TMDX - Piper Sandler Conf - Nov 28

Notes from the conference:

• They currently have nine planes with two more in the pipeline. They intend to scale up to approximately 20 by the end of 2024. By my estimate that will require about another $100 million to purchase the additional planes.

• The CEO said that the entire TMDX NOP logistics team are ex-Amazon employees. He didn’t really say much more than that, so I don’t know if that is a bit of an exaggeration or not. I also don’t know how many people that entails.

• He confirmed that they are planning a new clinical program for lung OCS which will incorporate new technology. The trial will not start until at least the second half of 2024. If they do this similar to previous trials, it will contribute to a few hundred additional OCS Lung sales as part of the trial. In previous trials they were fully compensated for all the OCS sales. So, they will get some additional volume while they are doing this trial, but they probably won’t be fully commercial with the new Lung OCS until late 2025 at the earliest - probably sometime in 2026. Based on his statements from the latest ER call, I would not expect much increase in lung volumes until the new trial is complete.

• TMDX will also be starting a “cold perfusion” trial for Heart OCS in the second half of 2024 with expected readout in late 2025 or early 2026. This will be for standard criteria hearts that require less than four hours of transportation time. These type of hearts are currently not utilizing the OCS warm perfusion system. TMDX believes that cold perfusion will have an advantage vs just putting the heart in a cooler and that utilizing cold perfusion will open up this segment of the market for them to integrate into the NOP service.

• International - the CEO said that this would be a mid-to-long term catalyst for growth. They need to secure reimbursement contracts in European countries before they can invest more there. He said it would be a country by country process and would probably not result in significant sales for 2-3 years.

• The CFO said that they would be close to breakeven for the next few quarters. He expects them to be at sustained profitability as they exit 2024. He also said that he expects TMDX to be a 30% EBIT business by the end of 2025.

• The CEO said that kidney trials will not start until after all three of the existing organ programs are stabilized. He said that kidney qualification will require a large randomized trial and it will not start until 2025 or 2026. I’m not sure if it will require as much time for the trial as the other organs, but I would not expect revenue from kidney until at least 2026 or 2027.

The stock sure reacted well today after this presentation yesterday, but I’m not exactly sure why. Lung, international, and kidney all sound like they are not going to provide any meaningful revenue for at least a couple of years - assuming all of the trials yield positive results. Based on the fact that they are planning to do a trial for cold perfusion on standard criteria hearts, it sounds like the current OCS/NOP will not be used for those. I had always thought it might be a possibility that it would be used for standard criteria hearts once the industry saw the value of the TMDX system. However, it does not seem like that is the case or else they would not be doing a trial for cold perfusion.

I have not made any changes to my allocation. I am still holding my ~ 1% position. I am still hoping for a dip in the stock price after the Q1 ER call to add more (but I could be very wrong about that, and I may not ever get the dip I am hoping for).



Thanks, @AnalogKid70. Great writeup.

The eye-roller in me thinks after crushing TMDX for deciding to buy planes and then seeing some success in the early returns, the market is now mildly excited management projects enough volume coming to suggest needing even more planes by changing the messaging from 10-15 to 20.


I think the thing I failed to fully consider is the potential revenue increase just from the logistics (planes). If they made $2MM last Q with just a couple planes operating, and only for part of the Q, then they could be generating $20M per Q in just logistics revenue by the end of 2024.

With liver, they probably did about 410 transplants last Q. ($41M / $100k total revenue per transplant). That would be a yearly run-rate of 1,600. There are going to be about 10k total liver transplants in the US this year. So, they have a lot of room to continue to grow in liver next year even if that is the main driver of increased revenue.

As Saul says, once you sell shares how do you know when to buy back in? Luckily I still have a decent amount, but with the benefit of hindsight I should have bought more in the low $40’s. I do still think there is a good chance for a dip after earnings because I expect the 2024 forward estimate from the CEO to be severely sand-bagged, but if they crush Q4 like they did Q3 there may not be a dip even with a sand-bagged forward estimate.