AxoGen Inc. is an growing regenerative medicine company focused on the commercialization of proprietary products and technologies for peripheral nerve reconstruction and regeneration. The company has had more than 7,000 surgical implants of its products performed in hospitals and surgery centers across the United States, including military hospitals that serve U.S. servicemen and women.
Turklay believes that the Company is "Hitting an inflection point" and values the company at $8 per share, which is based on an EV/Sales multiple of 5x on estimated 2014 revenues of $25 million; representing an 81% increase over his 2013 revenue estimate of $13.8 million.
His valuation is consistent with his analyst peers and inline with the take-out multiples of regenerative medicine companies that have been purchased by larger medical device companies, have been picked up within the ~5x to ~6x range.
Among the noteable purchases in this space was Royal DSM's (OTCQX:RDSMY) purchase of Kensey Nash was purchased for ~5x sales, Shire's (NASDAQ:SHPG) acquisition of Advance Biohealing at ~5.1x sales, Johnson & Johnson's (NYSE:JNJ) purchase of Synthes for ~5.8x sales. The most expensive purchase was Kinetic Concepts acquisition of LifeCell for $1.7 billion, or ~8.5x sales.
Regenerative medicine continues to be a hot-bed of opportunity for investors. This is because larger med-tech companies with commoditizing products are in search of cutting-edge, high growth technologies to help bolster their top-line growth rates.
For AxoGen, peripheral nerve regenerative represents a pioneering opportunity for the company, which Turklay noted it as a "unique one-stop shop for peripheral nerve repair". AxoGen is the sole player in a peripheral nerve allograft market that is an estimated $1 billion opportunity.
Investors are becoming more aware of Axogen and it's products and business potential. It was recently highlighted on FOX Business News' Varney & Company and was written up in the Wall Street Journal. This has not only been positive for the Company's shares, which are up approximately 88% year-to-date, but more physicians and surgeons are being educated and introduced to the company's products, which will later translate in to improving sales growth.
Investors should keep watch on AxoGen shares.
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 am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.