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Genedrive -On Track to Launch the First CE-market Decentralised HCV Test

Writen by Riccardo Lowi

On Track to Launch the First CE-market Decentralised HCV Test

KEY INVESTOR MESSAGES

  • Overall Genedrive PLC (LON: GDR) reported a business and financial update for the six months to December 2017 in line with expectations
  • Launch preparation of Genedrive® HCV test with partner Sysmex on track, expect sales to start coming through in CY2018
  • £1.3mln income from the ongoing collaboration with the US DoD, in line with expectations
  • Discussions for the disposal of the Services business are in progress
  • With £4.6mln of cash at end-2017, and given the company's expected cash burn, a capital raise in the next 12 months can't be ruled out
  • Full financial results for the six months to December 2017 to be published on March 20th

SUMMARY

Genedrive PLC (LON: GDR) issued a trading update for the six months to December 2017 that revealed no surprises.
 
Focus remains on the preparation of the upcoming launch of their HCV test, in partnership with Sysmex following two distributions agreements for the EMEA and Asia-Pacific territories.
 
A recent field study conducted in South Africa revealed that Genedrive® HCV test had the same specificity and sensitivity as the reference Abbott MC2000 HCV test. At the same time it revealed an excellent efficiency, with 95.4% of results achieved at first attempt.
 
We remain confident that the disposal of the Services business could be finalized in the coming quarters, although the length of the process suggests to us that the value of the transaction is unlikely to exceed the £2mln mark.
 
Given the expected cash burn and the cash position as of December 2017, we'd consider likely a capital raise over the next twelve months. However current market capitalization of c. £5.6 mln suggests that this is widely anticipated by investors. 
 
The launch of Genedrive® HCV test and the potential disposal of the Services division shall provide support to the stock price in the months ahead.

VALUATION

 As discussed more in depth in our initiation note of November 2017, we value Genedrive on a SOTP basis.
 
Based on expected revenue of c. £15 mln in 2025, we value Genedrive’s diagnostic division approx. £24 mln.
 
Including the value we attribute to the Services business and the company's net debt leads to an equity valuation of about £25 mln, almost 5x current market capitalization.

 

 

 

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