RESPIRI (RSH) Potentially ~ 20 times upside if RSH can capture 0.25% of its Target Market
Respiri is transitioning from R&D to commercialisation phase with a Q4 launch in Australia this year, then has plans for Europe next year and the US shortly after.
RSH & “Wheezo” to the rescue for Asthma patients
The product and service offering includes a digital device that objectively measures a patients wheeze, and a revolutionary app that will be a world first Asthma/COPD management system – Measuring wheeze, environmental data (air pollution, pollen), diary, medication use etc.
Complacency kills, asthma is not well managed
An Australian study determined that 70% of asthma patients thought their condition was well controlled but it’s not. Additionally, children and elderly asthma patients are hard to manage, and Respiri’s solution will not only make asthma patients life’s easier and safer, but also provide a critical tool for the parents/carers/doctors/teachers etc.
In a recent investor call CEO Marjan Mikel stated “We are already in discussions with potential pharmaceutical partners, to help us with the promotion of “Wheezo” and the eHealth SaaS platform to respiratory physicians” (listen to the call here - http://www.respiri.co/wp-content/uploads/2020/01/RSH-Investor-Presentation.m4a)
On top of this big pharma support the company is also in discussions with the Pharmacy Guild of Australia (pharmacy owners’ representative) and Asthma Australia.
RSH has the potential for 20 times share price upside (by achieving 0.25% global market share)
There are approx. 350m asthma patients globally. ~ 8-10% of the population in key target markets have asthma.
IF we assume a 0.25% Target Market penetration (875,000 customers) there would be $219m of device revenue (based on $250 price), and $84m of annualised recurring revenue from the app ($8x12 = $96 per year per customer)……..a conservative recurring revenue multiple of 10 results in a market cap of $840m, or ~ 20 times the current 7 cent share price
Which equates to:
$1.52 per share (based on capturing 0.25% of the world Asthma Population)
Australian launch
If we focus just on the Australian launch, the team is focused on leveraging support from big pharma, pharmacy, Asthma Aust etc, to promote the product to the 1000 respiratory physicians who see 70 patients a week. Not only is the strategy sensible in respect to access to ~3.5 million respiratory consultations a year, but the respiratory physicians are top of the pyramid. That is, they influence the GP’s, pharmacy etc in adopting best respiratory practices.
World Class Team
Importantly CEO Marjan Mikel, Chairman Nicholas Smedley, and non-exec director Dr. Tom Duthy have a complimentary skillset and are well supported by algorithm guru Samaneh Sarraf, a CTO with Silicon Valley pedigree, and a COO who knows the space well.
An early win for this team is cutting monthly cash burn from approximately $650k per month to $250k per month while improving capabilities, strategy, manufacturing capacity and product/service offering.
Why would big pharma be interested in little Respiri
The opportunity to provide a critical asthma self-monitoring product/solution, and E-Health SaaS platform is most likely motivation enough for big players to tie up with Respiri.
However, there is an additional angle which may link Respiri to big pharma companies who are focused on the development of asthma Biologics – these include AstraZeneca, Novartis, GSK, a division of Roche called Genetech, and Sanofi.
A couple of items to note about asthma biologics a) these drugs are expensive - $450-1500 per month b) clinicians need to justify that the patients receiving funding for biologics are not well managed by standard medication plans and
CoronaVirus (CV) & Asthma & China
The team is laser focused on their existing strategy, and as such made an understated announcement around 3 Chinese hospitals demanding Wheezo to assist with asthma families who either have coronavirus or at risk of it.
Interesting link: https://parenting.nytimes.com/parent-life/coronavirus-asthma-kids
To reiterate, Respiri is not suggesting Wheezo is a solution for CV, rather an asthmatics asthma can be triggered via CV, and as such all asthma patients globally have to be more vigilant than usual in monitoring their condition.
Make sure to speak to your financial advisor before investing!
