In a Sept. 3 research note, Ladenburg Thalmann analyst Jeffrey Cohen reported that CryoLife Inc. (CRY:NYSE) agreed to acquire Ascyrus Medical for $200 million.
"We are highly encouraged by the Ascyrus acquisition and anticipate nominal revenues from ex-U.S. territories and improved margins in the near-term as well as clinical and regulatory updates," commented Cohen.
Ascyrus Medical, a private medical device firm based in Florida, developed the Ascyrus Medical Dissection Stent (AMDS), "the first aortic arch remodeling device utilized for the treatment of type A aortic dissections (TAAD)," Cohen described. Having CE Mark and Health Canada approvals for the AMDS, the company has sold the device on a limited basis in Europe and Canada, generating pro forma revenue of about $3 million.
Of the total consideration for the acquisition, Georgia-based CryoLife is to pay Ascyrus Medical $80 million upfront, $60 million of it in cash and $20 million in common CryoLife shares. The biopharma will pay the remainder of the $200 million in increments when it achieves certain milestones related to AMDS, specifically regulatory approval in various regions.
Cohen highlighted that the current treatment for TAAD is hemi-arch repair, in which a graft is employed to close the ascending part of the aorta, and the use of an AMDS in addition to the hemi-arch repair greatly improves the result.
"Based upon the superior outcomes in patients treated with both, it is anticipated that utilizing AMDS could become the standard of care with a $540 million market opportunity," he added, noting that an estimated 48,000 patients globally per year experience TAAD.
Cohen indicated that CryoLife expects that in the United States it will next get an investigational device exemption for the AMDS from the U.S. Food and Drug Administration. It would follow this with a pivotal trial starting in H2/21 and garner eventual device approval in the U.S. in 2024. Also, the biotech company is working to get the AMDS approved in Japan, hopefully by 2025.
CryoLife intends to capitalize on its sales force in Latin America, Europe and the Asia Pacific to now sell the AMDS in countries covered by the CE Mark.
Ladenburg Thalmann has a Buy rating and a $29.50 per share price target on CryoLife, the stock of which is currently trading at about $18.18 per share.[NLINSERT]
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Disclosures from Ladenburg Thalmann, CryoLife Inc., September 3, 2020
ANALYST CERTIFICATION: I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:
The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities.
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