DNB Markets – Episurf Medical: Clinical data strengthens the case

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In our view, the most important events in Q3 were the presentation of long-term clinical data from the Swedish trial and very strong 2-year follow-up data from the large European (80 patients) multi-centre trial. Q3 was largely in line with our expectations, and we note that the number of procedures is increasing despite a negative Covid-19 impact. We reiterate our fair value of SEK1.9–6.5.

Q3 operating loss in line with our forecast. Q3 sales of SEK1.5m were up 36% YOY and 150% QOQ. However, Q2 was severely affected by the Covid-19 pandemic (with sales hit by postponed elective surgical procedures). The number of planned Episealer procedures increased by 57% YOY and 76% QOQ. The operating loss amounted to SEK15.4m in Q3 (an improvement of cSEK2.1m YOY and more or less in line with our forecast).

Clinical data on the longer-term outcome expanded further. The most important events during the quarter, in our view, were the publication of the long-term follow-up data (5–7 years) for the first Swedish patients and the 2-year follow-up data from the European multi-centre study, which both showed excellent outcomes and long-term performances. In the European trial, 80 patients have now been followed for at least two years, and all outcome variables (KOOS and VAS Pain) showed a statistically significant improvement over baseline values. At the same time, the revision rate for the implants was low at only 2.5% after two years.

Ambitious sales targets at CMD in September. Among other things, Episurf Medical stated that it expects the Episealer implant system to capture a c30% market share in its niche over time and that a 15% market share in the US market in its niche should be realistic three years after launch. As we have said before, the sales success of Episealer depends to a large extent on its clinical data as well as the company’s sales and marketing efforts. In the US, we expect the company to find a marketing partner, with its potential market share dependent on who the partner is.

The US IND trial has started, and the first patients have now been included and received their implants. The Covid-19 pandemic continues to affect recruitment to the trial, but the company reiterated that it is hopeful it will be able to conclude recruitment by end-2021 as planned.

Fair value of SEK1.9–6.5 reiterated. We believe the market share targets are ambitious but achievable, especially with the strong clinical outcome data seen lately. We have made only marginal changes to our forecasts following the Q3 report.


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Best regards 


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

Regeringsgatan 59 | Stockholm | Sweden


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