Healthcare Pulse – Week of March 4th (ALGN, AVDL, DXCM, EOLS, INMD, RDNT)
Align Technology (ALGN) – Full February website traffic data for ALGN’s key website (aligntech.com) was recently released, pointing to incremental upside vs. street estimates on Q1 case shipments. Evercore ISI highlighted that February unique visitors increased 3% Y/Y. While March visit data can be somewhat mixed, unique visitors have been up HSD/LDD sequentially in 4 of the past 6 years.
For context, unique visitor data for this website has historically had a ~0.90 correlation with case growth. Assuming a ~67% conversion of visits to cases (similar to 2022/2023 conversion rates), the data points to approximately 608K case shipments in Q1 inclusive of DSP cases vs the street at around 592K cases and Evercore ISI at around 593K assuming March traffic data comes in line with Jan/Feb.
“With the macro appearing to hold up and unique visitor data pointing to case counts above current Street estimates (assuming correlation holds), ALGN still looks like it can perform well relative to 1Q topline guidance ($960-$980 MM) and consensus (~$972 MM) should March hold up.”
Avadel Pharmaceuticals (AVDL) – Shares of Avadel had quite the eventful week, finishing higher by just over 19%. One of the headlines that led to this jump was related to the a jury verdict in the Avadel/Jazz Pharmaceuticals (JAZZ) case. A jury decided on a 3.5% royalty rate to be awarded to Jazz, which was much lower than the 27% royalty that was originally requested by Jazz. This news likely overshadowed the fact that the company reported earnings on March 4th in which management provided commercial metrics for Lumryz for January that demonstrated continued growth in narcolepsy despite usual slowdowns expected in the first month due to reauthorization.
As of January 1st, over 1,200 patients have initiated Lumryz compared to 1,000 patients at the end of December. Additionally, management noted a continued increase in patient enrollment in RYZUP with more than 2,200 patients enrolled in RYZUP patient support services as of January 31st versus over 1,000 patients as of the end of Q3 2023, and over 400 patients as of early August 2023. In terms of payer access, as of January 1st, Lumryz will be covered by Anthem (30% of commercially covered lives) and, as of February 1st, it will be covered by United Healthcare national formulary. In total, the company noted that Lumryz has coverage policies in >80% of commercially covered lives representing more than 140M commercial lives.
Needham was out with a note saying, “We reiterate our Buy rating and are incrementally more positive on AVDL because: (1) Lumryz ramp metrics suggest that sales approaching the $200M range for 2024 (vs. cons of $150M) are within reach even if we assume a slowdown in patient adds to Ryzup, and we haven’t seen any slowdown yet.”
DexCom (DXCM) – I highlighted shares of DexCom in our Conversations podcast on Wednesday morning. One of the items I mentioned was their new FDA-approved product called Stelo, a biosensor for type 2 non-insulin users. The approval came in earlier than what analysts had expected but the summer launch timeline was in-line. The company isn’t sharing much more information on the feature set or pricing at this point, waiting closer to launch, but it will be generating interest from its website ahead of launch and provide updates. BofA would say, “The more significant surprise is that Stelo will be available over the counter (no Rx required) to people 18+ not on insulin therapy. This lowers the barrier to adoption and broadens the TAM beyond the 25m type 2 not on insulin people in the US to more mass-market consumer users. We knew Stelo was going to be a cash pay product initially but thought it would require a prescription. We maintain our Buy rating on DXCM as Stelo could open up a completely new TAM which we believe has very little value today in the current stock price.”
RadNet (RDNT) – Following their presentation at the Raymond James Institutional Investors Conference, analyst would provide his takeaways on this diagnostic imaging company:
Regarding Volumes…Management still believes mid-single digit volume growth is sustainable in the near term, and believes we’re still in the early innings of the shift from inpatient to outpatient imaging.
Regarding AI…The company would point out that they began investing in AI over 40 years ago. Raymond James continues to emphasize that the RDNT AI story is not the typical buzzword-filled pitch, but rather has bona fide use cases with real clinical outcome improvements. “When AI is used for mammographies, the company is detecting 20% more cancers than if the technology wasn’t used. Callback rates are 17% lower when AI is used during mammographies.”
Regarding Alzheimer’s…Despite seeing over 100 patients as part of the newer Alzheimer’s treatments, the company has not built any expectations related to the opportunity into the 2024 guide. Following an initial PET scan + MRI, patients will receive an MRI every 3-4 months (versus our previous expectations of every 6 months) for a 15- to 18- month treatment period.
Aesthetics – Needham recently surveyed 334 women aged 30 to 70 about aesthetic procedures. Respondents plan to spend more on aesthetic procedures over the next 6-12 months compared to the prior survey in Q3. Both the portion of respondents that had an aesthetic procedure in the past 6-12 months and the portion respondents planning to have an aesthetic procedure in the next 6-12 months increased from the prior survey. Additionally, aesthetic spending per respondent in the past 6-12 months and expected aesthetic spending per respondent in the next 6-12 months increased from the prior survey. A majority of respondents are aware of the GLP-1 weight loss drugs and more than half of those that have used GLP-1 drugs indicated that the drugs have made them more likely to seek aesthetic procedures in the future.
“There were 45% of respondents that indicated that they had an aesthetic procedure in the last 6-12 months, which is up from 39% in our 3Q23 survey and 29% in our 1Q23 survey. And there were 28% of respondents that indicated that they plan to have an aesthetic procedure in the next 6-12 months, up from 23% in our 3Q23 survey. Average aesthetic spending per respondent over the past 6-12 months was $1,117, which was up by 28% from $869 in our 3Q23 survey. The average expected spending over the next 6-12 months is $776, which is up by 21% from $644 in our 3Q23 survey.”
Lastly, they asked about brand awareness for certain procedures and products among patients planning procedures in the next 6-12 months. The brands with the highest awareness were Allergan’s Botox wrinkle treatment at 54%, Allergan’s CoolSculpting body contouring at 48%, Allergan’s Juvederm facial filler at 37%, Evolus’ (EOLS) Jeuveau neurotoxin at 28%, Galderma’s Restylane facial filler at 24%, InMode’s (INMD) BodyTite/FaceTite body contouring at 22%, and InMode’s Morpheus8 skin tightening at 22%. “We are impressed that Jeuveau’s brand awareness is now above Restylane and all other neurotoxins beyond Botox. We are surprised and perplexed that Daxxify’s brand awareness has remained at the same ~6% level seen in 1Q23 when the product officially launched.”
