- Comparables BEAT ($1 Billion, +1200% in 5 years) and IRTC ($1.4 Billion, +136% in 1 year) indicate just how how hot the Cardiac Monitoring vertical is.
- Cardiac monitoring was a $22.2 billion market globally in 2016 and is projected to reach $28 billion by 2021.
- Small-cap BTCY could disrupt this $22 Billion market beginning with a potential FDA approval in the next 90 days.
Possibly the most under-appreciated biomedical stock catalyst of the next six months, Biotricity (OTCMKTS:BTCY) is set up for what could be a few hundred percent move in 2018.
Biotricity is in the midst of bringing their proprietary Mobile Cardiac Telemetry (MCT) system, called Bioflux MCT, to the market through the FDA's 510(K) application process, and an approval decision is possible before the end of the year.
Cardiac monitors are an overlooked segment for most investors, but savvy Wall Streeters who identified the blossoming market potential in the last few years have made out well. Companies with approved and marketed MCTs are generating meaningful revenue just a few years into their product launches - like BioTelemetry (NASDAQ:BEAT) and iRhythm (NASDAQ:IRTC) valued at over $1 billion each - and BTCY could quickly be on the same path with an improved business model that incentivizes physicians to use their product offering. MCT businesses already garner growth valuations, and BCTY's enhanced approach could mean multiples of upside with the approval and launch of Bioflux in 2018.
Technology Enabled Cardiac Monitoring Is The Billion-Dollar Market You've Never Heard Of
According to the Centers for Disease Control and Prevention, approximately 11 million patients in the United States have a heart rhythm disorder, or arrhythmia. Diagnosis and tracking relies on tests such as ECGs (electrocardiograms) to determine the severity and aetiology of the disorder. Initially, this includes an in-hospital ECG, but arrhythmias can be episodic or even asymptomatic, and the burden of keeping patients in the hospital hooked to an ECG is unrealistically expensive and inconvenient.
Many cardiovascular issues thus require more consistent monitoring - for days or weeks at a time - to properly diagnose. This resulted in the creation of the Holter monitor in the 1940's as a solution to record an ECG for 24 to 48 hours as a patient goes about their daily life. Subsequent iterations of similar Event-Specific monitoring systems are worn by the patient for a predetermined period of time and the patient can designate when the device should take an ECG snapshot. The health care provider then assesses the resulting data for arythmia diagnosis and treatment.
But Holter and similar event monitoring devices are constrained by short prescribed monitoring times, non-continuous data collection, cumbersome equipment, and poor patient compliance. These contribute to incomplete diagnoses and even repeat testing, which result in poor patient care and higher costs to the provider and health system as a whole.
The most recent advancement in cardiac monitoring is Continual Mobile Cardiac Telemetry, consisting of around-the-clock patient heart monitoring through external leads and remote monitoring.
As technology has improved and costs to design and engineer these products has fallen, the MCT space has boomed. And according to multiple published studies, MCT has higher diagnostic yield compared to traditional Holter or event monitoring, meaning that this new approach to monitoring and diagnosing heart conditions is, simply put, a better option for all involved.
Cardiac monitoring was a $22.2 billion market globally in 2016 and is projected to reach $28 billion by 2021. According to the American Heart Association, strokes alone cost the United States an estimated $34 billion each year in healthcare costs and lost productivity.
The opportunity to penetrate this market due to recent advancements in mobile, diagnostic, and algorithmic technology, all of which BTCY is perfecting, is tremendous.
Cardiac Monitoring Attracting Big Investment And Big Investors
Remote and cloud computing are revolutionizing cardiac monitoring in the same way that we've seen other segments, like machine learning, transformed in the last 5-10 years. That's attracted significant investment from sophisticated money, and even a casual understanding of the competition shows why BTCY could quickly be worth multiples of where it trades today.
Biotricity's primary product is called the Bioflux MCT. Bioflux is a small monitoring device that can provide up to 30 days of near real-time ECG monitoring and allows physicians to understand a patient's early symptoms and aetiology of arrhythmias for proper treatment. Where other monitors require "dumping" their data to providers periodically or at the end of the evaluation period (anywhere from 2 to 30 days), Bioflux sends the data in real-time via cellular connection to remote monitoring facilities called Independent Diagnostic Testing Facilities (IDTFs).
The return on investment in this space has been rapid, and a select few public companies are making waves with what appear to be less attractive products for providors. Publicly traded BioTelemetry (NASDAQ:BEAT), for instance, is on track to generate over $220 million in revenue from their cardiac monitoring services business this year, and the company is valued at $990 million in market capitalization! The company is laser focused specifically on expanding their remote monitoring business. In fact as part of this push, they acquired the European LifeWatch AG (SIX:LIFE) at a $260 million purchase price this summer. With staggering revenue growth, BEAT has returned 1400% in less than 6 years in an almost parabolic move higher, from $2 to $30.
Meanwhile, IRhythym (NASDAQ:IRTC) will do $94 million this year with an arguably suboptimal product, called Zio, that requires shipping back to the company for analysis at the end of the monitoring period. IRTC is loved by Wall Street, with a $1.2 billion valuation based on the growth opportunity in cardiac monitoring. Since it's IPO in 2016, IRTC is already up over 125%, demonstrating the demand for this growth vertical.
Tech Business Model Sets BTCY Up For Multiples of Upside In Near-Term
We've seen that cardiac monitoring with more traditional devices are already knocking down doors with their sales growth and stock performance. BTCY's tech focus and unique sales model may turn this industry on its head, and of the four or five providers in existence, BTCY's Bioflux appears to be a very competitive design.
Traditionally, when a doctor requests that a patient receive short-term cardiac monitoring for diagnosis, they refer the patient to the monitoring company, like IRTC or LIFE. The company then interfaces with the patient, ultimately billing the patient or their insurance company directly. The physician sees little-to-none of the economics of the process.
Biotricity's approach will incentivize physicians to use the Bioflux MCT by bringing them directly into this ecosystem and allowing them to keep much of the estimated $800-1000 reimbursed by most insurers and Medicare, on top of their own professional fees. Biotricity will sell the device and software bundle to the physician, who then does the billing and pays a fee to Biotricity per device and per patient. This results in the convenience of a monthly flat-rate invoice for each patient, with patients never getting a bill from Biotricity.
The company subsequently keeps their own own costs low by using established CMS-cleared monitoring centers staffed by certified cardiac technicians, nurses, and arrhythmia professionals rather than building out their own systems.
Biotricity's is a "tech" solution to a "service" problem, and this economic infrastructure positions BTCY to be a standout in the field. The model is similar to the major Software-as-a-Service push in recent years that has been so highly successful for tech companies. Physicians realize improved economics with a great diagnostic tool anbd software, while BTCY keeps costs low. Conversely, you can see the difficulty of the traditional model in Lifewatch's historic financials: the company was running a $113 million annual business and still unable to turn a profit.
Bioflux Approval Could Send BTCY Rocketing Higher
Biotricity submitted their premarket 510(k) application to the FDA in April of this year, and already in October learned that they had received a 510(k) clearance from the U.S. Food and Drug Administration for the software component of their Bioflux solution.
A 510(K) is a premarket submission made to the FDA to demonstrate that the device to be marketed is at least as safe and effective as a legally marketed device, and BTCY is largely through this review process. The company heard back in September that they must conduct biocompatibility testing of the external pouch used by patients to carry the Bioflux device, which should take 6 to 8 weeks before the outcome of this testing can be submitted. Biotricity is confident in the material used since it has already previously passed cytotoxicity testing, which was conducted in accordance with FDA guidelines.
This appears to be a low hurdle, and Biotricity should hear back from the FDA on Bioflux's approval by the end of the year, setting up a big catalyst for this small company.
We've seen similar astronomic moves from other small-cap companies undergoing big changes. Most recently Atossa Genetics (NASDAQ:ATOS) underwent a surge of trading as the company has expanded its plans for the cancer drug endoxifen, pivoting from a previous focus on diagnostics - the stock rocketed from $0.46 to as high as $1.50 in trading last week, demonstrating how quickly small-cap stocks can go from undiscovered to mainstream. Or Bon-Ton (NASDAQ:BONT) which has rallied from $0.35 to $1.25 in days when the company revealed that it may be up for sale; SuperCom (NASDAQ:SPCB) made a similar major move in a single trading session.
Just look at BioTelemetry, which five years ago restructured the company to focus on their mobile cardiac business. Like BTCY, BioTelemetry's stock was trading at $2.00 just before the switch and ran to $7.00 over the course of 2013 as investors realized the growth potential of this sector, a 250% return in 12 months. The similarities to BTCY are uncanny, and the marriage of a smart business model and a tech-savvy management team has Biotricity on great footing for 2018.
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