Rodman starts Kips Bay at outperform
“Kips Bay is the only company we know of that is exploring use of an external nitinol stent in improving patency of saphenous vein grafts in coronary artery bypass surgery,” writes analyst Suraj Kalia, referring to the use of the company’s eSVS nitinol mesh technology. He also points to the novel nature of the product, which if proven successful in a U.S. pivotal trial, “could be a game-changer in the practice of medicine.”
The eSVS mesh has CE Mark approval in Europe and the company has submitted an application for an Investigational Device Exemption to the FDA, with a decision expected in the near future.
“The success of this story is critically dependent on how the pivotal trial design shapes up,” Mr. Kalia said. “If Kips is able to appropriately design and control its U.S. pivotal trial, the probability of success both technical and clinical would improve significantly.” A positive outcome in the pivotal trial, combined with a significant market opportunity of 450,000 procedures in the U.S. and 400,000 outside of the U.S., and virtually no competition, could make Kips an attractive takeout target, he added.
Mr. Kalia recommends the stock only to long-term, growth oriented investors because the company will not be a “quarterly revenue” story for quite some time, despite some sales in Europe. “The real opportunity lies in the U.S., and a decision point should occur sometime in 2013-2014 time.”