Dallas, TX/January 18th, 2022/ Aziyo Biologics, Inc.
COMPANY DESCRIPTION
Aziyo Biologics, Inc. develops and markets regenerative medical products to improve outcomes in patients undergoing surgery. The Company has developed a proprietary tissue processing platform and built a portfolio of advanced regenerative medical products that are designed to be very similar to the natural biological material. CanGaroo® is a unique biological envelope that forms a natural, systemically vascularized pocket for holding implanted electronic devices. The Company's next generation CanGaroo RM, which includes the antibiotics rifampin and minocycline for the reduction of surgical site infections, is expected to be cleared by the FDA in the second half of this year and will be a major growth driver. The Company also has a product line for bone repair that preserves cells' ability to regenerate bone and decelerates cell apoptosis. And the Company's SimpliDerm product is a patented acellular dermal matrix with lower inflammatory response that is used in soft tissue reconstruction surgeries. Aziyo Biologics, Inc. was incorporated in 2015 and is headquartered in Silver Spring, Maryland.
SUMMARY
- Differentiated regenerative medical products - Aziyo's products address unmet clinical needs with the goal of promoting healthy tissue formation and avoiding complications associated with medical implants. CanGaroo is the Company's flagship product and was designed to mitigate complications derived from implantable electronic devices (IEDs). SimpliDerm is for soft tissue repair and offers improved biocompatibility and better functioning in the patient. And lastly is Cellular Bone Matrices for the orthopedic and spinal surgery market.
- Large target markets with room for expansion - Aziyo estimates that in 2019, there were over 2M patients in the US with implantable device procedures. This represents a $3B+ market opportunity. With current low single digit penetration rates, the Company has ample opportunity to grow.
- Scaling commercial team - Aziyo's S&M strategy combines a direct sales force with indirect channels. The Company's direct sales force is over 30 reps focused on the US. Its key commercial partners include Boston Scientific (NYSE: BSX) and Biotronik. While these key commercial partners validate Aziyo's products, they also bring to bear 1,400+ sales reps and clinical specialists to further expand Aziyo's market share and sales.
- Advancing a robust pipeline - Aziyo continues to invest in driving its pipeline to drive long-term growth. First in line is CanGaroo RM, which adds the antibiotics rifampin and minocycline. The Company expects to file a 510(k) in Q122 and expects to begin marketing in the 2H2022. The Company expects that CanGaroo RM has the potential to reach $100M or more in annual revenues.
- Product recall creates opportunity - In June 2021, Aziyo issued a voluntary recall of one donor lot of FiberCel due to reports of post-operative infections. While this event hit revenues and the stock price, the Company has made important strides to rectify the situation. First, Aziyo concluded a thorough review of its procedures that found no deviations from its established protocols. Additionally, the FDA inspected Aziyo's manufacturing facility and quality control and issued no Form 483 observations (means no deviations from accepted protocols/standards). And Lastly, Aziyo has developed and implemented additional safeguards that it believes exceeds FDA and industry standards for donor screening and testing.
- Recent equity financing - In December 2021, Aziyo closed a private placement of its common stock which raised $14.0M. The financing was led by Birchview Capital, with participation from existing investors Deerfield Management and HighCape Capital. The financing strengthens the Company's balance sheet and validates the investment opportunity.
- Valuation - Based on our F22 estimates, Aziyo trades at an EV/S multiple of 1.6x compared to median comps at 3.4x EV/S. Using an EV/S range of 2.5x to 4.5x, with a midpoint of 3.5x, we arrive at a valuation range of $9.50 to $17.25, with a midpoint of $13.50. See page 8 for additional details.
