No investor should be under the illusion that commercializing ground breaking, healthcare technology is ever easy. Even after proving clinical efficacy and obtaining FDA approval, companies need to educate the industry, obtain US insurance cover, set up distribution and supply chains, promote the products and raise fresh capital to fund the business until it becomes cashflow positive.
 
Inevitably there are teething problems along the way, but to the credit of Belluscura (BELL) - a next generation developer of portable oxygen concentrators (POCs) to treat COPD and other chronic respiratory conditions - the light is now clearly visible at the end of the tunnel.
 
Today the company released in line FY22 results, delivering an adjusted EBITDA loss of -$6.2m on sales up 265% to $1.5m. Importantly, it reiterated its volume guidance of 2,000 units per month in due course, up from 1,226 units in FY22.
 
This surge in demand is based on terrific distributor and end-user feedback regarding Belluscura’s newest product, the DISCOV-R (see picture) – “I would buy this right now if it were available,” said one.

The product  - which weighs 50% less than comparable dual flow POCs, produces nearly 3 times the oxygen by weight, and which won the prestigious Silver Award in the Best New Product category at the Medtrade conference earlier this year - is scheduled for full commercial launch in Q3 2023.
 
In terms of the numbers, the shares appear to be materially undervalued, too, trading at 32p versus broker Dowgate’s 100p a share target price. That target is predicated on unit sales of 6,250 - which would deliver sales of $7.5m in 2023 - rising to 20,000  and $28.8m a year later, and 40,000 generating $62.8m in 2025. That would mean Belluscura becomes cashflow positive in 2025, and closes 2023 with net funds of +$2.3m (from $1.8m last year).

This comes after successfully raising $8.8m (£7.2m) from the issue of $5.0m (£4.1m) of 10% Convertible Loan Notes in Jan 2023 and £3.1m of new equity at 25p in May 2023.

Elsewhere, the 1st generation X–PLOR continues to sell well, and might also be ‘white-labelled’ to third parties in the future.
 
CEO Bob Rauker commented: “The Group has made considerable progress in FY'22, during which it launched the next generation X-PLOR, built up significant US distribution, commenced an international roll out, established high quality manufacturing facilities & developed the DISCOV-R". 
 
“Trading in H1’23 has continued in line with our FY’23 expectations with a significant H2 weighting as previously stated. Demand for X-PLOR, which is predominantly a Direct to Consumer unit, is growing, and we expect our affiliation with GoodRX, a leading digital healthcare platform that makes healthcare affordable and convenient for all Americans, will help it to continue to gain momentum over the coming months."
 
“The commercial launch of DISCOV-R will be transformational. Having received a positive reception at Medtrade, we are very encouraged by the fact that over 125 distributors have requested access to DISCOV-R, with the distributors indicating potentially significant demand for units.”