Hansen acquired for $80 million and is a close comp for BioSig: Based in Mountain View, CA, Hanson Medical was the first company listed on our peer valuation analysis when we initiated coverage of BioSig on February 17, 2016, and while there is no perfect comp for BioSig, we do think the transaction is relevant and that it reiterates the strategic value in the space. Like BioSig, Hansen Medical is focused on achieving better patient outcomes for cardiac arrhythmia. Hansen's intravascular robotics enable more accurate and controlled catheter placement in order to improve patient outcomes for cardiac arrhythmia and endovascular procedures with its flagship Magellan™ Robotic System. Clearly the company is well-aligned and potentially complementary with BioSig, whose Flagship PURE EP™ System is intended to improve outcomes for patients with complex cardiac arrhythmias through complex real-time analysis of electrical activity in the heart to better identify the cause and nature of arrhythmias to drastically improve the process of finding catheter ablation targets - areas of tissue to destroy that otherwise create a cardiac arrhythmia
In the following table we examined a group of select transactions in the electrophysiology (EP) space, which demonstrates a pattern of consolidation by entrenched platers in order to maintain share and capture market opportunities in this strategically important $3.5 billion marketplace - a market projected by Global Industry Analysis to reach $5.5 billion by 2019E, with growth driven by the rising prevalence of cardiac arrhythmias.
|
Company
|
Proof of Concept
|
Prototype
|
Clinical Data
|
CE Mark
|
FDA
|
Sales
|
Acquirer / Investor
|
Valuation
|
|
nContact
(formed 2005)
|
✔
|
✔
|
✔
|
✔
|
|
|
Atricure
|
$149mn
Oct 2015
|
|
CardioInsight* (formed 2006)
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
Medtronic
|
$100mn
June 2015
|
|
Topera Medical* (formed 2010)
|
✔
|
✔
|
✔
|
✔
|
✔
|
|
Abbott
|
$250mn
Dec 2014
|
|
Bard EP
(division of CR Bard)
|
✔
|
✔
|
✔
|
✔
|
✔
|
✔
|
Boston Scientific
|
$275mn
Nov 2013
|
|
Rhythmia Medical
(formed 2004)
|
✔
|
✔
|
✔
|
|
|
|
Boston Scientific
|
$265mn
Oct 2012
|
|
Ablation Frontiers*
(formed 2004)
|
✔
|
✔
|
✔
|
✔
|
|
|
Medtronic
|
$225mn
Feb 2009
|
Source: Company investor materials, SeeThruEquity Research
*Plus significant additional payments following the successful completion of clinical milestones
Highlights from the note are as follows:
Hansen Medical to be acquired at 40% premium, representing a valuation of $80 million
On April 20, 2016, BioSig peer Hansen Medical, Inc. announced that it was being purchased by Auris Surgical Robotics for $4.00 per share, representing a total equity value of $80mn and a 39.6% premium to the prior day's closing price of $2.86. In addition, certain significant stockholders of Hansen Medical have agreed to invest approximately $49 million into Auris contemporaneously with the closing of the transaction. Mountain View, CA-based Hanson Medical was the first company listed on our peer valuation analysis when we initiated coverage of BioSig on February 17, 2016. The company is focused on developing intravascular robotics that enable more accurate and controlled catheter placement in order to improve patient outcomes for cardiac arrhythmia and endovascular procedures with its flagship Magellan™ Robotic System. This is well-aligned and potentially complementary with BioSig, whose Flagship PURE EP™ System is intended to improve outcomes for patients with complex cardiac arrhythmias through complex real-time analysis of electrical activity in the heart to better identify the cause and nature of arrhythmias to drastically improve the process of finding catheter ablation targets - areas of tissue to destroy that otherwise create a cardiac arrhythmia.
Regulatory developments and upcoming industry events may offer continued support
Although not affecting BioSig directly at this time, since BioSig is a pre-revenue company, we note BioSig's may be benefitting from a sector regulatory event. Indeed, the regulatory environment for medical device stocks recently received a boost with the two-year suspension of the 2.7% special medical device tax that had been included in "ObamaCare" - and there is a growing line of thought that the suspension will become a permanent repeal. We continue to see more positive industry catalysts ahead for BioSig. The company is preparing to present pre-clinical data and introduce / demonstrate the PURE EP to the industry and investors at the Heart Rhythm Society in May, which is one of the biggest events in the industry.
Maintain price target of $3.53 for BioSig
We have been encouraged by the progress made by BioSig since our initiation of coverage on February 17, 2016, and note that shares have risen by 51% since that time. The recent acquisition of peer company Hansen Medicine highlights a key point made in our initiation of BioSig, which is the strategic value in the space to larger medical device payers as well as the history of significant M&A. We continue to like BioSig and the opportunities it is targeting in the growing $3.5 billion electrophysiology (EP) market. We maintain our price target of $3.53 for BioSig, which , if achieved, represents potential upside of 130.7% from the recent price of $1.37 on March 23, 2016.
