Impedimed fundamentals remain strong

About the author:

Author name:

By Scott Power

Job title:

Senior Analyst

Date posted:

08 March 2017, 8:51 AM

Sectors Covered:

Healthcare, Life Sciences

Next generation device ready for study start

IPD has announced its next generation device – SOZOTM (to measure, monitor and manage fluid status and body composition) has completed all safety and performance testing for device readings and transmission of data.

As a result, the first SOZOTM unit will be placed at Scripps Health in California, where an initial study for monitoring patients with chronic heart failure will commence. The trial will enroll 10 Class III heart failure patients with study results available by mid-year.

The primary outcome is to measure the change from baseline in bioimpedance measurements at four weeks (monitored three times per week) and the impedance values will be compared with St Jude's CardioMEMSTM product.

More details can be found at ClinicalTrials.gov with the identifier NCT02857231. In our view, this is an important milestone and following the completion of the this trial a larger scale study will be initiated, which is necessary to drive clinical adoption with results in late CY17.

More catalysts on the way

The next key catalysts include: CE Mark (European) clearance for SOZOTM (in the coming months); commercial European launch in 2HCY17; the filing of a 510(k) application with the FDA by mid-CY17; pivotal heart failure study results in 4QFY17 and FDA clearance by 4QCY17.

We note these timelines have extended out by a couple of months compared with our previous expectations. Although a little disappointing the underlying fundamental story remains intact and compelling.

Investment view – remaining on a positive tack

We have not made any changes to forecasts. As a result our DCF valuation remains unchanged. Morgans clients can view price target. The key risk to the price target is a delay in recruiting the heart failure trial.

We note a rising short position in the name (current at 6.2%) which has frustrated both us and investors.

We can only speculate as to what is driving the short thesis. One view could relate to the slow (lumpy) revenue growth recorded in the lymphoedema part of the business. To drive revenue the private payers need to come on board. The key to convince the private payers is level one clinical data, which is expected to be released in 2HCY17.

Our positive Add recommendation is maintained.

More information

Morgans clients can login to view our detailed report and share price target for Impedimed (IPD). Alternatively, please contact your nearest Morgans office for access.

Disclaimer: Analyst owns shares.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.