Free to access research and investor meetings in a post-MiFID2 world.
This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.
Mauna Kea Technologies SA (MKEA-FR): Optical biopsies for increased diagnostic accuracy
Recommendation: OUTPERFORM
Target Price: EUR4.10
Current Price: EUR2.70 (COB on 11th July 2018)
KEY TAKEAWAY
We initiate coverage of Mauna Kea Technologies with an OUTPERFORM recommendation and a target price of EUR4.10 per share. Mauna Kea is a commercial stage medical device company headquartered in Paris, France. The company's main product, Cellvizio, is a market-leading confocal laser endomicroscopy system used for in-depth analysis of cellular microstructure, facilitating the real-time identification of pre-cancerous lesions in anatomical tracts such as the gastrointestinal and pulmonary tract. In addition to Cellvizio, the company markets Cellvizio Dual Band for pre-clinical, non-human research, as well as a range of disposable probes for each of its systems. We believe the company is well-positioned to enter a period of accelerated growth, driven mainly by Mauna Kea's new business model in the US and improved reimbursement structures for procedures involving Cellvizio. We forecast strong revenue growth at a 2018E-2022E revenue CAGR of 27% and expect profitability from 2022E.
Improved reimbursement to drive integration of CLE into routine diagnostic regimens
US reimbursement rates for upper gastrointestinal confocal endomicroscopy procedures in hospitals have increased by 154% since 2016, highlighting the increasingly favourable compensation scenarios for healthcare providers and facilitating the integration of CLE into routine endoscopy regimens. We believe accelerated adoption of Cellvizio in the gastroenterology field will translate into increased utilisation in other medical specialities and enable the company to solidify its position as market leader in CLE.
New consignment business model in the US expected to boost adoption
Under the new pay-per-use business model recently implemented in the US, Cellvizio systems are provided to clinics and hospitals free of charge, and users are charged per procedure. This is expected to boost adoption of Cellvizio systems across the US by eliminating high upfront costs. Despite the initial drop in sales observed in 2017, we expect Mauna Kea to benefit from the new business model in the long term, providing the company with additional leverage to penetrate the US market.
Promising future prospects in a variety of medical specialities such as surgery
Technological advances and miniaturisation of equipment increase the need for tools that facilitate safe surgical intervention, carrying a lower rate of complications and reducing the risk of post-operative deficit. With a broad regulatory portfolio in place, Mauna Kea is well-positioned to explore a range of promising commercial avenues in the future.
Fair value suggests 46% upside to current levels
Our target price of EUR4.10 per share is based on an EV/Sales multiple approach using our EUR25.1m revenue estimate for 2022E, a multiple of 4.0x, a discount rate of 11% and a probability rate of 75%. In addition, we conducted a discounted cash flow model to better capture the long-term growth potential, which yields a fair value of EUR4.50 per share.
Kind regards,
Martin Brunninger | Analyst / Martin Piehlmeier | Analyst
goetzpartners Healthcare Research Team | Research Team
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 | martin.brunninger@goetzpartners.com / healthcareresearch@goetzpartners.com
www.goetzpartnerssecurities.com
Registered in England No. 04684144.
Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.
Click here to see our privacy policy.
GPSL has a formal client relationship with Vicore Pharma Holding AB.
GPSL publishes and distributes "Investment" Research and "Corporate Sponsored" Research. Our Corporate Sponsored Research and investor meetings (e.g. NDRs, 1 to 1 meetings) are free to access and attend and is not classified as an inducement in a post-MiFID2 world, this is because the issuer is paying GPSL. GPSL does not offer any execution or market making services. This is a marketing communication as defined by the Financial Conduct Authority ("FCA"). The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).
In accordance with the General Data Protection Regulation ("GDPR") - if you would like to be removed / unsubscribed from our CRM (also please note that you are free to contact GPSL at any time in the future to have your e-mail subscription amended), please e-mail:
researchproduction@goetzpartners.com
About GPSL: goetzpartners securities Limited is a member of the goetzpartners group, and a leading pan European investment bank and research company. We bring together a wide range of expertise, insights and innovations to advance the interests of our clients around the world. The fast-changing environment brings challenges for businesses and investors. Research innovation, digital transformation and disruptive business ideas reshuffle the corporate world at a relentless pace. Our sector knowledge and our global footprint bring together corporate intelligence and a deep understanding of the industry with a wide network of top decision makers. These collective insights help our clients to stay at the leading edge of change.
This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.
This e-mail (including any attachments) from goetzpartners securities Limited ("GPSL") is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you receive this e-mail in error or are not the intended recipient of this e-mail, please delete and destroy all copies in your possession, notify the sender that you have received this e-mail, and note that any review or dissemination of, or the taking of any action in reliance on this e-mail is expressly prohibited. GPSL shall not be liable for the improper or incomplete transmission of the information contained in this e-mail nor for any delay in its receipt or damage to your system. GPSL does not guarantee that the integrity of this e-mail has been maintained nor that this e-mail is free of viruses, interceptions or interference and makes no warranties in relation to these matters. This is not an offer or a solicitation to buy or sell securities or investment products, or an official confirmation. GPSL record electronic and phone communications in accordance with FCA and MiFID2 regulations, they will be monitored for regulatory and training purposes. GPSL is authorised and regulated by the Financial Conduct Authority of the United Kingdom (Firm Reference Number: 225563).
Click on the following link for the GPSL MiFID2 Investor Guidance Notice
GPSL Equity Research publications are available on the following aggregators and via news distribution circuits (For Institutional Use Only): AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET, Research Tree, RNS Reach and Thomson Reuters.
If you cannot click on the above hyperlink please copy the below link and paste it into your browser for the full pdf version of the equity research report:
https://gp.bluematrix.com/sellside/EmailDocViewer?encrypt=c57174e1-917a-48df-b9dc-69d669f37157&mime=pdf&co=gp&id=paul.dunne@goetzpartners.com&source=libraryView
Free to access research and investor meetings in a post-MiFID2 world.
This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.
Dissemination of a CORPORATE NEWS, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
