DNB Markets - Episurf Medical: Looking past Covid-19

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Q4 was clearly hit by Covid-19, but we expect things to improve over the coming quarters (although Q1 might still see some negative impact). With society generally re-opening and companies such as Episurf Medical getting better access to customer sites, we believe sales should rise in 2022 and into 2023. Our fair value is SEK3.3–9.3.

Q4 earnings broadly in line with expectations. The pandemic still had a significant negative impact on customer access and thus sales for Episurf Medical in Q4. The company reported product sales of cSEK1.5m (we forecast cSEK1.7m) and an operating loss of cSEK19m (we forecast a loss of cSEK16m).

Customer access should now improve. Q4 earnings were hit by restrictions related to Omicron and we believe this will to some extent continue in Q1 (as sales in Q1 are generated by client activities in Q4). However, as restrictions continue to ease, activity – and thus product sales – should improve. We expect 2022 to be back-end loaded.

Product portfolio moving in the right direction. The company recently (end-2021) filed for 510(k) clearance in the US for its patellofemoral knee implant; we believe it should be approved and launched during 2022. In addition, the MTP implant (for the 'big toe') should be ready for 510(k) filing later in 2022 or early 2023.

EPIC knee trial should gain traction as Covid restrictions ease. This trial has been held back by pandemic restrictions and should start to gain traction when the restrictions ease. We believe the knee implant in the US could be ready for launch in 2025. This development activity has been the one most hampered by the pandemic.

More commercial focus as client access improves. The company has become more focused on launching products in new markets and mainly through distributors. During Q4 its implants were sold in 15 countries and the company expects new markets to be added this year (including India, Australia, New Zealand, and Singapore).

We estimate a fair value of SEK3.3–9.3. While sales growth and some development activities have been delayed by the pandemic, the company looks to be moving in the right direction with clearer commercial focus and a widening product portfolio.

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Best regards 


Patrik Ling |
DNB Markets | Equity Research | Senior Analyst Healthcare

Regeringsgatan 59 | Stockholm | Sweden
patrik.ling@dnb.se | www.dnb.no


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