Imricor Medical Systems Inc.

IMR Details

Filing for Investigational Device Exemption: Imricor Medical Systems Inc. (ASX: IMR) is engaged in the development of MRI-compatible medical devices to carry out MRI-guided cardiac catheter ablation procedures. Recently, the company announced that it has filed an application for an Investigational Device Exemption (IDE) from the US Food and Drug Administration. If the company receives IDE, this will enable IMR to initiate a clinical study aimed at gaining the clinical data to support the approval of several iCMR ablation devices. This includes the Vision-MR Ablation Catheter, Vision-MR Diagnostic Catheter, Vision-MR Dispersive Electrode, Advantage-MR EP Recorder/Stimulator, and the Osypka HAT500 Ablation Generator and Irrigation Pump.

Q3FY21 Financial and Operational Highlights:  During the quarter ended 30 September 2021, the company has received TGA approval for the Advantage-MR system in Australia and Medsafe approval for all Imricor products in New Zealand.

• IMR inked Sales Distribution Agreement with MiRTLE Medical, LLC and NordicNeuroLab AS and believes that this will sales process for all parties and bolsters the range of 3rd party iCMR lab equipment Imricor offers to its customers.
• During the quarter, IMR recorded net cash outflows from operating activities of US$4.651 million. Receipts from customers stood at US$0.366 million, which comprised of contract receipts (US$0.202 million), the sale and rental of capital equipment (US$0.082 million), consumable product sales (US$0.063 million) and the sale of service agreements (US$0.019 million).
• Subsequent to the end of the quarter, the company raised A$16.5 million and A$1 million via an institutional placement and oversubscribed security purchase plan (SPP) in October 2021.
• IMR also inked a new purchase agreement with Semmelweis University Heart and Vascular Centre in Budapest, Hungary.
• The company closed Q3FY21 with a cash balance of around US$20.202 million as compared to US$15.607 million as on 30 June 2020.

1HFY21 Financial Highlights:

• During the half-year, IMR posted total revenue of US$0.36 million as compared to US$0.27 million in 1HFY20.
• The company recorded a net loss of US$9.962 million against US$5.797 million in 1HFY20.

Revenue (Source: Analysis by Kalkine Group)

Key Risks:

• Forex Headwinds: The company’s business is exposed to a risk arising from the adverse movement in foreign currency as it operates in multiple geographies.
• Regulatory Risk: IMR is exposed to a more complex regulatory environment; any non-compliance could lead the business to fines, penalties etc.

Outlook:

• Looking forward, IMR plans to expand indications to ventricular tachycardia ablations are on track. In addition, IMR has scheduled a pre-clinical trial study for Q4FY21 with a European clinical trial expected to commence in 2022 and approval expected at the end of 2023.
• In addition, IMR is currently working through a process to identify suitable sites for participation in the trial and targets the end of 2023.
  

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of IMR has 52-week low and high levels of $1.000 - $2.585, respectively. The stock has provided return of ~1.62% in the past three months. The stock has support and resistance level of $1.110 and $1.50, respectively. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price with a correction of high-single-digit (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering the COVID-19 uncertainties and losses in business, etc. For the purpose of valuation, peers such as Polynovo Ltd (ASX: PNV), Nanosonics Ltd (ASX: NAN), ImpediMed Ltd (ASX: IPD) and others have been considered. Considering the expected correction in the valuation, business losses, current trading level, volatility in the healthcare space, and key risks associated with the business, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $1.370, as on 24 November 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia.

IMR Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.