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Ascendiant Capital Markets initiates coverage of Nemaura Medical with Buy rating, $3.25 price target

In addition, Acorn Management analyst Peter Wright says research shows the company's SugarBEAT scores over other glucose monitors on ‘multiple counts’ including affordability and cost

Nemaura Medical's sugarBEAT glucose monitor
The England-based medtech company will first launch sugarBEAT in the UK, followed by the rest of Europe starting with Germany next quarter

Analysts at Ascendiant Capital Markets initiated coverage of Nemaura Medical Inc (NASDAQ:NMRD) with a Buy rating and $3.25 price target.

The Loughborough, England-based medtech company’s sugarBEAT, the world’s first painless, non-invasive glucose monitor received a CE mark from the British Standards Institute in May.

SugarBEAT consists of a disposable adhesive skin-patch connected to a rechargeable wireless transmitter that displays glucose readings at regular five-minute intervals via a mobile app.

“CE mark approval is the most recently achieved milestone. The next milestone we expect is FDA approval,” wrote Ascendiant Capital Markets analyst Theodore O’Neill in a note to clients on Thursday.

READ: Nemaura Medical’s painless sugarBEAT glucose monitor wins CE mark

“The plan has been to roll out the product in Great Britain, followed by Europe, and the US. The technology has additional target markets that will also be pursued including continuous lactate monitoring which is aimed at elite athletes, those who train to become elites and those that simply want to perform at their best,” he added.

Nemaura Medical plans to launch sugarBEAT in the UK and Germany in the next quarter. This will be followed by launches in other EU countries like France, Italy, etc.

The company also plans to commercialize its CGM in other geographies like the Middle East and Australia that accept CE Mark approval.

The company is on track to submit an application to the US Food and Drug Administration in mid-2019.

Large market opportunity

The analyst pointed out that Nemaura is targeting a $179 billion global market opportunity including insulin and non-insulin dependent diabetics, pre-diabetics, and wearable health-tech markets.

“Nemaura has game-changing technology to help those with diabetes and those who want to improve and extend life spans,” wrote O’Neill.

“Diabetes affects people all over the world with >90% having Type II. The market for type II diabetics is estimated to be $69 billion. The pre-diabetic market is estimated to be $50 billion and the wearable health-tech/biohacking market is estimated to be $60 billion,” added.

O’Neill said the “fastest growing adopter group” for sugarBEAT will be biohacking’s poster boys like Geoffrey Woo, cofounder and CEO of specialized foods company HVMN and Twitter Inc (NYSE:TWTR) CEO Jack Dorsey.

The analyst said that once sugarBEAT gets FDA approval and “becomes available for retail sale on Amazon, we believe there will be substantial demand.”

Attractive stock

Nemura Medical is currently trading at $0.87 in New York so Ascendiant Capital’s $3.25 price target represents significant upside from the current share price.

“We believe this valuation balances out the company’s risks with the high growth prospects and large upside opportunity,” wrote O’Neill.

Perfect for diabetics with needle phobia

Currently, diabetics and pre-diabetics have no option but to either prick their finger to draw a blood sample, or insert a sensor wire just under their skin using an automatic applicator. The insertion of a continuous glucose monitor (CGM) device is painful, to put it mildly.

Since sugarBEAT doesn’t require needles or insertion it will challenge entrenched players like DexCom Inc (NASDAQ:DXCM) which markets the Dexcom G6 and Abbott Laboratories (NYSE:ABT) Libre System.

“Our research suggests that SugarBEAT scores over existing CGMs on multiple counts including flexibility of use, affordability, non-invasive nature, and a larger addressable market,” wrote Acorn Management Partners analyst Peter Wright.

“This, coupled with the impending submission of US FDA application in the next few weeks, makes us reiterate our view that NMRD is ready to disrupt the CGM market and that 2019 is an inflection year for the company and its investors.”

Superior product profile

Acorn Management said sugarBEAT’s “superior product” profile will drive market share gains.

“SugarBEAT comes in as the world’s first noninvasive, needle-free, continuous CGM that can address >70% of the Type 1 market, can be used by Type 2 patients, and most importantly can also be used by prediabetics,” wrote Wright.

Cost leader in the glucose monitor market

Acorn said sugarBEAT’s costs per day to insurers are targeted at 50% of Abbott’s FreeStyle Libre or 25% of DexCom’s G6, making Nemaura the cost leader in the CGM market.

“When conducting a three-day glucose profile, sugarBEAT can compete with test strips in most countries,” wrote Wright.

“Its £2 daily cost and £30 transmitter cost compare extremely favorably to Libre’s £3.5 and £50, and G5’s £7.3 and £475 — we believe this will be a big driver of market share gains,” he added.

Acorn Management said the stock is “vastly undervalued” and it expects impending EU commercialization and the imminent FDA filing to correct the price-value mismatch.

“We retain our estimates and reiterate our view that NMRD deserves to be re-rated — it is trading very cheap (market cap $175 million/$0.84 per share) versus our intrinsic value estimate of $715 million or $3.45 per share,” wrote Wright.

The analyst also said a US FDA filing is expected in two to three weeks, and the company is hopeful of receiving approval in 6-9 months.

Protected by patents

With sugarBEAT likely to disrupt the diabetes market, Nemaura has been careful to craft a smart patent strategy. The company has got patents covering the algorithms, sensor platform and a solid IP portfolio with over 30 issued and pending patents across multiple patent families.

Today, Nemaura CEO Faz Chowdhury, who is the brains behind sugarBEAT, holds 50 patents on drug delivery systems and sensors, across 15 technology platforms. The pharmaceutical scientist received his PhD in Nanomedicine from the University of Oxford.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

Quick facts: Nemaura Medical Inc

Price: 0.66 USD

NASDAQ:NMRD
Market: NASDAQ
Market Cap: $137.33 m
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