Field Testing Ongoing / Rodman Presentation - Analyst Blog
18 Septembre 2012 - 7:43PM
Zacks
Field Testing Ongoing / Rodman
Presentation
Brian Marckx, CFA
Q2
Financials
Verisante (V.VRS /
VRSEF) filed their Q2 2012 financials for the
period ending 6/30/2012 in late August. Operating expenses
were $669k, down slightly from the $773k in the year-earlier
period. Net loss and EPS were $659k and ($0.01) compared to
$759k and ($0.02) in Q2 2011.
Cash burn remains very much in-line with our projections.
Management continues to manage capital well, keeping operations
lean while continuing to make meaningful progress with product
development and pre-launch marketing and investor-awareness
activities.
Cash burn (including capitalized R&D) was $1.4 million and $2.6
million in the three and six month periods ending 6/30/2012.
VRS exited Q2 with $3.5 million in cash and short-term
investments.
Field Testing
Ongoing
Verisante continues to make progress with field testing of Aura and
last week announced that they placed more beta units in Canada for
that purpose. The device is now or has already been tested by
doctors and consenting patients in British Columbia, Alberta and
Ontario. VRS notes that they expect field testing to continue
over a period of about 2 - 4 months during which data and feedback
will be collected and used to make any necessary final refinements
to usability and the software. This is expected to be the
final step prior to commercialization of Aura.
Rodman & Renshaw
Presentation
Thomas Braun made a presentation at a Rodman & Renshaw
conference held in NYC last week where he outlined the key
competitive advantages of Aura and summarized the company's
near-to-mid term commercialization strategy. Some of our key
take-aways, which mostly relate to timelines, include;
- The clinical study of Core for lung cancer being conducted at
the Lung Tumor Center at Vancouver General Hospital should complete
by this Summer and results published by year-end
- Registration for sale of Aura in Mexico and Brazil began about
3 months ago (as a reminder Aura is already approved for sale in
Europe, Canada, Australia, New Zealand and South Africa)
- Commercialization timelines by territory (per a presentation
slide);
o Canada: device sales commence in late 2012.
Disposable end-cap sales begin early 2013. Service contract revenue
begin early 2014.
o Europe/Australia/New
Zealand/S.Africa/Mexico/Brazil: device sales commence in late 2012.
Disposable end-cap sales begin early 2013. Service contract revenue
begin early 2014.
o U.S.: device and disposable sales begin late
2014
- VRS's targeted roll-out strategy remains unchanged.
Initially they expect to target dermatologists ("early adopters"),
then general physicians ("innovators"), and finally other health
care providers including skin care clinics, oncology practices, and
imaging centers
- VRS continues to work on the pre-IDE process related to an
eventual FDA filing. VRS is working with their U.S.
consultant to put together their pre-IDE submission (which should
be "any day now"). Following the submission, VRS will meet
with FDA (potentially sometime near year-end) where the agency is
expected to provide specific guidance relative to the U.S.
regulatory approval pathway. The current expectation (which
remains unchanged) is that FDA will want VRS to conduct a
multi-site clinical trial (n= ~1,000 including at least 100
melanomas) in support of an eventual PMA filing. The trial is
expected to take about 1 year to complete. Assuming a
12-month turnaround by the FDA, a reasonable best-case scenario
could have Aura on the U.S. market in late 2014. As we note
below, given the slight delay in the IDE process (initially an IDE
meeting was expected earlier in 2012), we have pushed back our
assumed U.S. launch of Aura from late 2014 to mid-to-late 2015,
which provides some cushion for further
delays.
- VRS expects revenue from service contracts (in all territories)
could be meaningful following the expiration of an initial 12-month
warranty period
Valuation
We continue to model an initial launch in late 2012 with an
immaterial amount of revenue in the current year but showing a
steep ramp throughout 2013. We had previously modeled Aura to
launch in the U.S. in late 2014 but given the slight delay in the
IDE process (initially an IDE meeting was expected earlier in
2012), we have pushed back our assumed U.S. launch of Aura from
late 2014 to mid-to-late 2015 (slightly more conservative than
management's late-2014 guidance, which provides some cushion for
further delays). Updates to our model mostly effect years
2014 - 2015 with a much more muted impact over the
longer-term.
As commercialization (ex-U.S.) is now expected to be a near-term
event, we are now using DCF as our valuation methodology. Key
inputs to our 10-year DCF model include a 10% discount rate and 2%
terminal growth rate. Our DCF model values VRS at about
$2.70/share (which is very much in-line with our prior valuation of
$2.60/share).
Please visit scr.zacks.com to access a free copy
of the full research report.
(V.VRS): ETF Research Reports
(VRSEF): ETF Research Reports
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