This Analyst Says Artivion's Sell Off Seems Overdone After Trial Halt

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  • On Friday, Artivion Inc AORT stopped the PROACT Xa clinical trial after the Data Safety Monitoring Board (DSMB) indicated that there was a lack of evidence supporting the non-inferiority of apxiban (Eliquis) to warfarin. 
  • While this is disappointing since this represented a potential $610 million opportunity, Needham notes that it would not have been approved until late 2025. 
  • The analyst reaffirms the Buy rating with a price target of $28, down from $29.
  • Management reiterated its 2022 guidance and its long-term targets through 2024. Since Needham's model only goes out to 2024, it did not change the estimates. 
  • The analyst also writes that Artivion has five other large opportunities in its pipeline through 2025, and these have the potential to expand its overall total addressable market by ~$700 million. 
  • The analyst notes that AORT shares are now trading at a 2023E EV/sales of 2.4x despite double-digit revenue growth. It views Friday's weakness as an overreaction and a buying opportunity. Shares fell almost 25%.
  • Needham writes that AORT ended the PROACT Xa trial prematurely. The trial began enrolling in April 2020, and as of AORT's 2Q22 earnings call, it had enrolled 805 patients out of the planned 1,000 patients.
  • Price Action: AORT shares are up 1.99% at $13.57 on the last check Monday.
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