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goetzpartners securities Limited
Curetis (CURE-NL): European growth highlights US opportunity
22-May-2018 / 11:39 GMT/BST
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Curetis (CURE-NL): European growth highlights US opportunity
Recommendation: OUTPERFORM
Target Price: EUR10.00
Current Price: EUR4.26 (COB on 21st May 2018)
KEY TAKEAWAY
Growth in Europe in Q1/2018 strengthens our optimism for the US Unyvero
launch. Less fragmented and more innovative the US presents a major
opportunity. Infection and antibiotic resistance are increasing issues in
commercially-driven US healthcare; threatening both patients and bottom line.
Unyvero's unique capability and product pipeline should speed US adoption in
severe disease. Longer term Curetis's unmatched anti-microbial resistance
("AMR") platform should secure market share for the lower priced Unyvero A 30
RQ platform in the congested, but far larger, routine testing market. The AMR
platform also promises a source of cash generating deals. Given this positive
outlook, including 2019E approval in China, we are optimistic investors will
participate in an anticipated fund-raising. We reiterate our OUTPERFORM
recommendation and EUR10 post-financing TP on this basis.
Europe gathering momentum - Given the previous slow pace of European Unyvero
sales growth, the 518% year-on-year growth reported in Q1/2018 is clearly
encouraging. We understand that there is increasing adoption of multiple
cartridges by first adopters; further endorsing the Unyvero platform.
Accelerating adoption in the fragmented and conservative European market also
bodes well for the US launch.
US remains major opportunity - More integrated, innovative and commercially
driven the US market represents the major opportunity for Curetis. 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 clear. This is reflected in the feedback to
us from US physicians. We expect strong uptake in China following the CFDA
decision 2019E.
Antibiotic resistance a key driver - A global focus on antibiotic resistance
provides a significant opportunity. Developed originally by Siemens and now
within the Ares Genetics subsidiary, Curetis's AMR platform provides unique
access to antibiotic resistance markers. These markers promise a
differentiated diagnostic menu that should drive share in the much larger
routine infection testing market, as well as deal flow.
Deal flow - Curetis has already announced R&D and supply agreements with MGI.
Part of major Chinese diagnostic and next generation sequencing (NGS) player
BGI, these agreements could form the basis of a major strategic partnership.
Cash-generating deals on the AMR platform are anticipated with pharma players.
Financing opportunity - We estimate that the company will require a further
EUR20m on top of the EUR4.1m and $10m equity line secured in April 2018 to
achieve its 12 - 18 month objectives. We would see this as an attractive
opportunity for investors at current levels given the increasingly positive
outlook and potential upside post financing. Our analysis suggests a
post-financing valuation of EUR9.2 - 13.3 / share.
Kind regards,
goetzpartners Healthcare Research Team | Research Team
Dr. Chris Redhead | Analyst
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com /
chris.redhead@goetzpartners.com
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(END) Dow Jones Newswires
May 22, 2018 06:39 ET (10:39 GMT)
