The global kidney transplant industry is on the verge of a major technological breakthrough. Today, billions is spent treating acute kidney disease, where sufferers have to use dialysis machines at an estimated cost of $90k a year each, while 100,000 transplant operations take place.
 
Worse still, when an organ is implanted there is a 35-50% chance of the part being rejected by the patient, often after an adverse immune response.
 
Enter Verici Dx (VRCI), which in January this year launched its next-generation Tutivia post-graft immuno-diagnostic. The treatment materially enhances patient treatment by improving acceptance rates, extending organ longevity, and therefore reducing healthcare costs.
 
The test has a 60% positive predictive value - 80% negative predictive value  - which on a like-for-like basis is 3x more accurate than the next best product on the market. That establishes a new industry benchmark, and allows doctors to respond to instances of organ rejection within a week of operating.
 
In comparison, existing tests generate far more false positives - for example caused by BK virus which is present in 15-30% of recipients.   Moreover, Tutivia is able to correctly identify high risk patients too, which cruicially means doctors can then prescribe tailored treatment plans, for example to modify immune-suppressant and steroid dosages.
 
In terms of commercialisation, Verici expects to obtain full CMS/insurance cover  for c.65% of US transplants by December 23, and is presently working with three leading US transplant centres. It may take a little while to ramp up volumes, as procurement departments familiarise themselves with the benefits, but once healthcare cover has been granted I’d expect revenues to materially scale from the second half
 
Elsewhere, Verici’s highly complementary pre-graft sister test Clarava is slated for launch in the fourth quarter after the completion of an extended data collection study to expand usage and broaden the addressable market, with results expected soon.
 
With the efficacy of the platform now proven, these two tests should hopefully open the door to similar scientific break-throughs in relation to other products, starting perhaps with Protega, which aims to predict the risk of fibrosis and long-term graft failure. First revenues from Protega are slated for 2025.
 
CEO Sara Barrington commented: “Looking ahead to the rest of 2023, we plan to accelerate the rollout of Tutivia in other major US transplant sites, & to secure insurance coverage. For Clarava, we expect to report validation shortly & to initiate its initial launch before the yearend, which will support the collation of further evidence to enable a positive coverage determination. These pivotal milestones will help refine our market positioning & further accelerate commercial uptake of both of our lead products.”

The company closed 2022 with net cash of $9.8m, providing sufficient runway until mid-2024. Broker Singer Capital Markets is forecasting FY23 turnover of $0.9m, climbing to $6.1m in 2024, and has a 79p risk-adjusted target price. 

VRCI