Leerink starts Axogen at OP

Leerink launched coverage of Axogen (NASDAQ:AXGN) with an “outperform” rating and $22 price target. The stock closed at $15.10 on July 28.

“We see Axogen as a unique and sustainable high-growth company, with a unique barrier-to-entry around one of its flagship products, Avance, and a high gross margin business that should be scalable over time,” writes analyst Richard Newitter.

“We believe the company is well-positioned not only to sustain a leading position in peripheral nerve repair but also to lead the category's expanded utilization into a large and significantly underpenetrated $1.8-billion opportunity, fuelling a 32% 2018-2022 estimated compound annual growth rate in revenue, well-above the small-cap MedTech average,” he added.

Mr. Newitter also said the company's products generate a more than 80% gross margin, which “we think is sustainable”.

In addition, he said a unique regulatory status for Axogen’s key product, Avance, the only commercially available nerve allograft in the U.S., should provide up to 12 years plus of exclusivity.