Diamond Equity Research Initiates Coverage on Hancock Jaffe Laboratories, Inc. (NASDAQ: HJLI) with a Valuation of $6.60 Per Share
NEW YORK, Sept. 20, 2018 (GLOBE NEWSWIRE) -- via NetworkWire – Diamond Equity Research, a leading equity research and corporate access firm with a focus on small capitalization public companies, has initiated coverage of Hancock Jaffe Laboratories, Inc. (NASDAQ: HJLI). The in-depth 21-page initiation report includes detailed information on Hancock Jaffe ’s business model, services, industry, valuation, management, and risks.
The full research report is available at the following link: https://www.diamondequityresearch.com/register/
Highlights from the report are included with this press release.
Large Market Opportunity
Hancock Jaffe is developing three promising cardiac and vascular product candidates (CoreoGraft, VenoValve, and a Bio-prosthetic Heart Valve), targeting an enormous combined market of $53 billion in the U.S. alone. With HJLI’s products potentially delivering better patient outcomes than available treatments, the company possessing extensive experience with proprietary tissue processing and manufacturing methodologies, strong intellectual property, and an experienced senior management team, we view Hancock Jaffe as a unique small capitalization investment opportunity.
The chronic venous insufficiency (CVI) market is one of the largest unmet medical curative markets. With Deep Vein CVI having no known cures or effective treatments, we expect the VenoValve to capture significant market share if the product is approved. Additionally, approximately 20 million people in the U.S. suffer from varicose veins, with varicose veins being a precursor to CVI. According to a recent study by the American Heart Association, the costs associated with cardiovascular diseases (CVD) will surpass $1 trillion in the U.S. by 2035 in which the direct medical costs mount up to over $700 billion, a 135% increase from the 2015 value. In other words, the CVD treatment industry will continue to enjoy a 4.4% compound annual growth rate (CAGR) in the foreseeable future. Hancock Jaffe Laboratories specializes in three areas within CVD, namely aortic and mitral valve diseases, coronary artery bypass graft surgery, and lower limb CVI.
Obviously, the healthcare expenditures incurred by CVD are a huge burden on both the U.S. households and the Medicare/Medicaid system. Thus, there is a high demand for cost-effective treatments addressing CVD. Furthermore, a Deloitte report suggests that the healthcare market will continue to shift from volume-based payment models to patient outcome and quality-based ones, putting a premium on innovative medical devices that improve quality of life for patients. This ongoing trend serves well for HJLI, as its product candidates seek to deliver better patient outcomes.
Cost-effective Treatment Approach
HJLI provides three promising cardiac and vascular product candidates (CoreoGraft, VenoValve, and a Bio-prosthetic Heart Valve). HJLI’s technologies either offer treatments where none exist or potentially make the existing procedures safer and more effective. The aging population creates a growing demand for more cost-effective treatments for debilitating chronic diseases. HJLI is well positioned to effectively compete because of numerous competitive strengths. Hancock Jaffe brings their proprietary processing and manufacturing methodologies specifically applicable to the design, processing, manufacturing and sterilization of biologic tissue devices. Secondly, Hancock Jaffe has attracted senior management with extensive research and development experience, who bring the needed experience to secure FDA approval for product candidates. The company also has intellectual property, which it believes will cover certain aspects of its devices and provide protection from new entrants in their markets. Hancock Jaffe Laboratories is well-positioned to compete within the medical device market, with its state-of-the-art facility, experienced management team, and proprietary technology.
It is very difficult to value Hancock Jaffe Laboratories Inc. given its early stage and the limited number of publicly traded medical device companies with a focus on cardiac and vascular diseases treatments. In our comparable company analysis, we screened for small capitalization companies within medical devices and other biomedical related industries. From comparable company analysis we arrived at a valuation of $7.95 per share using our forecasted 2020 revenue and the median enterprise value revenue multiple of 4.38x. Given the uniqueness of HJLI’s business model and the limited number of public companies to compare it to, we also built a standalone discounted cash flow analysis in order value the business. Given HJLI has a limited operating history, we built a bottom up model to value the business projecting revenue from their three medical device candidates. Our discounted cash flow model indicates a fair value per share of $5.21. Given the inherent assumptions in valuation models, we selected to use an average of our discounted cash flow valuation and our comparable company analysis valuation. We arrive at a valuation of $6.60 per share, which indicates significant upside from current trading levels.
About Hancock Jaffe Laboratories, Inc.
HJLI specializes in developing and manufacturing bioprosthetic medical devices to establish improved standards of care for treating cardiac and vascular diseases. HJLI currently has three product candidates: the porcine tissue based VenoValve, which is intended to be surgically implanted in the deep venous system of the leg to treat Chronic Venous Insufficiency; the CoreoGraft, a bovine tissue based off the shelf conduit intended to be used for coronary artery bypass surgery; and a porcine tissue based heart valve, which based upon its relatively small size and increased output, is an ideal candidate for pediatric aortic/mitral valve replacement.
For more information on Hancock Jaffe Laboratories, visit http://www.hancockjaffe.com/.
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on premiere institutional investor platforms including Factset, Morningstar, and Thomson One. The founder, Hunter Diamond, CFA, brings extensive experience working as a research analyst and investment banker focused on emerging growth companies. The firm is headquartered in midtown Manhattan.
For more information on Diamond Equity Research, visit www.diamondequityresearch.com.
Full disclosures pertaining to this report can be found at the end of the report and on the Diamond Equity Research website disclosure section. Hancock Jaffe has paid for this report as company sponsored research, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. Diamond Equity Research LLC is being compensated by World Wide Holdings, LLC on behalf of Hancock Jaffe Laboratories, Inc. for producing research materials regarding Hancock Jaffe Laboratories, Inc. and its securities. All payments are received upfront and are billed for an annual research engagement. As of 09/20/2018, the issuer had paid us $15,000 for our services, which commenced 07/09/2018. Additional fees may have accrued since then.
Hunter Diamond, CFA Diamond Equity Research email@example.com