Acarix — Strong medical support

Acarix — Strong medical support

Acarix has gained strong support from clinical users, one comments that CADScor will ‘shorten waiting lists and add value for both patients and healthcare system’. The CADScor medical device helps doctors rule out coronary artery disease, avoiding complex and costly further testing in 50% of cases. Q119 sales were SEK299k with a gross profit of SEK209k, a 70% margin. Acarix sells to the German and Austrian private markets (about 10% of the population) and the Scandinavian public sector. The process for German public reimbursement is underway. A 2,000-patient outcomes trial starts in 2019. Our valuation remains at SEK369m.

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Written by

Acarix

Strong medical support

Q119 results

Healthcare equipment
& services

22 May 2019

Price

SEK4.93

Market cap

SEK113m

Cash (SEKm) at 31 December 2018

65

Shares in issue

23.0m

Free float

29.7%

Code

ACARIX

Primary exchange

Nasdaq First North Premier

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

30.1

7.2

(48.0)

Rel (local)

33.3

4.2

(48.8)

52-week high/low

SEK9.4

SEK3.7

Business description

Acarix, a Swedish company with Danish origins, has developed the CE-marked CADScor to help doctors rule out stable coronary artery disease. About half of patients can be ruled out from further expensive testing. Full EU sales could start from 2020, with US sales possible from 2023.

Next events

H119 results

16 August 2019

Q319 results

14 November 2019

Analyst

Dr John Savin MBA

+44 (0)20 3077 5735

Acarix is a research client of Edison Investment Research Limited

Acarix has gained strong support from clinical users, one comments that CADScor will ‘shorten waiting lists and add value for both patients and healthcare system’. The CADScor medical device helps doctors rule out coronary artery disease, avoiding complex and costly further testing in 50% of cases. Q119 sales were SEK299k with a gross profit of SEK209k, a 70% margin. Acarix sells to the German and Austrian private markets (about 10% of the population) and the Scandinavian public sector. The process for German public reimbursement is underway. A 2,000-patient outcomes trial starts in 2019. Our valuation remains at SEK369m.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/17

0.64

(30.74)

(1.29)

0.0

N/A

N/A

12/18

1.02

(42.25)

(1.83)

0.0

N/A

N/A

12/19e

2.62

(43.33)

(1.88)

0.0

N/A

N/A

12/20e

4.11

(44.75)

(1.94)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. The 2016 IPO increased shares in issue.

Q119 CADScor sales remain steady

Getting a solid base of CADScor units in place and routinely used is key to high-margin patch sales to offset cash burn and move to profit. The CADScor unit is normally sold in bundles with 120 disposable, single-use patches (these stick the microphone to the chest to enhance sound quality). In Q119, there were five CADScor system and 640 patch sales, implying perhaps 40 repeat patch orders. The incentive for private insurers to pay is greater, since much higher costs (from invasive hospital tests) can be avoided in 50% of chest pain patients who are identified by CADScor as not at risk of coronary artery disease (CAD, 96% negative predictive value). Acarix is building wider medical awareness across Europe.

New clinical outcomes trial planned

Acarix has stated that a new randomized clinical trial (FILTER-SCAD) will run in four centres to look at prospective outcomes. The 2,000-patient trial is planned by Acarix to start enrolling patients in 2019. The study will compare CADScor to standard evaluation over 12 months of follow-up. The trail is planned to end in 2021 or 2022. Although there is still little information available, this trial could be very important as it will provide long-term clinical data and show economic benefits. This will be very helpful in persuading public healthcare payors to buy CADScor.

Valuation: Remains at SEK16.00 per share

Acarix had operational cash use of SEK38m in FY18, with SEK65m cash remaining at 31 December 2018. Accordingly, further funding will be needed depending on investment in trials and marketing. Our valuation assumes 2020 German reimbursement, with strong sales from 2021. We also assume US sales from 2023. Sales could develop in other European countries. Our indicative value before any new funding remains at SEK369m (SEK16.00 per share).

Exhibit 1: Financial summary

SEK000s

2017

2018

2019e

2020e

Year end 31 Dec

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

638

1,024

2,623

4,105

Cost of Sales

(208)

(316)

(577)

(874)

Gross Profit

430

708

2,046

3,232

EBITDA

 

 

(29,499)

(41,028)

(41,959)

(43,273)

Operating Profit (before amort. and except.)

 

 

(30,743)

(42,523)

(43,454)

(44,768)

Intangible Amortisation

(1,261)

(1,430)

(1,430)

(1,430)

Exceptionals

-

-

-

-

Operating Profit

(32,004)

(43,953)

(44,884)

(46,198)

Other

-

-

-

-

Net Interest

7

273

120

20

Profit Before Tax (norm)

 

 

(30,736)

(42,250)

(43,334)

(44,748)

Profit Before Tax (FRS 3)

 

 

(30,736)

(42,250)

(43,334)

(44,748)

Tax

960

-

-

-

Profit After Tax (norm)

(29,776)

(42,250)

(43,334)

(44,748)

Profit After Tax (FRS 3)

(29,776)

(42,250)

(43,334)

(44,748)

Average Number of Shares Outstanding (m)

23.0

23.0

23.0

23.0

EPS - normalised (ore)

 

 

(129.31)

(183.48)

(188.18)

(194.33)

EPS - FRS 3 (ore)

 

 

(129.31)

(183.48)

(188.18)

(194.33)

Dividend per share (ore)

0.0

0.0

0.0

0.0

Gross Margin (%)

67.4

69.1

78.0

78.7

EBITDA Margin (%)

(4,624)

(4,007)

(1,600)

(1,054)

Operating Margin (before GW and except.) (%)

(4,819)

(4,153)

(1,657)

(1,091)

BALANCE SHEET

Fixed Assets

 

 

25,191

23,696

22,201

20,706

Intangible Assets

20,351

18,921

17,491

16,061

Tangible Assets

0

0

0

0

Acquired rights

4,840

4,775

4,710

4,645

Current Assets

 

 

108,865

71,501

29,662

(13,591)

Stocks

1,945

2,625

2,625

2,625

Debtors

2,468

3,857

3,857

3,857

Cash

103,457

65,019

23,180

(20,073)

Other

995

0

0

0

Current Liabilities

 

 

(5,118)

(7,320)

(7,320)

(7,320)

Creditors

(1,464)

(2,504)

(2,504)

(2,504)

Short term borrowings

0

0

0

0

Short term leases

0

0

0

0

Other

(3,653)

(4,816)

(4,816)

(4,816)

Long Term Liabilities

 

 

0

0

0

0

Long term borrowings

0

0

0

0

Long term leases

0

0

0

0

Other long term liabilities

0

0

0

0

Net Assets

 

 

128,939

87,877

44,543

(205)

CASH FLOW

Operating Cash Flow

 

 

(41,506)

(39,863)

(41,959)

(43,273)

Net Interest

7

277

120

20

Tax

960

977

0

0

Capex

(2,984)

0

0

0

Acquisitions/disposals

0

0

0

0

Financing

1,203

0

0

0

Dividends

0

0

0

0

Other

0

0

0

0

Net Cash Flow

(42,320)

(38,609)

(41,839)

(43,253)

Opening net debt/(cash)

 

 

(145,895)

(103,457)

(65,019)

(23,181)

HP finance leases initiated

-

-

-

-

Other

(118)

171

-

-

Closing net debt/(cash)

 

 

(103,457)

(65,019)

(23,181)

20,073

Source: Acarix accounts, Edison Investment Research forecasts

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

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United States of America

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Level 12, Office 1205

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NSW 2000, Australia

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This report has been commissioned by Acarix and prepared and issued by Edison, in consideration of a fee payable by Acarix. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Cranswick — Ready to capitalise on opportunities

Cranswick had a year of consolidation in FY19, showing resilience against an uncertain and intensely competitive market backdrop. Management has continued to invest in the business to strengthen its asset base. Revenues were broadly flat on an underlying, like-for-like basis, and adjusted PBT was slightly ahead on the same basis, despite the tough trading environment. Capital investment behind the business continues apace: the Continental meats facility was completed in FY19 and the construction of the new state-of-the-art poultry processing facility is well underway.

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