WB starts AxoGen at OP

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William Blair launched coverage of AxoGen (NASDAQ:AXGN) with an “outperform” rating. The stock closed at $26.65 on Feb. 2.

AxoGen is a global leader in the peripheral nerve repair and regeneration industry, and sells a portfolio of solutions to treat patients with nerve injuries. Its flagship product, Avance, is the only commercially available substitute, off-the- shelf human nerve allograft to repair severed nerves and offers surgeons an effective solution to avoid a secondary surgical site when repairing a severed nerve, writes analyst Kaila Krum.

In addition to Avance, AxoGen’s other nerve repair solutions include the AxoGuard NerveConnector, AxoGuard NerveProtector, and Avive Soft Tissue Membrane.

Ms. Krum said AxoGen’s portfolio addresses an opportunity of more than $2.2-billion in the U.S. alone, with a penetration in the low single digits currently. The company recently expanded into the $250-million breast neurotization market, with a solution for women to recover lost sensation after undergoing a mastectomy.

She estimates AxoGen has about 600 active hospital accounts today and has been rapidly expanding its sales force, essentially doubling the size of its direct presence in the last three years.

“Given the substantial opportunity today, the ability to grow in both new and existing accounts, and potential to eventually expand into incremental pipeline opportunities, we believe the company should be able to grow 40%-plus in 2018 and durably in the mid-30% range over the next three-to-five years,” she added.