- Sarepta Therapeutics (SRTP) faced headwinds as they brought their new drug Exondys 51 to the market in the last two years, but the company and its stock have done very well with great execution on the sales front, and in expanding their drug candidate portfolio
- Investors like to see this kind of diversification as revenue begins to pile up, and the stock has gone from $25 to $80 in less than two years
- Unknown Biotricity (BTCY) is in a similar position, launching their first FDA cleared product and expanding their planned product offerings this year with new medical devices in development. BTCY could look like SRPT in a year or two
Shares of Sarepta Therapeutics (NASDAQ: SRPT) have been putting naysayers to bed for the last two years. Since the beginning of 2015, the stock has climbed over 5-fold as they received United States FDA approval and launched their drug for Duchenne Muscular Dystrophy, Exondys 51. This battleground stock has gone from a no-name drug developer 7 years ago to a powerhouse marketing and development machine, with $155 million in 2017 sales and a packed pipeline of follow-on drugs.
It's exactly the kind of story that healthcare investors look for, where their first revenue-generating product is doing great and they'e got a plan to continue expanding their product portfolio.
Unfortunately, many investors missed this boat.
We've identified another potential transformative technology company that's executing on their first product launch while they build out their product suite, in a major up-and-coming market. In a short time, Biotricity Inc (BTCY) could look a lot like SRPT, as they received their first FDA clearance in December for a new medical device that will enter a multi-billion dollar, and growing, market. 2018 is all about that launch and further expansion of their medical device portfolio, which is why investors who missed out on SRPT might do well to take a look at this undiscovered, executing company in 2018.
Addressing A Big Need In Cardiac Care, Bioflux is an Elegant Solution
Sarepta Therapeutics was, for years, a battleground stock as their drug eteplirsen made its way through clinical trials and then in front of the U.S. Food and Drug Administration. Despite many naysayers, it was approved in September of 2016. Since then, the stock has been on a tear as the company has not only generated increasing revenue, but also expanded their portfolio of developmental treatments for diseases.
Investors want to see this kind of momentum. The first commercial launch is always the hardest, and SRPT is doing well.
Overlooked Biotricity (BTCY) is in the same boat as SRPT just a few years ago…launching a new product into a huge addressable market with what appears to be a rock-star team, and expanding their potential product portfolio to boot.
The U.S. spends over $200 billion yearly on managing and treating heart disease, and heart rhythm disorders affect up to 11 million people according to the Centers for Disease Control and Prevention. Individuals with these disorders are 5 times more likely to have a stroke, and most are preventable with early intervention.
The problem lies in detecting and treating these patients. Patients who go to the doctor or hospital with signs of heart failure or arrhythmia must sometimes stay in the hospital for days at a time while doctors collect heart rhythm data through an EKG, looking for the cause of the malfunction. Getting quality EKG data is paramount. But some patients go untreated, or poorly treated, because the arrhythmia is never pinpointed.
Biotricity's solution is elegant and potentially transformative. Their recently U.S. FDA cleared Bioflux is a small, phone-like device with small cables leading to electrodes on the patient's chest, like an in-hospital EKG. The device is small enough that the patient can go home and about their normal life. Meanwhile, Bioflux records and transmits their EKG data to a remote monitoring facility where it can be accessed in real-time by monitors and even the patient's doctor. Ultimately, this streamlines and simplifies the diagnosis process.
It's a rapidly growing industry as more hospitals and physicians move away from older technology and get patients out of the hospital more quickly. Already the cardiac monitoring market is estimated at 4.6 million diagnostic tests annually in the United States, with older bulky technology that does not transmit remotely. The opportunity to penetrate and transform the process for patients and doctors is immense.
Biotricity received FDA clearance for Bioflux just a few months ago in December of 2017, a major hurdle that the company has now passed with flying colors. The product launch is underway, and Biotricity is hiring a rock-star team for the endeavor. The company brought on Casey Shattuck to serve as their Vice President of Sales, initializing and spearheading the Bioflux launch this year. His background at startup cardiology focused companies speaks volumes. NASDAQ-listed CardioThoracic Systems, Inc. was acquired for $380 million in 1999, and FoxHollow Technologies for about $780 million in cash and stock in 2007. Shattuck's experience in these start-up environments, and their subsequent long-term success, may portend good things for the Bioflux launch.
Launch Underway, Could BTCY Be Another SRPT Success Story?
With the Bioflux launch underway, BTCY could be one of 2018 and 2019's unheard of success stories among healthcare stocks, with few investors paying attention to this industry.
As the company ramps their sales efforts, a little revenue can go a long way. Healthcare companies often trade at high multiples of their revenue, like Sarepta (SRPT) which now has a market capitalization of $5.25 billion based on just $155 million in 2017 sales- a 34X Price-to-Sales Ratio.
At that rate and with a more conservative P/S ratio of 20x, even $10-15 million in sales in the coming years, BTCY could be worth $200 to $400 million. That's $9 to $18 for the stock, or 2 to 5X of upside with even this minimal market penetration.
Meanwhile, the company has always intended to become a multi-product device company, and they recently outlined that they received ethics approval to investigate mobile fetal monitoring, one of the hottest emerging diagnostic fields. More details are coming later this year according to the company's recent year-end press release, which could generate further interest in the name. Investors want to see diversification, and BTCY is on the right track. This is similar to Foundation Medicine (NASDAQ: FMI), which has emerged from a trough of disiliusionment with the succesful launch of their first genomic tests and expansion sending the shares from $15 to $80 as they've expanded on their initial product offering.
Biotricity is not without risks as an investment, as micro-cap stocks are often high-risk. The company may need substantially more capital to market Bioflux effectively, and a financing could be necessary. They're up against larger companies selling remote monitoring devices of their own, and this space could get more crowded as technology gets cheaper.
Only time will tell, but BTCY is launching Bioflux in a compelling manner, and the company is expanding their product portfolio in 2018 and 2019. By this time next year, the company could look a lot like the SRPT success story.
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