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Northland Capital Partners View on the City - Polarean Imaging: Initiation of Coverage

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POLAREAN IMAGING (LON:POLX)

SECTOR – HEALTHCARE

RATING – BUY*

MARKET CAP – £12.9m

CURRENT PRICE – 16.5p#

TARGET PRICE 46p

ANALYST – VADIM ALEXANDRE

                 LIAM GASCOIGNE-COHEN

 

Year-end Dec

2017A

2018E

2019E

2020E

2021E

2022E

 

Revenue (US$m)

1.24

1.85

2.06

6.33

13.36

23.35

EBITDA (US$m)

(3.55)

(6.03)

(3.51)

(0.33)

3.07

8.04

Adj. pre-tax Profit (US$m)

(3.96)

(6.66)

(4.15)

(0.97)

2.43

7.39

Adj.EPS (cents)

-

(8.50)

(4.12)

(0.96)

2.41

7.34

 

 

 

 

 

 

 

 

SOURCE: Northland Capital Partners Limited estimates.*Northland Capital Partners Limited acts as Nomad and Broker to Polarean Imaging Ltd. and therefore this information should be viewed as a Marketing Communication. #Priced at prior day’s close. USD/GBP = 0.79 (Fidessa)

 

Initiation of Coverage: Pivotal Phase III trials are underway (Note attached)

 

NORTHLAND VIEW

 

Polarean Imaging plc (‘Polarean’, ‘the Company’) is a revenue-generating company specialising in drug-device combinations for the magnetic resonance imaging (‘MRI’) market. The Company’s gas polarisation platform provides a non-invasive, radiation-free method to visualise lung structure and function using MRI.

 

  • Fundraise of $4m:  In December 2018, the Company conditionally raised US$4 million (£3.125 million) before expenses through a placing of 22m ordinary shares with new and existing investors at a price of 14 pence/share. The fundraise is subject to shareholder approval.
  • Novel technology: Polarean’s flagship product is a novel lung imaging technology that produces highly reproducible quantitative images which are more convenient for and less harmful to the patient than current methods.
  • Revenue generating: Although yet to receive clinical-approval, Polarean has already sold several polarisers to medical research institutes and remains focused on expanding the installed base of systems through additional sales of research units. Not only is this a source of revenue but it also underlines the academic acceptance of the Company’s technology.
  • Pivotal Phase III trials underway: Polarean is currently running two Phase III trials for its drug-device platform. The trials are expected to complete recruitment in Q2 2019 and, if successful and approved by the US Food and Drug Administration (FDA), will enable clinical sales of its system, expected in 2020E.
  • Major market opportunity: The annual burden of pulmonary disease in the US is estimated to be over US$150b and Polarean expects over $500m in system sales just to top tier institutes.
  • Valuation: Northland’s Discounted Cash Flow model indicates a fair value of £57m. We set a price target of 46p/share based on 125m fully diluted shares outstanding.

 

 

COMPANY DESCRIPTION

Healthcare technology company with a proprietary drug-device combination in late-stage clinical trials.

 

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