The past couple of years have been difficult for Endologix Inc. (Nasdaq: ELGX), but conditions appear to be improving at the Irvine-based medical device maker, with a repositioned portfolio and a new leader at the helm.
Shares of the company recently traded at $4.80 each for a $402 million market cap.
Hiccups
Endologix develops minimally invasive products used to treat abdominal aortic aneurysm, or thinning of a blood vessel wall. Products are divided between endovascular aneurysm repair and endovascular sealing.
The abdominal aorta is an essential blood vessel extending from the chest to the abdomen and is responsible for supplying blood to the legs. Ruptured abdominal aortic aneurysms are the 15th-leading cause of death in the U.S. and the 10th-leading cause of death in men older than 55, according to the Society for Vascular Surgery.
John Onopchenko joined Endologix in October as chief operating officer, after the company had started to recover from a recall of its AFX abdominal aortic aneurysms system, which closely followed a temporary CE Mark suspension over reports of type III endoleaks in an older version of the device. The entire AFX product line was put on hold shortly afterward when the company discovered a manufacturing glitch at its Irvine plant.
It has 129,000 square feet in Irvine and another 110,000-square-foot facility in Santa Rosa.
“I plan to take a significant amount of time immersing myself in the commercial side of business,” said Onopchenko in a recent earnings call. He succeeded Chief Executive John McDermott, who’d been with the company for over a decade, this month.
Onopchenko said he’ll also spend time “with our folks in clinical development and in regulatory affairs and medical affairs.
He was previously executive vice president of Carlsbad-based Acutus Medical Inc., whose device is designed for patients with complex atrial arrhythmias.
CE Marking for Endologix’ product line was reinstated in January 2017, and the company quickly addressed its manufacturing issues, but its AFX business hasn’t bounced back.
Endologix estimates the traditional endovascular aortic aneurysm worldwide market potential to be $4 billion annually, a market it’s already in. It’s developing products to treat the more complex form of the disease.
Approximately 75% of all abdominal aortic aneurysm patients are treated with the less invasive endovascular method, and 25% through open surgery, according to Endologix Securities and Exchange Commission filings.
Eyes on FDA
This year the company is shifting focus from the AFX line to the Ovation endovascular sealing system in the U.S. It issued revenue guidance of $170 million to $180 million for the year but scored a slight beat in the first quarter—sales of $42.3 million versus a four-analyst estimate of $41.3 million.
Endologix acquired the Food and Drug Administration-approved device when it merged with Santa Rosa-based TriVascular Technologies Inc. in 2016.
It completed enrollment in February for a 75-patient clinical study of the product line’s latest version, the Ovation Alto Stent Graft. The company plans to file for regulatory approval in the third quarter with hopes of getting approval in the U.S. and European markets next year.
It also seeks FDA approval of its other sealing device, the Nellix stent graft.
Company shares plummeted more than 30% a year ago when it announced a two-year setback for Nellix, indicating meetings with the FDA and “further internal analysis” led to the launch of a confirmatory study providing two-year follow-up data. The company enrolled its first patient in the follow-up study in March and said it anticipates FDA approval in 2020.
“The good news here is that Ovation continues to grow nicely,” Chief Financial Officer Vaseem Mahboob said, “and the AFX business is stabilizing.”
The company has restructured its Irvine operations to reflect lower AFX volume.
It employs 782 as of Dec. 31, according to filings.
