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Amedica Corporation (NASDAQ:AMDA) Is Ramping Up For A Sharp Upside Revaluation

Amedica Corporation (NASDAQ:AMDA) Is Ramping Up For A Sharp Upside Revaluation
Written by
Chris Sandburg
Published on
October 31, 2016
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Amedica Corporation (NASDAQ:AMDA) looks dramatically undervalued right now. The company is valued at a little over $16 million at its current price, yet brought in just shy of $20 million revenues during 2015. This year, first and second quarter revenues came in at $4.2 million and $4 million respectively, and analyst estimates call for third and fourth quarter revenues to bring the annual total to circa $19 million. Next year, however, things get a bit more interesting. Zacks has the company at a $33.7 million top line for full year 2017, and a $46 million top line for 2018. That’s 135% growth in 36 months.The company expects a flurry of growth catalysts throughout the next twelve months, and as these fall into place, we expect Amedica's market capitalization (and by proxy, it's share price) to follow. For this reason, we think Amedica is very much one to watch near term.By way of a quick introduction, the company operates in the global medical devices industry. Specifically, it makes implantable units out of a material called silicon nitride. Right now, when a patient who has had a spinal injury goes in for surgery, they receive implants (in the vast majority) made out of plastic or metal. This has been the standard of care (SOC) method for decades, and as with any decade old medical or tech device, decades of SOC mean it's these implants are very much due an upgrade.Amedica has developed, and is already bringing to market, this upgrade. Essentially, it's remaking the current implants out of the silicon nitride material that forms the basis of its operations. Silicon nitride addresses a number of the drawbacks associated with plastic and metal. It's harder than plastic, promotes bone growth to a far higher degree than either metal or plastic, it's actively resistant to bacterial growth and – by proxy – infection, and more. These aren’t just claims, either. The company has proved these differentiators by way of a variety of trials and peer reviewed documentation.The problem is, getting a new medical technology to market takes time, and costs money.Physicians need to be educated as to the benefits of a new material or device. Patients need to learn about the new option available to them. Evidence needs time to build up to support the confidence with which surgeons are able to recommend the new type of implant.This is why revenues have been flat (not insubstantial, but steady) for the last couple of years. Amedica has been quietly going about addressing each of these last three points, and we expect its efforts to start reaping rewards before this year draws to a close. The company is due to present at the North American Spine Society Annual Meeting at October close – the premier event for spinal injury ad reconstruction in the US. This should bring a host of new physicians and surgeons on board with its material, and should kick start the above mentioned revenue growth.Beyond that, we are looking at a few key FDA decisions to boost the company's market capitalization. It's lead product group, a selection of spinal implants, continues to expand, and Amedica has a host of different size implants under consideration right now. The FDA has already green lighted a selection of these, and there's no obvious reason why it won't continue to do so as the company submits for approval.Additionally, Amedica has a new type of composite silicon nitride device pending approval – one that's been in the works for some time – and when the FDA gives it the thumbs up, it will not only open up a large portion the currently unattainable market (i.e. that dominated by current SOC) for the new product, but also introduce a portion of the uneducated (from an offering perspective) current market to the company's legacy implants.As with any high growth company, we expect capital to be an issue going forward, and dilution looks inevitable short to medium term. However, if Amedica can meet its analyst generated revenue targets, and capitalize on its upcoming approval catalysts, then, there's no reason this dilution can't be offset through growth.We will be updating our subscribers as soon as we know more. For the latest updates on AMDA, sign up below!Disclosure: We have no position in AMDA and have not been compensated for this article.

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