Company Overview: ImpediMed Limited is an Australia-based company, which is a global provider of medical technology to measure, monitor and manage fluid status and body composition. The principal activities of the Company consist of the development, manufacture and sale of bioimpedance instruments and consumables, and the sale of electronic test and measurement devices. The Company's operating segments include Medical, and Test & Measurement. The Medical segment is a supplier of non-invasive medical devices to over two underserved markets: aiding in the subclinical assessment of individuals at risk of secondary lymphedema, and the monitoring of body composition and hydration. The medical cash-generating unit (CGU) is the core business of the Company. The Test & Measurement segment is a supplier of power precision testing and measuring equipment (T&M). The Company's geographical locations include Australia/rest of world (ROW) and North America.


IPD Details

ImpediMed develops bioimpedance devices with a focus on medical applications in the fluid status area and the Company is pioneering the use of next-generation bioimpedance technology in BIS (Bioimpedance Spectroscopy). The Group is dynamic and is on a growth path with the strong demand for its unique product offerings. It continuously works on its mission of “Leave no patient untested who can benefit from its technology”. It offers the largest selection of BIS devices in the world. The company develops advanced medical products which utilize bioimpedance spectroscopy technology, or BIS and by using such sophisticated electronics, the level of impedance, or opposition of a patient’s body to the current and can be measured and converted into clinically useful measurements such as a patient’s extracellular fluid, intracellular fluid, total body water, fat mass, and fat-free mass levels.


Company’s Products (Source: Company Reports)

It has a reliable technical support system for any hardware, firmware, or software questions. The Company announced promising results regarding the interim analysis of the PREVENT Trial that will help in preventing lymphoedema. Recently, the Group got FDA clearance for bilateral lymphoedema that opens the opportunities for the US cancer market that is almost 1 million new relevant cancer patients per year. The Group has appointed direct sales force in the U.S. lymphoedema market that focuses on the sale of SOZO™ with L-Dex® and on its associated subscription revenue agreements for patient assessments in the lymphoedema market. Company’s financial and operational performance reflects that it is growing in terms of momentum and is working on introducing SOZO™ under a new subscription model.

Positive Results from PREVENT Trial- Primarily, encouraging results from PREVENT prospective, randomized trial interim analysis have been reported with regards to preventing lymphoedema as noted for over 500 patients in two groups, one using the L-Dex BIS system, and the other using traditional tape measurements. Moreover, PREVENT Trial is the largest international multicentre randomised controlled trial undertaken in the prevention of breast cancer-related lymphoedema (BCRL). This is expected to help during early treatment for chronic lymphoedema as compared to the same intervention when initiated from tape measurement. These interim results reflect that assessment by this device in post-surgical breast cancer patients can be successfully incorporated into the clinical practice.


Estimated Cash outflow for the June Quarter (Source: Company Reports)

Update on Quarterly Activities (March 2018)- The Company released Quarterly cash flow report for the period ended 31 March 2018. The Group reported a total revenue of $1.4 million for the period including medical revenue of $0.9 million. Total SOZO® contract value signed for the quarter was $0.9 million and with $0.2 million in recognised SOZO® revenue. The company ended the quarter with $2.0 million in SOZO® contracted revenue pipeline, up from $1.2 million last quarter. Further, these range from one to three years in length, and at the end of the quarter, the Group had more than two-dozen customers waiting for installation and commencing monthly contracted revenues. It recorded a Net operating cash outflow of $6.1 million for the Quarter and recorded cash receipts of $0.9 million for the quarter, with cash on hand of $36.7 million as of 31 March 2018. Further, during this Quarter, the Group released promising results from PREVENT Trial, announced US FDA 510(k) Clearance for Bilateral Lymphoedema Assessment with SOZO® and also announced a multi-year commercial agreement with Sharp HealthCare to be a Centre of Excellence with SOZO® for their cancer care program.


Revenue Performance (Source: Company Reports)

Overview of Financial Performance- The Group reported a loss of $14.4 million from continuing operations after income tax for the half-year ended on 31 December 2017 (31 December 2016: $13.8 million), with a total revenue of $2.1 million, including medical revenue of $1.6 million, and $0.3 million in recognised SOZO™ revenue (31 December 2016: $2.9 million), a decrease of $0.8 million, or 28 per cent, over the previous corresponding period. Cash and cash equivalents were $42.4 million at 31 December 2017 (30 June 2017: $54.9 million) and net cash used in operating activities for the period was $11.7 million compared to $11.4 million for the six months ending 31 December 2016. Operating expenses remained the same as they were last year that is $16.1 million. The group had earmarked the second half of the 2017 calendar year for an initial launch in Europe and US launch to follow post getting all necessary regulatory clearance and approvals.


Cash and Cash Equivalents with Net cash used in Operating Activities (Source: Company Reports)

Other Key Achievements - IPD announced that L-Dex® featured highly at the 12^th Australasian Lymphology Association (ALA) conference held in Brisbane from 17th - 19th May 2018 and the conference was attended by internationally and nationally-renowned speakers and delegates. The ALA is the peak professional organisation in Australasia for lymphoedema management, research and education and their biennial conference is the premier lymphoedema event for the Asia Pacific and has enjoyed very strong growth over the last four years with strong support from industry, including ImpediMed, one of the ALA’s Industry Partners. Recently, the Company presented an abstract of the presentation at the American Society for Breast Surgeons in Orlando, Florida.


SOZO™ Milestone Summary (Source: Company Reports)

It was found that early detection using BIS with easy patient self-directed interventions for early stage lymphedema can significantly improve patient outcomes and decreased the development of persistent BCRL. The Group also made a three-year joint development agreement with the Mayo Clinic to advance new solutions for ImpediMed’s fluid status and body composition monitoring technology. The Group recently announced about acceptance of an abstract (titled- Utilization of bioimpedance spectroscopy in lieu of invasive monitoring for monitoring fluid overload) for presentation at the 23rd World Congress on Heart Disease and this provides a comprehensive overview of the latest research developments in cardiovascular medicine.

Stock Performance- The Group has been certified with TGA declaration of Conformity, ISO 13485 Certificate and many more. The promising results of the PREVENT trial was a significant milestone for the Company and demonstrate the Company’s ability to detect very small fluid shifts in the human body that are medically meaningful. Gradually all the pieces are falling into place for its cancer business with its latest clearance for bilateral lymphoedema, the positive interim clinical results, and the building interest in the new SOZO platform. The Group focuses that its technology should be included in the cancer guidelines, and also should be approaching private payors to obtain private payor coverage and successfully accelerate the growth in its contracted revenue pipeline. Recently, the Company issued 865,534 ordinary shares (797,200 at $0.11 and 68,334 at $0.4618) under the Employee Stock Option Plan.

With US FDA 510(k) Clearance for Bilateral Lymphoedema Assessment with SOZO®, the Company can greatly expand the available market as it reflects the SOZO® system’s ability to assess patients at risk of bilateral lymphoedema, where a patient is at risk in either both arms or both legs. It is worth noting that the ImpediMed was the first company to receive U.S. Food and Drug Administration (“FDA”) clearance in the U.S. to aid healthcare professionals to clinically assess unilateral lymphoedema for its L-Dex® device. In the meanwhile, Macquarie Group Limited ceased to be the substantial holder of the Group since 26 June 2018. ROE and ROIC both as on 30 June 2017 stood at (20.6 per cent) and on 31 December 2017 stood at (27.7 per cent). The stock prices have been declining since the start of the year and were down by 15.69 per cent in last one month but saw a recovery of 2.38 per cent in last five days as on July 02, 2018 with a further rise of 2.32% on July 03, 2018. The group’s latest movement can be attributed to the products ‘L-Dex’ and ‘Sozo’ that were featured at latest conferences and helped provide an insight on how the medical diagnostic devices are developed to help scan a patient’s body non-invasively. The group aims to have better cash flow position and profits are flagged to show up over the next couple of years. Lately, Group’s senior vice president, R&D and Technology, Dennis Schlaht was awarded the 2018 Lymphatic Education & Research Network (LE&RN) Advocate Honor at the annual 5K Run/Walk to Fight Lymphedema & Lymphatic Diseases. We give a “Speculative Buy” recommendation for the stock at the current market price of $0.44 by looking at the ongoing developments and by looking at the efforts the Group is undertaking towards commercialization of its products.
 

IPD Daily Chart (Source: Thomson Reuters)

 
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