Hey mate, I don't think I can upload the actual report here but happy to summarise the key details of the report and my own views on it. As a disclaimer, these are my views + summary of research from E&P (credit to David Nayagam and Alan Liang). Not advice though (even the price target)...
As has already been mentioned, E&P has a speculative buy recommendation for EYE, with a price target of 85c (representing around 240% upside from current prices). This valuation ONLY incorporates iTrack Advance and does not value any future R&D in the glaucoma segment (which the company is currently undertaking) and does not value the upside potential of the 2RT division. In their words, investors have a "free-option" to benefit from any upside associated with 2RT (and zero downside given the market has failed to incorporate it into its valuation of the company). This is something I have discussed here on numerous occasions and is why I particularly like this stock. At current prices, the market is not pricing this in meaning even if 2RT fails, iTrack Advance will ensure shareholders are still rewarded. Of course, if 2RT is a success then we are looking at an absolute rocket of a price rerate. Imo, it would be akin to investing in any one of the many zero-revenue ASX-listed biotech stocks with a product undergoing FDA clinical trials at a price of $0 (instead of some of the lofty valuations you see). Keep in mind E&P's price target is a speculative recommendation, meaning that there is a strong probability that figures mentioned could be significantly higher or significantly lower than forecasted. These reports are also typically generated for sophisticated and institutional investors (who can afford to make bigger and riskier bets) and readers should not rely on the information being an accurate prediction of what WILL happen in the future.
Revenue target for FY24 is $32.2 million, so approx. 100% growth from the last reported YTD revenue figure of $15.2 million. In FY25 they forecast revenue of $43 million, which I think is understating the impact that the MAGIC trial results will have on demand for our procedure (I personally forecast we will be doing over $50 million revenue in FY25). They are seeing almost break-even in FY24, and profitable by FY25. I would be cautious about this as I think the company would be wise to boost marketing expenditure significantly if they are indeed recording triple digit revenue growth. Profitability can wait in the short term whilst we take market share (IMO).
What appealed most to me (and I guess the recent buyers who read the report) was the fact that the information used in this report was based on their own on the ground analysis of the company. These analysts (one a well-respected professional in the medical space) visited the facilities and spoke to key ophthalmologists and other industry experts in order to make a more informed view of this company. They noted the location of the company as an indicator to the attention to cost minimisation this company has, as well as the steps being undertaken to rapidly expand production to meet a significantly higher amount of demand. According to them, direct staff count has doubled, and the development of a new clean room (for manufacturing) due this month which should see staff count double again. Current capacity is 20,000 units per year, so this significant expansion of capacity (to well above 20,000 units per month) is a strong indicator that management sees solid sales growth. I believe that the price per unit is around $1,000, so doubling the current capacity (to reflect the new clean room) is probably how E&P arrived at their $40 million FY25 revenue target. Low level of complexity means high skill and dexterity is not required which significantly reduces labour associated costs.
They also met with key US glaucoma surgeons. They reiterated what we have already heard; that drops are losing favour as a front line treatment and that eye doctors are keen for the least invasive and most effective treatments. MIGS is the best option for this, and many surgeons prefer procedures that are tissue sparring, non scarring and does not leave any implanted components in the eye. iTrack Advance ticks all those boxes, and is why so many doctors are currently shifting their attention to canaloplasty. They also see iTrack Advance as
the best of the existing canaloplasty options. They say that OMNI does not deliver sufficient visco fluid to create the necessary pressure to clear the outflow system, and it also can't complete the full 360 degrees in a single pass.
They obviously liked what they saw and heard on their visit, as they have significantly improved their outlook for the glaucoma division since they last released one of these. They did remove the 2RT component due to the uncertainty around it, but they remain very bullish on it and see a high chance of success in the clinical trials (and the author has an extensive background in clinical trials). Considering how bullish these guys are on 2RT, I am surprised a deal hasn't been made with partners. I am hoping it is due to the company seeking a better deal (through getting more data etc.), but who knows. Would be great if we can get some more insight on what is going on here in the FY23 report.
They note the main risk is related to competition. Glaukos has recently introduced their own canaloplasty device called iPrime, but surgeon feedback indicates this device has many issues and is non-intuitive to use. Imo, iPrime is quite obviously inferior to iTrack Advance and is unlikely to take sales from us and is more an indication of Glaukos' realisation that the industry is moving away from stents and towards canaloplasty. They also discuss the issue with the LCDs, and the strong opposition to this move. They don't provide much in the way of advice on the likelihood of the LCD being implemented though, but they're clearly not seeing it as a major risk to the valuation as it is not brought up anywhere else in the report.
Obviously everything here is imo and nothing in it should be taken as advice
(20min delay)
