A Glance At Medical Device Company, Osprey Medical, Inc.

A Glance At Medical Device Company, Osprey Medical, Inc.

Headquartered in the United States, Osprey Medical, Inc. (ASX: OSP) is engaged in protecting patients from the adverse effects of X-ray dye used commonly while performing the angiographic imaging procedures. Osprey aims to make heart imaging procedures safer for patients suffering from poor kidney function. The company focusses on transforming the standard of care for chronic kidney disease (CKD) patients by reducing Contrast Inducted Acute Kidney Injury (CI-AKI) and lowering hospital costs. Osprey holds valuable and innovative product portfolio that includes products that are FDA-cleared, TGA-cleared and CE-Marked.

More About CI-AKI

The Contrast Inducted Acute Kidney Injury (CI-AKI) is caused by the X-ray dye that is used in common imaging procedures for heart/legs, which has harmful effects on patients’ kidneys. A significant body of clinical evidence suggests that CI-AKI can result in debilitating and potentially life-threatening consequences. It was also witnessed that the CI-AKI in the CKD population undergoing angiography has increased to 28 per cent in 2017 from 18 per cent in 2012.

CI-AKI is a growing problem associated with poor patient outcomes after coronary angiography. The graph below represents the types and percentage of risk connected to patients with or without AKI:

Why CI-AKI is a Burden?

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The hospital costs increase for patients with CI-AKI as it becomes the responsibility of the hospital to deal with most procedure-related poor outcomes. As stated by Osprey in its recent presentation, the CI-AKI costs approximately US$1.7bn to the hospitals each year. This is because CI-AKI leads to increased length of stay, increased 30-day readmissions and increased bundled payment risk at hospitals.

Besides hospital costs, AKI increases the mortality in chronic kidney disease (CKD) patients and the patients with AKI are more likely to be discharged to non-home facilities.

What’s Unique with the Company’s Technology?

As per the company, approximately 30 per cent of all angiography patients are at risk of CI-AKI, which is a frequent and dangerous complication for patients and expensive for hospitals to manage. The products of the company are designed to lower the amount of contrast injected into patients during standard peripheral and cardiovascular procedures.

The company’s DyeVert™ is the only device with an FDA cleared claim for contrast dye reduction without compromised image quality for patients undergoing angiography procedures. The DyeVert™ system has been designed for patients at risk of CI-AKI that require contrast minimization. It is easy to set up and does not disrupt a patient’s flow, in line with standard physician guidelines.

Market Opportunity for Osprey

The company’s total market opportunity is approximately US$1.65bn that incorporates the opportunity for its DyeTect™ Automated Contrast Monitoring System and DyeVert™ Plus system. The DyeTect™ Automated Contrast Monitoring System was designed for the non-CKD heart patients while DyeVert™ Plus system was developed for patients with poor kidney function that requires contrast minimization.

The market opportunity for DyeVert™ Plus and DyeTect™ in the USA and Western EU is estimated by the company to be around 3.2 million and 3.5 million procedures per year, respectively. About 6 million coronary (angiograms and stenting) procedures are performed per year in the USA and Western EU, out of which 2.75 million procedures are at risk for CKD, Diabetes and STEMI. Similarly, from 950K peripheral procedures performed per year, 475K are at risk of CKD and diabetes. This means that there is a huge opportunity available for Osprey’s products in the market.

Osprey’s Performance in FY18

Osprey released its annual results for the 2018 Financial Year in March 2019. It was another year of strong commercial growth for the company as Osprey continued to experience strong unit volume/revenue growth in FY18. The company’s sales force expanded by 39 per cent in FY18 with the hiring of nine additional sales team members across the year.

Execution of GPO strategy

The company executed a GPO (Group Purchasing Organisations) strategy in FY18 that was introduced about a year ago. The GPO represents some of the largest networks of hospitals and health care providers in the US that have some of the largest global healthcare databases. The company focussed its sales efforts to target GPOs and signed four GPO agreements in 2018 (covering 50% of US heart hospitals), including a contract with Premier, Inc. that is one of the largest GPOs in the United States with over 4,000 member hospitals.

Key Developments

Osprey focussed on incremental and continuous innovation in FY18, evident from the launch of its newest technology DyeVert™ Plus EZ in September. It is a next-gen DyeVert™ system that is streamlined and is simple to be used by clinicians. The company received positive feedback from physicians and cath lab technicians for its DyeVert™ Plus EZ technology since its launch.

The company commenced market access to obtain recommendation for DyeVert™ from the National Institute for Health and Care Excellence (NICE) in the UK. During FY18, the company partnered with GE Healthcare, one of the largest suppliers of imaging contrast agent, for the Be Kind to Kidneys™ campaign to build awareness of CI-AKI.

Financial Results

During FY18, the company achieved a 54 per cent revenue growth to US$2.5 million as its US cardiac cath lab adoption and sales momentum continued to accelerate throughout the year.

The units of DyeVert™ sold by the company in FY18 improved by 57 per cent on pcp to 7,201 units. The three-year compound annual growth rate for DyeVert™ was recorded as 179 per cent.

The operating expenditures of the company rose 22 per cent on pcp to US$19.0 million in FY18, reflecting an increase in predominately sales and marketing expenses to drive future sales growth. The company reported a closing cash balance of US$25.2 million as on 31st December 2018 (US$25.3 million as at 31 March 2019).  

Future Outlook for 2019

The company remains firmly focused on enhancing sales in FY19 to drive shareholder returns. The company aims to continue growth in unit sales and accounts and originate new GPO distribution agreements in expanding hospital network footprint. It intends to increase average order size and penetration across all sales territories and build brand awareness of DyeVertTM production outside of the US. It will emphasize on expansion into new markets with the initial focus on Western Europe.

Stock Performance:

Osprey’s stock is currently trading at AUD 0.067 (on 5th July 2019).


Disclaimer

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