SVB Leerink starts Avedro at OP; PT $20

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SVB Leerink initiated coverage of Avedro (NASDAQ:AVDR) with an “outperform” rating and $20 price target. The stock closed at $11.70 on March 8.

Analyst Danielle Antalffy writes that the company’s key growth driver is the commercialization of the KXL cross-linking system plus Photrexa in the U.S. to treat keratoconus, a progressive corneal disorder that “we estimate represents at least a $3-billion-plus market opportunity as a base case.”

With reimbursement now covering about 95% of the total addressable market (TAM), the adoption ramp should accelerate in 2019, she said. “Longer-term, we believe there is reasonable potential for estimate upside and/or TAM expansion, as keratoconus is still meaningfully under-diagnosed.”

Avedro also is pursuing expanded indications into vision correction, notably the potential $15-billion presbyopia market opportunity in the U.S. Phase 2 studies outside the U.S. are scheduled to begin in 2019.

“Given this management team’s success in securing the first-ever FDA approval for a minimally-invasive therapy to treat keratoconus, as well as securing reimbursement for 95% of covered lives under the estimated TAM over the last 2 years, we are confident in their ability to continue to execute and drive strong double-digit sales growth for the foreseeable future and share appreciation over the next 12 months,” Ms. Antalffy said.

Stephen Kilmer