OssDsign: Past the Omicron bump in the road - ABG

Sales worse than feared, but isolated to Q1 conditions
Clinical and commercial progress bodes well for mid-term
Reiterate our fair value range of SEK 8-21 per share

Weaker sales, but good clinical and commercial progress
The impact of Omicron was larger than expected, as surgical volumes and the use of Cranial PSI plummeted. Although the effect was expected and reflected in sales estimates, it was larger than we thought and led to a 22% miss vs. ABGSCe. It was largely due to the ~6 weeks lead time for Cranial PSI, which meant that the elective surgery halt from mid-December to mid-February affected the full quarter. This is a non-recurring effect from external factors, and we do not think it affects the mid-term sales trajectory. Already in Q2’22, we should see a sharp recovery in sales, as elective procedures have recovered to a high level with a large surgical backlog to work through. On the clinical and commercial side, OssDsign has managed to deliver a prestigious contract with the largest hospital network in France (AP-HP), is progressing well with the PROPEL registry for Catalyst and fully enrolled the TOP FUSION study. This progress is more important than the Q1’22 sales, and makes us more confident about the long-term prospects of commercial success with Catalyst.

Cut to near-term estimates, long-term outlook unchanged
We cut sales for ‘22e by 13% on the Q1 deviation and a lower uptake of Catalyst. The Q1 disruption seems to have been larger than we thought, and we now expect a slower uptake of Catalyst use since sales access should have been limited. This also prompts us to cut ’23e-24e sales as we move the uptake trajectory of Catalyst slightly out in time.

Fair value of SEK 8-21 per share unchanged
We leave our fair value range unchanged at SEK 8-21 per share. Although we cut near-term sales, we leave our long-term estimates unchanged and have gained confidence in the trajectory based on good commercial and clinical progress during the quarter. Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ossdsign/Equity-research/2022/5/ossdsign---past-the-omicron-bump-in-the-road/