, this represents a +28% potential.
BONESUPPORT’s stock has performed exceptionally in the past 12 months (+83%), currently trading at approximately SEK 73. YTD, the share is down roughly -5% owing to the fall in early March after the FDA announced that more data was required for its De Novo filing but has since recovered the collapse. We see a short-term catalyst for the share in its FORTIFY study results, which we expect to be published in early September, and an anticipated FDA approval (for bone infection) in Q1 of next year. Assuming positive study data (superiority to autologous treatment; absence of deep infection), we might begin to take a closer look at the SOLARIO study, which currently is only included in our Bull Case (SEK 167).