Hi all...
well.. the expansion available to the device use is really very large ( biggest understatement I have ever said ..?? ) than just for lymph in arms.. have a read of this from Wilsons.. not their forecast share price but what is happening in the world.. and the difference of IPD's SAAS business to pretty much everything else.. I draw your attention to them saying this at the end of their brief.. plus everything else...
We maintain our OVERWEIGHT rating and $0.21/sh PT on ImpediMed. Last week we revisited
Stanford Medical Centre, which was one of the first adopters of bioimpedance spectroscopy (BIS)
for lymphoedema assessment (we first visited in 2009).
Stanford is an NCCN member and an
example of where we see SOZO clinical practice evolving. In addition to breast cancer related
lymphoedema prevention, utilisation has expanded to lower limb and thoracic cases. The group is
also exploring new territory in post-surgical vasculitis. Our un-risked valuation of $0.39/share is
keenly sensitive to terminal pricing assumption (currently US$2K/device/month). IPD’s
aspirational pricing is twice that and cannot be ruled out given that SOZO is (unusually) a
revenue-focused benefit (rather than cost-focused benefit) SaaS solution. Our day at Stanford
suggests willingness to pay may be higher than anticipated, once broad payer coverage is
secured.
Key Points
Insights from Stanford. Separate to its NCCN membership status, Stanford is a leader in
lymphoedema research and management. The institution’s interest in bioimpedance spectroscopy
(BIS) specifically as early detection/intervention extends beyond breast-cancer related
lymphoedema (BCRL) and includes lower-limb (as sequelae to pelvic cancer treatment) and
thoracic (stemming from melanoma or head and neck cancer). More recently, Stanford has
explored SOZO as a tool for the management of post-surgical oedema, vasculitis and limb
salvage (denoting a potential future indication). With the prospect of private payer coverage,
Stanford and others are framing SOZO as an oncology tool that just may happen to be ‘paid for’
via its association with lymphoedema prevention.The device’s abilities (and FDA clearances) for
protein calorie malnutrition, body composition and bone density are germane to longitudinal
cancer care. We expect investigator-led clinical research to forge new frontiers for BIS (and
SOZO) expanding the concept of medical necessity from BCRL to new indications.Payer dominoes teetering. The recent achievement of critical mass in Michigan is important
because there is actually nothing special about Michigan. The decision frameworks enabling these
early successes apply equally across USA and we see it as a matter of time until the map fills out.
SOZO’s unconventional, ‘revenue-focused’ SaaS solution probably enhances willingness to pay.
As a revenue generating intervention, SOZO is dramatically different to most SaaS based
solutions in healthcare we research, almost all of which focus on cost management. Whilst SOZO
does support a cost-out angle (especially as the US market transitions to value based rather than
fee for service reimbursement) that aspect remains nebulous.
The ‘cost’ of managing
lymphoedema is not always (or ever) incurred by the centre making the SOZO purchasing
decision. With US$150/test revenue available for treating Medicare beneficiaries and
>US$200/test for privately insured patients, centres only need to perform 23 tests/month to
break-even, when paying IPD US$4K/month. We understand that mature SOZO users (including
Stanford) are already performing >80 tests per month. SOZO as a revenue (if not profit) centre is
an entirely new SaaS phenomenon for investors to considerbefore you ask.. just about to go and get first coffee.. I quite enjoyed playing highlighter.. but please read this and digest exactly what they are saying about how far this will/can go .. and understand ..
as always DYOR .. cheers all..
doggy ..
(20min delay)