Rodman & Renshaw Initiates 'Unsung' Presbia With Buy

Rodman & Renshaw has started Presbia PLC LENS with a Buy rating and $14 price target, saying the company is "an unsung company with an intriguingly positioned device in the attractive ophthalmics domain."

Presbia makes the Flexivue Microlens for presbyopia (nearsightedness). The brokerage, citing a data from Market Scope, said the worldwide presbyopic population would grow to about 2.1 billion by 2020.

The brokerage, according to data from Market Scope, said spending on devices, equipment and procedure fees for presbyopia-correcting surgery is expected to increase from about $408 million in 2014 to approximately $750 million in 2019 at the manufacturer level.

Analyst Raghuram Selvaraju noted that the company could target nearly 30 million people in the U.S. with presbyopia and 35 million in Western Europe and certain other industrialized countries, mainly Asia.

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Flexivue Microlens

Flexivue Microlens, which is being commercialized in several countries such as South Korea and Germany, is being tested in a large Phase 3 program in the United States. Selvaraju expects a top-line data in late 2017, with possible approval in late 2018 and U.S. market entry in early 2019.

"In our view, Presbia could independently launch the Flexivue Microlens™ in the U.S. and may generate peak sales of $445 million in the U.S. alone and $530 million worldwide by 2030," Selvaraju wrote in a note.

Study And Patient Responses

Meanwhile, the analyst expressed his "surprise" that the investors neglecting the stock despite a an interim data from its Phase 3 U.S. trial showing that over 90 percent of microlens-implanted patients improved by five lines on a standardized visual acuity chart six months after surgery.

"We believe that these data bode well for the future topline U.S. pivotal trial results and consider Presbia's current enterprise value of under $30 million to be extremely low for a company this advanced in development with a potentially best-in-class, risk-mitigated product in a highly lucrative arena," Selvaraju noted.

The key factor that works in favor of the Flexivue Microlens is that improves vision without requiring repeated insertions unlike contact lenses. The analyst's model puts a total value of $278 million for the Flexivue Microlens product.

Selvaraju, who sees the company to post a loss of $0.78 a share for 2016 and loss of $0.53 a share for 2017, said "continued international rollout of the Flexivue Microlens and its potential approval in the U.S. may enable the firm to attain profitability."

At time of writing, Presbia shares were up 6.78 percent at $3.94.