Shares on issue 143.6
Market cap $57.4M
Net Cash $14.1M
Enterprise Value $43.3M
2021 Revenue $13.4M
EV/2021 Revenue 3.2X (historical)
Nova Eye (ASX:EYE) is what's left over after Ellex (ASX:ELX) successfully divested its laser hardware business in 2020.
EYE owns an attractive, on-market, 70% gross profit margin ophthalmic device called iTrack used to treat mild to moderate glaucoma. iTrack is a minimally invasive glaucoma surgeries (MIGS) device which is currently garnering ophthalmic surgical support and now has US funding advantages over the implantable stent devices like iStent owned by Glaukos (GKOS.USA) in the USA.
The market currently has Glaukos (GKOS.USA) trading at 8.6X 2022 Revenues which is a considerable premium to EYE, even after GKOS share-price fall on proposed Medicare/Medicaid funding cuts. The closest peer to EYE which similarly targets glaucoma is Sight Sciences (SGHT.USA) which is capitalised at $1.2 billion USD and trades at 17X 2022 sales with a heavy $50 million plus cash burn. Another relevant company is PE controlled Ivantis, which recently settled an IP infringement with Glaukos with $60 million USD cash and a 10% royalty on its Hydrus Microstents sold in the USA till April 2025 (Sight Sciences have subsequently lodged legal proceedings against Ivantis).
There is a growing clinical opinion that implantable stent devices cause tissue damage, while devices like EYE's iTrack or SGHT's Omni represent a more natural, less tissue damaging process while allowing further surgical intervention at a later stage.
EYE has supplemented its iTrack business with the 2020 acquisition of Molteno3 which is designed to treat severe and complex glaucoma. Additionally EYE acquired key glaucoma patents in 2021 which will be used to enable the iTrack device to treat mid-stage glaucoma, giving EYE a comprehensive range of glaucoma products. The MIGS USA market is rated as a $600 million USD dollar market with CAGR of 26 percent (Marketscope 2020).
The other non-glaucoma technology owned by EYE sits in a special purpose vehicle called AlphaRET and is a laser based technology used to treat age related macular degeneration (AMD). The company has filed with the FDA to commence a pivotal clinical trial, with the hope being the FDA agrees and EYE successfully partners AlphaRET, with the partner funding the clinical trial. This would be a successful outcome as length of the clinical study and the cost are not palatable for EYE investors. If successful EYE investors will end up with a shareholding in AlphaRET, which can be thought of as option value in the EYE valuation.
Disclosure -- Own shares here.
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