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goetzpartners securities Limited
Curetis (CURE-NL): Focus on US launch
23-Nov-2017 / 16:52 GMT/BST
*This equity research note was formally published on 17th November 2017 at
5.00am.*
*Curetis (CURE-NL): Focus on US launch*
*Recommendation: OUTPERFORM*
*Target price: EUR10.00*
*Current price (as at 17th Nov 2017): EUR3.75*
Sluggish EU sales growth and slippage in the installed base target into
Q1/2018 were sure to disappoint. While exact timing can never be assured, we
remain confident that FDA approval will take place within the next month or
two. While it is always possible that approval may drop into next year, the
2018 US launch of the Unyvero platform remains the major Curetis driver. We
believe clear differences between the markets should see significantly faster
growth in the US compared with Europe. We remain optimistic that the first US
launch and the prospect of a pipeline of additional US cartridge approvals
should have a positive impact on both installed base, cartridge volumes and
sales during 2018. China remains a substantial opportunity for Unyvero, as
well as strategic deal flow through the Ares Genetics subsidiary. Given the
anticipated upside, we remain positive despite European delays. The current
stock weakness looks substantially over done and is a good entry point for
investors. We maintain and reiterate our OUTPERFORM recommendation and EUR10
target price.
*Europe disappoints* - Installations and sales continue to lag expectations in
Europe. While the company is hopeful that the appointment of Riwat Lim from
QIAGEN will invigorate progress, the company will need to show it can speed
and expand the conversion of current demonstration and evaluation sites into
real sales.
*Brighter prospects in the US -* We remain as confident as we can be that FDA
approval will take place shortly. Better funded and less fragmented, the US
healthcare market is generally more receptive to innovation than Europe. With
US hospitals increasingly penalised for poor infection control and subjected
to antibiotic stewardship guidelines (20% - 50% of US patients receive
antibiotics that they don't need) and the threat of litigation for
misdiagnosis, commercial and regulatory incentives to adopt rapid infectious
disease diagnostics in the US are building. This is reflected in the feedback
from US physicians we have spoken to. This together with a pipeline of new
panels, should drive adoption of the Curetis Unyero platform during 2018
following FDA approval.
*Further upside from China and other deal flow -* Unyvero continues to
progress towards regulatory submission in China. The recent agreement with MGI
in China has opened up the prospect of broader strategic collaboration and
highlights the potential for deal flow through the Ares Genetics antibiotic
resistance subsidiary in China and beyond.
*Funded to inflection -* Although given the European delays, Curetis may
struggle to achieve our current EUR2.5m top-line estimate for 2017, YE cash
should be in-line with our expectations (see FDA approval major catalyst in H2
[1]) and, with a further EUR15m to draw down from the EIB, sufficient to take
the company through the anticipated inflection points and well-placed to raise
additional capital thereafter.
*Positive on the upside -* Retaining our estimates beyond 2017 (see FDA
approval major catalyst in H2 [1]), we are optimistic for significant upside
during 2018. We maintain and reiterate our OUTPERFORM recommendation and EUR10
target price.
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goetzpartners Corporate Research | Research Team
Dr. Chris Redhead | Analyst
goetzpartners Corporate Research
goetzpartners securities Limited
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632337 23-Nov-2017
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(END) Dow Jones Newswires
November 23, 2017 11:52 ET (16:52 GMT)
