Avinger Pantheris 1

Next Generation Pantheris imperative to Avinger's turnaround

Posted on May 15, 2018

One year after their restructuring announcement, Avinger is slowly working their way through a turnaround that was expected to reduce net cash use to approximately $7 million per quarter by the third quarter of 2017, a reduction of 48% from the average quarterly cash use for 2016.

The company just announced Q1 earnings, falling well short of expectations, missing by $4.53 and on revenue.

However, during the Q1 earnings call, Avinger CEO, Jeff Soinski, said, "I believe that the most difficult aspects of the turnaround are behind us and that the business will continue to trend upwards. Avinger has a very bright future, and our entire team remains focused on leveraging the numerous opportunities that lay ahead of us as we strive to achieve our ultimate goal of improved utilization, increased market share and enhanced shareholder value.

The turnaround has negatively hit revenue, reduced the sales team down to 18 reps and has had a significant impact on the stock.

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Breakdown of Q1 Results and Recent Highlights

  • Revenue of $1.8 million for the first quarter of 2018 - 48% decrease from Q1 2017 as there are only 18 sales rep compared to the same time last year 
  • Disposable revenue of $1.5 million for the first quarter - 49% decrease compared to Q1 2017
  • Announced treatment of first patients globally with next generation Pantheris Lumivascular atherectomy system  
  • Added the extended nosecone version of next generation Pantheris and announced successful first-in-patient procedures in Europe
  • Next generation Pantheris featured in live case transmissions at Leipzig Interventional Course (LINC) 2018 and Charing Cross International Symposium 2018
  • Added 3 new patents to its U.S. intellectual property portfolio – Avinger’s IP portfolio now includes 119 patents and applications
  • Converted $41.8 million of debt and fees into equity
  • Closed a public offering of Series B preferred stock with gross proceeds of $18 million
  • Regained compliance with Nasdaq listing requirements

“We achieved several major successes during the first quarter of 2018. Our next generation Pantheris was approved in Europe late last year and continues to perform favorably. We expect to receive FDA clearance of the next-gen Pantheris this quarter and are eager to roll it out to selected U.S. accounts immediately after approval,” said Jeff Soinski, Avinger’s president and CEO. “We also revamped our capital structure during the first quarter. We converted the large majority of outstanding debt into equity, completed an $18 million financing, and regained Nasdaq compliance. We look forward to completing several additional product development milestones and pursuing a growth strategy during the remainder of 2018.”

With the turnaround slowly progressing, the most important objective in the immediate future is the expected Q2 FDA clearance and launch of the next-generation Pantheris system. The company has filed their 510(K) and has received questions and requests based on the submission. They have responded and are waiting to hear back from the FDA. 

What is Pantheris?

From the Q1 call:

In the meantime, we’re building our initial inventory of the next-generation devices and plan to launch this device into initial sites in the U.S. immediately following FDA approval. We plan to expand distribution of the next-generation Pantheris throughout the remainder of the year as we increase production and gain purchasing approvals in additional Lumivascular sites. In addition to the next-generation Pantheris, we also anticipate submitting a 510(k) application for clearance of a lower-profile six-French version of Pantheris for smaller vessels, including those below the knee, by the middle of this year.

We expect to receive our CE Marking for this new device around the same time we file our 510(k) submission in the U.S., which, similar to the next-generation Pantheris, would provide the opportunity for early clinical experience with this new lower-profile device in Europe soon after filing in the U.S. Based on our anticipated filing time line, we continue to expect 510(k) clearance and initial U.S. launch prior to the end of this year. We remain excited about the potential for the expansion of our Pantheris product line. In addition to the demonstrated health benefits of the device, we believe that our unique technology will quickly assert itself as a valuable solution in addressing this large and growing market.

The next-generation of Pantheris has high expectations for Avinger as the company estimates the new device will expand their available market opportunity by as much as 50%. The increased utilization within existing accounts will have the opportunity to capture more surgical cases, making each of the 18 reps more productive. 

The next-generation Pantheris and the improving cash position of the company are just two importation steps in achieving a challenging turnaround for Avinger. 

It will be imperative that Avinger is successful with this launch. Their goal should be to increase utilization within existing accounts and let their reps start to bring the product to new accounts. This potential growth would then allow them to start hiring additional reps as 18 sales reps throughout the U.S. is nowhere near what they will need to generate enough revenue growth. Most companies in the medical device industry have around 100-150 reps with smaller companies having around 40. 

The next 12 months will be make or break for this management team.