Japanese orders bode well for Opsens in 2016, says Paradigm

Paradigm Capital analyst Christopher Lam says he has increasing optimism about Opsens (Opsens Stock Quote, Chart, News: TSX:OPS) heading into 2016.

Yesterday, Opsens announced it had received orders worth more than $1.2-million for its products to measure fractional flow reserve (FFR) from the Japanese market. The company’s FFR products are designed to optimize the diagnostic and guide treatment in patients with coronary heart disease.

“The receipt of these orders, during the limited market release phase for the single territory of Japan is a very good sign,” said CEO Louis Laflamme. “In parallel to the progress in Japan, Opsens is also working to expand its commercial activities in several other geographical territories, which will generate strong growth for Opsens’s FFR revenue in fiscal 2016.”

Lam says he expects Opsens’ Optowire 2 product will soon receive approval in Canada and the United States, but next year will be all about the large and lucrative Japanese market.

“We see the strong order in Japan as confirmation of distribution support, commercial expansion and market demand in one of Opsens’ largest FFR markets,” he says. “We estimate the Japanese market opportunity to be $80–$100M and to make up the majority of Opsens’ FFR sales in H1/16. Looking forward, we are increasingly optimistic about our expectation of continued q/q increases in FFR sales, which should further accelerate as manufacturing capacity comes online from the new facility. Additionally, a successful launch would bode well for Optowire’s broader commercial prospects as clinical momentum and results in Japan may help drive demand from U.S., European and Canadian cardiologists.”

In a research update to clients today, Lam maintained his “Buy” rating and one-year target price of $2.15 on Opsens, implying a return of 126 per cent at the time of publication.