Anteris Technologies (AVR: $21.50) presented at the inaugural E&P Healthcare conference this week.
CEO Wayne Paterson believes that the technical risk for the company's novel aortic valve, the DurAVR 3D, has been significantly diminished, down to only 5%-10% following successful implantation into 13 patients. The remaining risk for the company relates primarily to execution.
Anteris is developing a single piece aortic valve that is implanted via catheter, rather than open-chest surgery.
Market Size and Dynamics
There has been a move to implant aortic valves via a less invasive procedure via a catheter (TAVR) compared to open chest surgery (SAVR). In 2019 there were 72,991 TAVR procedures in the US, which for the first time exceed the number of aortic valves implanted by open chest surgery (57,626) (source: Diagnostic and Interventional Cardiology, November 2020). At a price of US$35,000 per device in the US (around US$20,000 outside of the US), this places the market at US$2.6 billion in the US, or US$4.6 billion including valves implanted using either procedure.
Anteris anticipates that the market for TAVR delivered aortic valves to grow to US$9 billion in the US in 2028 and US$5 billion outside the US. The TAVR market is dominated by two products, the Sapien 3 and the CoreValve from Edwards Lifesciences (64% market share) and Medtronic (31% market share) respectively.
Paterson believes the Anteris device can achieve a market penetration of between 30%-40% that could generate annual sales of between US$3 -5 billion.
Competitive Advantages
Anteris' valve has several advantages over the incumbent products. The effective orifice area it achieves is significantly larger than both competitors' valves, and it reduces the pressure more that the Sapien 3 and CoreValve. Paterson said that the company's device is 50% better than the competition.
Its valve is only a single piece, whereby the competing valves are sown together using three pieces. The Anteris valve uses the proprietary ADAPT treatment process developed in Australia. From heart tissue repairs in children, the ADAPT treated tissue has shown resistance to calcification for 10 years. The company says it has the best anti-calcification treatment in the world.
Paterson said that the competing valves still leave the patients with mild stenosis after implant where the Anteris valve returns the patient to a healthy state with a mean pressure gradient across the valve of 5-10 mmHg.
The Anteris valve closes by pivoting at the base rather than at the top of the valve, which is one of the reasons that better closing can be achieved. Paterson said that aortic valves need to be anatomically correct. The DurAVR 3D was designed as a valve first and is the only valve that delivers perfect laminar flow through the aorta.
In August 2019 the FDA approved TAVR procedures for low-risk patients. Many of these are younger patients. However young patients are expected to live longer and so require a more durable, longer-lasting valve. There are obvious advantages of implanting the device through a catheter, with up to eight weeks recovery from open chest surgery which is also limited to younger patients.
These devices are tested in a laboratory under an 'accelerated wear test'. Each valve is required to last a minimum 200 million cycles. Paterson said that competing valves start to wear out around 300-400 million cycles, where the Anteris valve lasts for between 750-800 million cycles. The Anteris valve has shown to operate for 15 years under simulated wear testing.
Presentation of Data
At the TCT conference to be held later this month in Boston, it is expected that data will be presented on the Anteris aortic heart valve which will compare its performance with aortic valves implanted using surgical (open-chest) procedures. This should be highly significant for the company.
At the PCR London Valves conference at the end of November it is expected that 12-month data will be released on the first five patients implanted with the DurAVR 3D valve.
Competitive Tension
Anteris is building competitive tension for acquisition from its two competitors. Paterson believes the company with the largest market share is the most at risk from this new technology. If Anteris continues to make positive advancements with the development of its valve, it is likely to become of interest to the two companies that dominate the TAVR market, Edwards Lifesciences and Medtronic.
Studies to Date
In November last year the first five patients were implanted with the DurAVR 3D device. Paterson said that the first cohort was a very sick patient population. It included one patient who Paterson believes was two weeks from dying with a pressure gradient of 90 mmHg. Following implant that patient's function was returned to normal with a pressure gradient of under 10 mmHg.
In May this year a further eight patients were successfully implanted with the Anteris TAVR device.
In June the company reported a six-month follow-up of the first five patients. All patients were progressing well, with a mean reduction in pressure across the valve of 86% from baseline and 6% improvement from three-month data. Using the six-minute walk test, patients have improved 46% from baseline and an additional 21% from the three-month assessment.
Medical Advisory Team
Anteris has put in place an exceptional medical advisory team of 23 cardiac specialists across North America, Europe and Australia (see table on previous page). It includes Samir Kapadia, chairman of the Department of Cardiovascular Medicine at the Cleveland Clinic, which in 2021 the centre performed 652 TAVR procedures.
Earlier this year Dr Martin Leon joined the company's medical advisory board and is a highly significant addition. He is Director of the Columbia Interventional Cardiovascular Care Center and he has performed more than 10,000 procedures. Dr Leon is also director and founder of TCT (Transcatheter Cardiovascular Therapeutics), the world's premier interventional cardiovascular meeting which will be held in two weeks. He has been a principal investigator on more than 50 clinical studies, which have underpinned advancements in the field of interventional cardiovascular medicine.
The centres where the company's medical advisors are based represent a receptive audience for the company in both its clinical studies and for commercial launch once approved.
Clinical Pathway Ahead
To gain European approval, a trial involving around 100 patients will be required, with European approval likely to be received before US approval.
In the US, Anteris will first conduct a feasibility study in around 15 patients, which is expected to only take a few weeks to recruit. The company will then conduct a pivotal IDE study in the US and Australia, which is expected to take around one year to recruit. The company will be eligible for reimbursement for these procedures (US$25,000 per device). Patients will be followed for one year. That study is expected to start early next year and may involve around 400 patients.
Share Register and Funding
Anteris held cash of $33 million at the end of June. In March the company raised $28 million from a major US life sciences fund managed by Perceptive Advisors. It has US$9.5 billion in funds under management and will be a useful potential source for additional funding.
In February this year it declined an acquisition by US cashbox Medicus Sciences Acquisition Corp, which Bioshares believes was a sensible decision.
Summary
Samir Kapadia believes that the field of interventional cardiology has reached a stage where TAVR procedures for aortic valve replacements should be considered for all patients (i.e. replacing surgical implantation). The 30-day mortality rate has fallen to just 0.3% in recent years from 7.5% in the early years of TAVR implants.
However, with TAVR procedures now being implanted in younger patients, there is a strong need for biologic valve material to be less resistant to calcification, which is the primary advantage offered by the Anteris valve.
Anteris is capitalised at $299 million.
Bioshares recommendation: Speculative Buy Class A
(Anteris has been added to the Bioshares Model Portfolio.)
Disclaimer:
Information contained in this newsletter is not a complete analysis of every material fact respecting any company, industry or security. The opinions and estimates herein expressed represent the current judgement of the publisher and are subject to change. Blake Industry and Market Analysis Pty Ltd (BIMA) and any of their associates, officers or staff may have interests in securities referred to herein (Corporations Law s.849). Details contained herein have been prepared for general circulation and do not have regard to any person’s or company’s investment objectives, financial situation and particular needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without consulting their investment adviser (Corporations Law s.851). The persons involved in or responsible for the preparation and publication of this report believe the information herein is accurate but no warranty of accuracy is given and persons seeking to rely on information provided herein should make their own independent enquiries. Details contained herein have been issued on the basis they are only for the particular person or company to whom they have been provided by Blake Industry and Market Analysis Pty Ltd. The Directors and/or associates declare interests in the following ASX Healthcare and Biotechnology sector securities: Analyst MP: ACR,CGS, CYC, IMM, OPT,CUV,MX1,PAB, PXS,RNO,SOM. These interests can change at any time and are not additional recommendations. Holdings in stocks valued at less than $100 are not disclosed.
