In a July 14 research note, analyst Yi Chen reported that H.C. Wainwright & Co. initiated coverage on Carmat SA (ALCAR:PA; CKMTF:OTCMKTS), the France-based developer of a total artificial heart, with a Buy rating and a €38 per share price target. The current share price is around €26.70.
Chen discussed the highlights of this commercial-stage medical device company. Its product Aeson is a total artificial heart for patients with advanced biventricular heart failure who have exhausted all other treatment options and are ineligible or waiting for a heart transplant.
Aeson differs from other total artificial hearts on the market in that it combines three critical features, Chen noted. They are hemocompatibility, which reduces the risk of developing a thromboembolism; self-regulation, in that it automatically adapts to patients' metabolic needs; and pulsatility, meaning it produces blood flow and pressure as a natural heart does.
"These features make Aeson a genuine physiologic heart replacement therapy (PHRT) that allows patients to live with almost normal quality of life," wrote Chen.
Significantly, Carmat's Aeson is at the commercialization stage in Europe, and the company has begun rolling it out in Germany. As such, sales are expected to start sometime in H2/21. Carmat plans to market Aeson in the main countries in the European Union via a direct sales team.
Carmat has a CE mark for Aeson in the bridge to transplant indication, which it received in December 2020. The CE mark was granted based on results of a 15-patient pivotal study. It showed a six-month survival rate among patients treated with Aeson and a better safety profile than other total artificial heart products.
"Aeson has clearly demonstrated its ability to replicate the function of a human heart and meet the physiological needs of patients in various daily situations," Chen wrote.
In France, Carmat plans to start the 52-patient EFICAS clinical study this quarter "to generate safety, performance and health economics data to support value proposition and obtain French reimbursement," Chen noted. Commercialization would then follow in France, likely starting in 2023.
Carmat also plans to conduct a broad post-marketing surveillance study of the first 95 patients treated in a commercial setting. These data would help support reimbursement in France and drive market adoption.
The company could use longer-term results (greater than one year) from this study to be granted a second indication for Aeson: destination therapy. This would expand the potential Aeson market to include patients ineligible for a heart transplant.
"Carmat's approach to clinical development and commercialization targets an increasing total addressable market, which may drive top-line growth," Chen wrote.
Another positive element of the Carmat story is the "attractive" potential market for Aeson, Chen noted. Heart failure affects about 15 million people in Europe and about 6 million in the U.S. Terminal chronic heart failure with reduced ejection fraction, a target market for Carmat, affects about 4.1 million people in both Europe and the U.S. Of those, only about 5,500 receive a heart transplant per year, and about 5,700 are on a heart transplant waiting list.
As for the cost of Aeson, H.C. Wainwright estimates it could be about €200,000 in the European Union and €240,000 in the U.S., with peak sales reaching close to €700 million in just the bridge to transplant indication.
In the U.S., Carmat is currently screening patients for a 10-patient bridge to transplant feasibility study, to start in late 2021 or early 2022.
"We project potential entry into the U.S. market in 2025," Chen wrote.
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Disclosures from H.C. Wainwright & Co., Carmat SA, Initiating Coverage, July 14, 2021
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Yi Chen, Ph.D. CFA and Raghuram Selvaraju, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Carmat SA (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Carmat SA.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from Carmat SA for non-investment banking services in the previous 12 months..
The Firm or its affiliates did receive compensation from Carmat SA for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Carmat SA during the past 12 months.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.
