Two FDA Clearances in Less Than a Month Have Top Analysts Watching Xtant Medical (XTNT)

Investors and financial analysis firms have taken note of two paramount FDA approvals for Xtant Medical (NYSE: XTNT) within less than a month’s time. The supplier of spine surgery and orthopedic products announced on November 17 that it won FDA clearance for its Irix-C cervical cage, as covered by a recent article (http://nnw.fm/Omu1Z). Xtant Medical stated that the product was previously only cleared for use with autogenous bone graft, but is now cleared for use with autografts or allografts, as well as an expanded range of levels allowable (now from C3-T1 to C2-T1).

This news was immediately followed by the November 23 announcement that the U.S. Food and Drug Administration has additionally cleared the Xsert Lumbar Expandable Interbody System (http://nnw.fm/O1sj8). The device is designed to expand in-situ, with the intention of providing implant height adjustability and simplifying surgeon insertion techniques. The newswire goes on to quote the device’s developer, Dr. David Kirschman, as stating: “We are very pleased to have received clearance for Xsert. This system allows the surgeon to implant the cage in a tighter corridor and then expand the device according to the patient’s anatomy. With the clearance of allograft use with Xsert, Xtant Medical further expands combined device and biologic solutions for surgeons and their patients.”

These technologies were included as factors in determining a price target of $3.50 in a November 30 report by Aegis Capital (http://nnw.fm/P13It). The financial analysis firm initiated coverage of Xtant Medical with a ‘Buy’ rating, and cites, among others, the company’s capital structure and cash liquidity. The report states that the company has access to $15.8 million of cash, which includes $3.5 million net proceeds from its recent rights offering. An article (http://nnw.fm/CY2vW) by HealthPointCapital notes that the $3.8 million gross from the offer consisted of approximately five million units of common stock and warrants priced at $0.75 per unit. In the November report by Aegis, the firm anticipates Xtant Medical’s generation of an additional $8 million in EBITDA in 2017, implying access to sufficient cash into 2018. Aegis points out that the company demonstrated quick action in addressing supply constraints earlier this year, and states, “We prefer supply constraint over demand issues, and we anticipate the company resuming growth.”

The analysis firm also states in its report that “Management is on track with its sales force training and portfolio selling initiative, and we expect cross-selling to accelerate as the sales force finish their training and as biologic and hardware supply constraints are removed.” In 2015, Xtant Medical commercially released 3Demin, a technology that is used for various spinal fusion applications in combination with autologous bone, or as a standalone bone graft. This product proved to be popular with spinal surgeons despite the supply constraints mentioned above. This holds significance as the FDA approval of Xsert to be packed with autograft, or allograft bone graft, enable the product to be used with Xtant Medical’s 3Demin and patented OsteoSponge technology.

For additional information, visit www.xtantmedical.com

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