Commercialising next generation technology is never easy, even at the best of times - especially across the healthcare sector where there’s a ton of regulatory, scientific & insurance hoops to jump through.
Inevitably there will be bumps in the road. But when they occur, the important point for investors is not lose sight of ‘bigger picture’. Focus instead on the longer term goals, & how the business should fare once the new ground breaking therapeutics, medical devices &/or diagnostics are fully adopted.
Enter Verici Dx (mrkcap £15.8m, 6.5p), a specialist in kidney transplant diagnostics, who are presently commercialising 2 cutting edge blood tests with a 3rd on its way.
Firstly its unique pre-transplant prognostic (Clarava) which has been licensed to industry giant
Thermo Fisher in order to develop its own in-house kidney test called One Lambda. This relationship is going great guns & should deliver sales of $4m in 2024 (vs $1m LY).
The next is #VRCI’s best-in-class post-transplant test (Tutivia), that is already being sold in the US after demonstrating material clinical benefits vs the standard of care.
Unfortunately though, the process of approving Tutivia for Medicare insurance cover has been pushed back into 2025, as opposed to Q4’24.
Meaning that $2.6m of turnover will not now be recognised in 2024, but rather delayed into next year. Albeit this 6 month delay should have little impact on Verici Dx's Dec’24 cash position (Est $2.0m vs $6.1m Sept’24), which has been supported by continued tight cost control.
More encouragingly too, Tutivia has been well received by clinicians, repeat ordering levels are good & volumes are expected to accelerate as insurance coverage is established in 2025.
User physician Dr. Zahraa Hajjiri adding: “As an early adopter of Tutivia, we have been exceedingly satisfied with its outcomes & high reliability. We are in the process of integrating it into our protocol for delayed graft function & biomarker assessment, anticipating a significant surge in its utilization.”
Elsewhere, Verici’s services division continues to generate collaborations, with contracts signed to date now anticipated to generate 1st revenues in 2025 vs Q4’24 (Est $0.9m B4).
Ok, but what does this all mean wrt the numbers? Well despite the temporary setbacks, profitability is still within sight.
Indeed based on c. 90% gross margins, Singer Capital Markets are forecasting sales to climb to $4.0m (vs $1.0m LY) & $11.6m respectively for this year & next, with adjusted EBITDA coming in at $0.4m for 2025 (-$5.3m FY24) & net cash closing Dec’25 at $0.6m.
CEO Sara Barrington commenting: “Local coverage determination is important to our commercial strategy, &d we are actively working with the assessment team to expedite the approval process. While this delay pushes back our short-term revenue expectations, our long-term outlook remains positive as we continue with the adoption of Tutivia.”
Disclosure: #VRCI is a Vox Markets client.