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Endologix won’t seek FDA OK for device before 2020

May 19, 2017

Following the announcement by Endologix, Inc. (NASDAQ: ELGX) that it will no longer seek approval of the Nellix first generation device following a FDA meeting, Stifel said the potential U.S. approval is pushed to at least 2020 from the previous timeline of early-2018. The company would now pursue approval of the second generation Nellix system, and for this, an additional confirmatory clinical study is needed, the firm noted.

Delay In Approval Prompts Downgrade

Analysts Matthew Blackman, Rick Wise and Drew Ranieri downgraded the shares of the company to Hold from Buy, as the Nellix approval timeline is pushed back yet again and considering the need to fund an additional trial, which is of yet unknown size and follow-up duration.

Lowering Price Target; Estimates Under Review

Stifel lowered its price target for the shares to $5.50, with the new target reflecting the firm’s valuation for the entire Endologix franchise, excluding U.S. Nellix. The firm estimates the valuation to be $6–$7 per share, plus some increased discount rate for future, potentially dilutive financing.

Stifel said its revenue and earnings per share projections are under review and that it will have additional commentary following the company’s conference call.

At time of publication, the shares of Endologix were slumping 36.70 percent to $4.26.

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