Theraclion — Update 1 November 2015

Theraclion — Update 1 November 2015

Theraclion

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Theraclion

Faster treatment opens market

Pharma & biotech

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2 November 2015

Price

€7.71

Market cap

€33m

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Share details

Code

ALTHE

Listing

Euronext Paris

Shares in issue

4.28m

Business description

Theraclion is a French medical device company with an EU-marketed, non-invasive focused ultrasound treatment system to destroy commonly occurring benign breast fibrous lumps (fibroadenomas) and thyroid nodules. The main alternative is riskier surgery and a scar. US trials are underway.

Bull

Marketed product: nine systems in the market plus three clinical trial sites and three H115 orders.

Initial US trials underway to generate clinical data for 513(k) regulatory review. Possible cancer indications being evaluated.

Company revenue-generating with French sites offering therapy and five German healthcare provider reimbursement agreements in place.

Bear

Timing to launch in US market not certain but regulatory pathway now simpler and clearer.

Conditions treated are benign, so less incentive to fund. Probably targeted to private market.

Requires preliminary breast biopsy to eliminate cancer diagnosis so slows market. Thyroid nodules diagnosed with blood test and biopsy.

Analysts

Dr John Savin MBA

+44 (0)20 3077 5735

Christian Glennie

+44 (0)20 3077 5727

Theraclion is a research client of Edison Investment Research Limited

Theraclion has announced interim clinical results on a crucial innovation, Beamotion, to speed up EchoPulse therapy five times. The CE-marked EchoPulse device precisely focuses high-energy sound to break down benign but troublesome breast fibroadenomas and palpable thyroid nodules. EchoPulse is easy to use and leaves no scars, with no infection or surgical risks. US trials have started. In H115, Theraclion gained three new orders, had revenues of €56k, a reported loss of €3.2m and cash of €4.7m.

Breast fibroadenomas

At least 10% of women develop small hard lumps, 1-2cm, often in the upper, outer breast, which can be very painful; these often develop at a young age. EchoPulse causes fibroadenoma shrinking (average of 72.5% seen after a year) so women can be treated at low risk without surgical scarring. Confirmed fibroadenomas are benign, usually stable and up to 50% regress with time. A 20-pt study is underway at the University of Virginia and Theraclion now intends to submit a de novo 513(k) application to the FDA. Beamotion is also being trialled; no results are available yet.

Thyroid nodules – treatment time cut five-fold

These nodules form on the margins of the thyroid gland with about 5% of adults developing palpable nodules; 95% are benign (biopsy needed). Hyperfunctioning thyroid nodules will sometimes cause symptoms due to excess hormone production. Nodules can only be removed by surgery so are usually monitored. EchoPulse allows simple therapy with 48.9% mean shrinkage. In new interim clinical data on seven patients, Beamotion cut mean treatment time from 83 to 17 minutes.

H115: Three sales, German reimbursement

H115 had three orders (from Hong Kong, Egypt and Germany); FY14 sales were three systems worth €774k plus €26k of consumables. In H115, revenues were €56k (€28k of grants, €32.5k equipment rental and €5.5k consumables). The H1 reported loss was €3.2m. Cash at 31 August was €4.7m after receiving a €1.1m repayable advance in July and the €4m capital increase in June at €8 per share.

Valuation: EV of ~$28m

The current valuation appears to be supported by the CE-marked status and EU growth potential to be driven through reimbursement agreements, with over 1 million German women covered by insurance for EchoPulse therapy. The US private and cosmetic markets are key, but approval and significant sales may be after 2018. Kepler Cheuvreux has agreed funding from up to 400,000 shares over 36 months.

Historical and consensus financials

Year
end

Revenue
(€m)

PBT
($m)

EPS
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/13

0.0

(4.5)

(0.99)

0.0

N/A

N/A

12/14

0.8

(4.9)

(1.11)

0.0

N/A

N/A

12/15e

3.5

(6.1)

(1.18)

0.0

N/A

N/A

12/16e

6.4

(6.3)

(1.26)

0.0

N/A

N/A

Source: Company data, Bloomberg (forecasts). Note: IPO was in April 2014.

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United Kingdom

New York +1 646 653 7026

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US

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Wellington +64 (0)48 948 555

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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