Abiomed (NSDQ:ABMD) shares fell approximately 13.1% yesterday despite the company announcing positive results from a pilot trial of its Impella CP heart pump that will clear the way for a pivotal that could nearly double the device’s total addressable market.
The company announced on Sunday that a pilot study of its Impella CP, used to unload the left ventricle for patients presenting with anterior ST-segment elevation myocardial infarction without cardiogenic shock met its primary endpoints and that it plans to launch a pivotal trial during the second half of next year.
Leerink Partner analyst Danielle Antalffy said that they expected that results from the trial might end up having a positive effect on the company’s shares, according to a letter to investors.
“While [Abiomed] shares have run in the last few days – +25% off recent lows – we do think investors will likely focus on these encouraging trends in infarct size, and shares could move moderately higher on this data,” Antalffy wrote in a letter on Sunday.
Abiomed saw its shares drop approximately 13.1% on Monday, opening at $388.99 and closing at $337.86. The drop was reportedly due to the high expectations of the company’s investors, according to another letter to investors from Antalffy released today.
“Despite the pilot trial’s success, [Abiomed] shares sold off yesterday, likely caused by: (1) Elevated investor expectations for more definitive positive trends favoring the unloading arm, which would have been incredibly difficult in such a small trial; (2) what may be perceived as a modest delay in initiation of the pivotal trial, with [Abiomed] targeting 2H19 vs 1H19; and (3) a broader selloff in MedTech, and specifically in growth/momentum stocks,” Antalffy wrote.
They went on to state that at its reduced price, shares in the company reflect “very little STEMI, which we peg to be nearly $140/share based on our DCF”.
If the pivotal trial of the device is successful, Abiomed could see a nearly double increase in its total addressable market, Antalffy said, who was bullish on the company’s efforts.
“With or without STEMI, we believe [Abiomed] has a monopoly in a large and under penetrated market that ultimately could prove to be multiples of its current size. More importantly, we believe the company will most likely revise its multi-year vision set at the 2015 analyst meeting – $1B+ in revenue from the current high risk PCI and cariogenic shock indications alone by FY2021 and ~30% operating margins – with the company clearly tracking ahead of this goal already on operating margins and pushing close to $1B insoles next year, based on our estimates,” Antalffy wrote in a letter to investors.
Shares in Abiomed have dropped a much smaller 0.3% today, at $336.72 as of 11:15 a.m. EST.
