Leerink starts Inspire Medical at OP; PT $57

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Leerink launched coverage of Inspire Medical Systems (NYSE:INSP) with an “outperform” rating and $57 price target. The stock closed at $40 on Oct. 26.

“We see Inspire as a sustainable ultra high-growth/gross margin (more than 30%; about 80%) small-cap, as the company drives higher utilization of the first and only FDA-approved neurostimulation device for obstructive sleep apnea (OSA),” writes analyst Richard Newitter.

OSA is a sleep disorder associated with comorbidities and represents an $11-billion market opportunity, “where current therapies have drawbacks and Inspire’s unique solution can offer (clinically proven) patient benefits over them,” he added.

Mr. Newitter said Inspire’s clinical evidence is compelling with MEDACorp ear nose and throat specialist feedback consistently pointing to a high level of enthusiasm and anticipated adoption potential for the technology, even against a cumbersome reimbursement backdrop.

“We think reimbursement frictions are nearing a tipping point with Aetna covering the procedure as of July 2018 and others likely to follow over the next one-to-two years,” he added.

“An easing reimbursement process should help accelerate Inspire’s adoption trajectory over the next one-to-two years and could be a source of upside even to our above-consensus growth forecasts” of a 34% compound annual growth rate in revenue between 2018 and 2023, “alongside several other areas that aren’t specifically contemplated in our model, such as geographic footprint expansion (the UK and Belgium) or new indications (pediatric Down syndrome),” Mr, Newitter said.

Stephen Kilmer