fda approval, page-3

Shaw Flashnote: Osprey (OSP) - FDA clearanace comes through (BUY, Risk: HIGH, PT: $1.30 up from $0.80)

Event
Osprey Medical Inc. (ASX: OSP) today announced that it has received U.S. FDA 510(k) clearance for its AVERT™ System.
Highlights
• The AVERT System is a proprietary technology designed to reduce the amount of dye injected and exposed to patients undergoing angiogram or diagnostic heart procedures. In a pilot human clinical study, the AVERT System was shown to reduce the amount of dye by up to 40% without compromising image quality.

• There are at least 4 million angiogram heart procedures performed annually in Western Europe and the United States.

• Commercialisation of AVERT (as a product independent of CINCOR) will now commence. AVERT was already CE and TGA approved, but OSP awaited FDA approval to begin commercialization. A strategic and limited rollout will now begin in Texas and Australia to prove take up. The level of penetration achieved will be the key value driver, with investors and a number of larger medical device companies looking to review the data, as it becomes available over the next 6-12 months.
Recommendation
Addressable markets conservatively estimated to be worth $1.4bn for which there is no immediate competition, underlies our investment thesis for OSP. In addition, recent trade sales, peer group market capitalisation and our DCF valuation suggest OSP is significantly under-priced (mkt cap ~$50mn). We believe the FDA approval will be the first of a number of share price catalyst over the next 12 months. At this point in its development we value it at and have a target price of $1.30 (up from 80cps) however, if it achieves the next few near term catalysts identified above we expect to see significant additional share price appreciation. BUY.