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Sientra Idea Proposal (SIEN)

Sientra Idea Proposal (SIEN)
 

How will demand for Sientra’s implants for cancer and aesthetics procedures ramp post-COVID-19? Will Sientra’s share gains continue?

Report Available: May 20, 2020

 

Blueshift’s initial research found SIEN having to navigate a new set of challenges as elective surgeries are just now resuming. Prior to COVID-19, SIEN turned in strong Q4 2019 results with continued growth, an acquisition, and record full-year 2019 sales. These accomplishments were impressive as SIEN reported that the breast implant market is flat, suggesting that SIEN made significant share gains. The company reported earnings in early March just before the COVID-19 suspension of elective surgeries and it had been preparing for continued growth and share gains. The question now is how quickly demand for SIEN’s implants will return.

 

Observations

  1. SIEN’s Q4 results produced record sales, up 22% year-over-year to $23.2 million. Breast product sales grew 22% year-over-year to $12.8 million. For the full year, breast implant and tissue expander sales grew 25% in an overall market that was essentially flat. SIEN said it was making sizable share gains. Total 2019 sales grew 23% year-over-year to a record high of $83.7 million. SIEN provided full year 2020 sales guidance in early March of $94 million to $98 million representing a 12% to 17% increase over 2019. SIEN said that the guidance factored in the anticipated impact of the COVID-19 pandemic. However, on April 7 the company announced that it was suspending 2020 guidance and taking steps to curtail spending.
  2. A significant highlight of Q4 was SIEN’s acquisition from Lubrizol Life Science of its dedicated FDA-approved silicone breast implant manufacturing operation in Franklin, Wisconsin. CEO Jeff Nugent said, “This acquisition advances our strategic goal of becoming the leading provider of breast products in the worldwide breast augmentation and reconstruction market. Over the years we have considered several options to achieve vertical integration for our breast implants and we believe that acquiring this already established operation in a turnkey transaction is the most intelligent way to achieve this goal with the best mix of risk, reward, investment and speed.”
  3. Three days after SIEN’s Q4 earnings, the Surgeon General and CDC recommended that all elective surgeries be suspended to stop the spread of coronavirus and to preserve health system resources to fight the disease. Since then all the major medical/surgery associations have released guidelines and recommendations for the eventual resumption of first required procedures and eventually elective procedures. As a result, SIEN’s 2020 plans have been disrupted and the path forward remains unclear.
  4. As breast cancer related reconstruction and elective procedures come back as states re-open throughout May and June, SIEN should be well positioned to resume its sales and market share growth. Prior to COVID-19, the U.S. breast implant market was expected to reach $1 billion by 2025 with over 300,000 procedures. Silicone breast implants represent 85% of the market and there are only three FDA-approved providers in the U.S.: SIEN, AGN and JNJ’s Mentor Worldwide.
  5. SIEN has been performing well against its primary competitors thanks in part to a late-Fall 2019 voluntary and then an FDA Class 1 recall of some of AGN’s implants. As a result, SIEN recorded 25% growth in breast products sales in the earnings period following the FDA meeting, with tissue expanders used in reconstruction procedures reportedly growing 50%. JNJ’s Mentor also reported sales gains following the AGN recall.

 

How is the COVID-19 pandemic impacting the breast implant market? How and when will SIEN’s breast cancer reconstruction procedures ramp as elective surgeries resume? How and when will SIEN’s aesthetics procedures ramp? What does the current backlog look like for these procedures? Will SIEN resume it share gains? What kind of breast implant procedure volume is anticipated over the next 6 to 12 months? What is the status of the breast implant competitive landscape? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Plastic surgeons and their medical teams, Breast implant sales channel, and Industry specialists.  

 

Companies: Allergan plc (AGN), Johnson and Johnson Co. (JNJ), Sientra Inc. (SIEN)

 

Research Begins: May 4, 2020

 

To see other ideas Blueshift Research is currently working on, please click here.

 

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