stuart roberts target 12 cents opto .38cps

Rhinomed (RNO)
COMPANY REPORT
Breathtaking early stage opportunity

Company summary. Rhinomed is commercialising an internal nasal dilation platform called BreatheAssist. The initial BreatheAssist product, called Turbine, was launched into the sports performance market in January 2014. Other applications in the works for BreatheAssist include its
use in snoring reduction and drug delivery.

Turbine may represent the Next Big Thing in sports medicine, with clear advantages for users based on a 38% increase in air delivery to the lungs. We see potential for Turbine to be used across a range of sports beginning with cycling, where favourable clinical data showing a 6.5% power advantage was recently announced.

? We believe that BreatheAssist can help Rhinomed follow the ‘CNS Inc. Playbook’ to commercial success. CNS Inc. built a US$100m business out of Breathe Right nasal strips which ultimately allowed it to be sold to GSK for US$566m in mid-2006. We see potential for Rhinomed to
follow a similar pathway given the superiority of its product.

? BreatheAssist may represent a new product in sleep disorders, with work planned to show that it can cut snoring (an indicator of sleep apnoea)
as well as work synergistically with CPAP therapy in moderate-to-severe sleep apnoea and as a stand-alone product in mild-to-moderate sleep apnoea.

? BreatheAssist has potential to be a serious drug delivery technology, with evidence that it can be used for nasal delivery of a range of drugs.

Rhinomed is currently working on BreatheAssist delivery of the migraine drug Sumatriptan, where dissatisfaction with current delivery modalities is high.

? Rhinomed has strong leadership. CEO Michael Johnson brings to Rhinomed a marketing background with experience in positioning new medical therapies. His skills have proved instrumental in bringing Turbine to market. Backing Johnson is a board chaired by Martin Rogers with
relevant experience. It includes Brett Scrimshaw, formerly Vice President & Chief Executive Western Europe for Nike.

? Rhinomed is undervalued on our numbers, with a base case valuation of $0.12 per share and optimistic case of $0.38 on a probability-weighted DCF valuation. Our target price sits at our base case valuation.