SCA approval: One down, two to go
Artrya announced today it had secured FDA approval for Salix Coronary Anatomy (SCA), the first of three approvals we expect the company will secure within the next 15 months.
US Commercialisation: This is a major milestone for the company and is the first FDA approval the company has achieved since launching in 2018. The approval enables Artrya to launch commercialisation in the US, with the company able to immediately start charging the three US health systems (health groups) that have already been using the system in a “research” capacity.
Pave the way for SCP and SCF: Artrya can now use SCA’s approval as precedent in its applications for FDA approval for Salix Coronary Plaque and Salix Coronary Flow using the same 510(k) pathway as used for SCA.
SCA is a launch pad for SCP and SCF: As outlined in our initiation of coverage report (‘Salix: The future of cardiac imaging’), SCA is a plaque visualisation and workflow platform on which Artrya is building additional diagnostic tools. Once installed within a hospital or clinic, physicians can order additional tests with the click of a mouse. SCA provides results to clinicians within 10 minutes, with the results from all subsequent tests available nearly instantaneously.
Salix generates revenue for hospitals: Once approved, SCP and SCF will turn cardiac diagnostics from a cost centre to a revenue centre. The US CMS (Medicare) reimbursement codes for AI-assisted cardiac analysis tools mean hospitals and clinics will earn between US$950 - $1,050 every time they use SCP and SCF, more than offsetting the US$750 Venn Brown estimates Artrya will charge per test. And with Artrya offering the only near-real-time, human-free analysis, it offers a compelling value proposition compared to its competitors, which charge ~US$1,200 - $1,300 with a turnaround of ~24 hrs.
Valuation update: Following the FDA approval, we’ve rolled forward our valuation, lifting Artrya’s equity value to $295 million, up from $213 million. On a diluted per share basis, this equates to $2.63 per share, up from our previous $2.35 per share valuation and includes the dilution resulting from the issue of 20.5 million new shares as part of the $15 million placement completed in February.
