Irvine-based Endologix, Inc. (NASDAQ: ELGX) was founded in 1992 to develop a range of minimally invasive treatments for aortic disorders. The Company’s focus is on endovascular stent grafts for the treatment of abdominal aortic aneurysms (AAA). AAA is a weakening of the wall of the aorta, the largest artery in the body, resulting in a balloon-like enlargement.
The company developed a minimally invasive, polymer-based system (Nellix EVAS) that completely seals and fills an aortic aneurysm sac while at the same time minimizing device migration. The device has already been approved for sale in the EU since 2013. After that approval, the company continued to develop the Nellix EVAS and subsequently revised its US PMA application.
However, during May 2017, the company announced that FDA’s response was ultimately more cautious, and after Phase III trials, the FDA decision-making panel held off approving the PMA and requested that Nellix perform a last confirmatory trial. This news was a significant setback for the business risk profile of the company. In fact, the stock fell by more than 30% in response, as the decision resulted in a roughly 3-year delay in selling the device in the US.
At that time, the management stated that although the timing for potential approval is later than its original plans, the company feels the probability of success is higher. Essentially, while the FDA agreed that the two-year results with the refined IFU are encouraging, they still want prospective evidence in the preferred Gen2 device. As per company, that confirmatory study with the Gen2 device has a higher likelihood of success and will provide further evidence that EVAS with Nellix provides excellent patient outcomes. The company confirmed that basis-estimated timeline for enrollments, data collection, the submission, and a panel meeting; they are forecasting a potential U.S. approval in the year 2020.
More recently, on Sep 21st, the company announced the CE Mark approval for its Nellix® EndoVascular Aneurysm Sealing System (“Nellix”) with the refined Indications for Use (IFU).
Following a thorough review of supporting clinical data, the Company, together with an independent clinical reviewer, has determined that Nellix, with the refined IFU, meets the applicable safety and clinical performance requirements. As a result of these evaluations, a CE Mark for Nellix with the refined IFU has been granted.
With the recent development, it seems that the company is gradually progressing towards a growth trajectory, although difficult in the short term. The stock currently has an average rating of “BUY” and a consensus price target of $9. Considering present valuation, ELGX is at an extremely favorable risk reward position.
About the Company: Endologix, Inc. develops and manufactures minimally invasive treatments for aortic disorders. The Company’s focus is endovascular stent grafts for the treatment of abdominal aortic aneurysms (AAA). AAA is a weakening of the wall of the aorta, the largest artery in the body, resulting in a balloon-like enlargement. Once AAA develops, it continues to enlarge and, if left untreated, becomes increasingly susceptible to rupture. The overall patient mortality rate for ruptured AAA is approximately 80%, making it a leading cause of death in the U.S.
Pipeline and present stage:
Other Recent business highlights:
On September 11th, ELGX announced that it has signed a joint research and development agreement, as well as an exclusive distribution agreement, with Japan Lifeline Co., Ltd. (JLL) pertaining to the development and distribution of novel endovascular stent graft systems for the treatment of thoracic aortic diseases (the Systems).
Under the terms of these agreements, the two companies will jointly invest in the development, clinical research, and commercialization of the Systems. JLL has exclusive distribution rights to the Systems in Japan, and Endologix intends to commercialize and sell the Systems through its existing global sales force and distribution partners in countries other than Japan. Endologix anticipates that the global market for thoracic devices could reach $900 million by 2022, and represents a significant growth opportunity for the company.
On August 17th, ELGX announced positive interim results from the LEOPARD (Looking at Evar Outcomes by Primary Analysis of Randomized Data) clinical study. LEOPARD is the first and only head-to-head, prospective, multi-center, randomized clinical study comparing currently available endovascular abdominal aortic stent grafts. LEOPARD directly compares the Endologix AFX® and AFX2 endografts to other commercially available bifurcated aortic endografts.
Second Quarter 2017 Financial Results:
Revenue: Global revenue in the second quarter of 2017 was $48.6 million, a 4.7% decrease from $51.0 million in the second quarter of 2016. U.S. revenue in the second quarter of 2017 was $31.9 million, a 12.1% decrease from U.S. revenue of $36.3 million in the second quarter of 2016. International revenue was $16.7 million, a 13.3% increase from International revenue of $14.7 million in the second quarter of 2016. On a constant currency basis, second quarter 2017 International revenue increased 14.8%.
Profitability: Gross profit was $32.2 million in the second quarter of 2017, which represents a gross margin of 66.4%. This compares to a gross profit of$29.5 million, or a gross margin of 57.8%, in the second quarter of 2016.
Net loss for the second quarter of 2017 was $16.3 million, or $(0.20) per share, compared to a net loss of $66.8 million, or $(0.81) per share, a year ago. Adjusted Net Loss (non-GAAP, defined below) totalled $8.0 million, compared to an Adjusted Net Loss of $16.7 million for the second quarter of 2016.
Liquidity & Financial Flexibility: Total cash, cash equivalents, restricted cash, and marketable securities were $94.5 million as of June 30, 2017. On April 3, 2017, the Company entered into an agreement for $170 million in funding through a $120 million six-year secured term loan and a $50 million three-year secured asset-based revolving line of credit. The Company drew the entire principal amount of the term loan on April 3, 2017. Subsequently, on June 23, 2017, the Company drew $25 million under the aforementioned revolver.
Because of lower than expected AFX2 sales recapture in the U.S. market and sales force attrition, Endologix is reducing its previously issued revenue guidance. The Company now anticipates 2017 revenue in the range of $185 million to $190 million, compared to the previous range of $193 million to $200 million, representing a reported decrease of 2% to 4% compared to 2016. As a result, Endologix now anticipates 2017 GAAP loss per share in the range of $(0.91) to $(0.95), compared to its prior guidance of a GAAP loss per share in the range of $(0.83) to $(0.86). This revised guidance also reflects increased interest expense related to the $120 million term loan and $25 million draw under the Company’s revolver. Additionally, Endologix now expects full-year operating expenses of approximately $170 million, compared to the prior guidance range of $170 million to $175 million
Key Growth drivers for the company:
- 2017/2018: Leverage existing product portfolio and positive clinical evidence
- 2019: Ovation Alto
- 2020: Nellix in U.S.
- 2021: ChEVAS
Key risk factors and potential stock drivers:
The Key trigger for the company would be successful completion of the upcoming milestones. Any adversities related to these upcoming milestones might adversely impact the overall investor sentiments.
The present pipeline of ELGX is still at a nascent stage and has not yet generated meaningful revenue and will likely operate at a loss as it grows its market position and seeks ways to monetize it.
With the given circumstances, ELGX could also become a takeover target by a larger medical device entity.
The company is likely to face significant competitive pressure from large medical device markers, who often fetch relatively high sales multiples.
ELGX has a history of losses leading to continued dilution for shareholders. Therefore, any time or cost overrun in its ongoing R&D activities, will further impact its business & financial profile.
On Tuesday, September 26, 2017, in intra-day trading ELGX was at $4.23 (down by 1.17%). Market capitalization is $346.25 million. The current RSI is 42.28
In the past 52 weeks, shares of ELGX have traded as low as $4.08 and as high as 13.25
At $4.15, shares of ELGX are trading below its 50-day moving average (MA) at $4.49 and below its 200-day MA at $5.77
The present support and resistance levels for the stock are at $4.08 & $4.34 respectively.
Free SMS/Texts for our research reports (see below)
See our track record, it speaks for itself…
Traders News Source recent profiles and track record, 380% in verifiable potential gains for our members on 3 small cap alerts alone! These are just three examples from over two dozen winners this year. We have had the #1 gainer on the entire NASDAQ exchange 8 times this year so far and one that was the #1 gainer on the exchange two days in a row (NASDAQ: SPEX) moved from $1.01 to $4.75/ share within three days of our profile.
January 31st, 2017 (NASDAQ: HIMX) opened at $5.10/share and hit a high of $9.68/share March 24th, 2017 for gains of 89% within 60 days- http://finance.yahoo.com/news/himax-technologies-review-4q-2016-130000319.html
May 23rd, 2016- (NYSE: XXII) opened at $.87/share hit a high of $3.03/share so far our member potential gains- 248% – http://mailchi.mp/tradersnewssource/updates-5-of-our-profiles-for-212-400-and-whats-coming-next?e=[UNIQID]
(NASDAQ: OBCI) coverage began February 7th, 2017 opening at $4.10/share. This coverage was due to the consistent exceptional quarterly growth coupled with a special divvy issued last year and as anticipated was announced again this year. So far OBCI has traded as high as $5.90/share for potential gains of 43% so far. http://mailchi.mp/tradersnewssource/updates-5-of-our-profiles-for-212-400-and-whats-coming-next?e=[UNIQID]
These are numbers that make traders drool. Any trader in any market would fall all over themselves to see numbers like this. So, if you’ve been on the fence, perhaps it’s time to start doing some research and verify our numbers for yourself. We are constantly raising the bar and separate ourselves from the rest of the small-cap newsletters as the best in business.
We know with a large following comes a large responsibility as we have everyone from institutional investors to the beginner following our profiled securities in our newsletters. This is something we take very seriously always seeking small cap growth companies that have both near and long-term potential for our members.
Big Opportunities Trading Small Cap Stocks
***Get our small cap profiles, special situation and watch alerts in real time. We are now offering our VIP – SMS/text alert service for free, simply text the word “Traders” to the phone number “25827” from your cell phone***
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.