Premaitha Health Plc (LON:NIPT) is a molecular diagnostics company that has used the latest advances in DNA technology to develop a non-invasive pre-natal screening test. IONA is its first test, for detection of genetic defects to estimate the risk that a foetus is carrying a disorder, such as Down’s syndrome. Although IONA is entering a competitive market, it does have some advantages and is the first test to be regulatory approved via a CE Mark. Interim results show the first signs of commercial traction which are expected to accelerate herein. Also, Premaitha has signed a strategically important partnership with Thermo Fisher which adds considerable credibility.
► Interims: 1H’16 results represent the first meaningful set of numbers since the IONA test was approved and launched. With five commercial relationships during the period, sales emerged at £0.6m. The underlying loss was £2.7m as the company built up laboratory testing facilities and commercial infrastructure.
► IONA: This test is a screen for risk assessment that a foetus has a serious genetic disorder. The test is extremely accurate (sensitive) with few false positives and eliminates the need for unnecessary invasive follow-up tests that cause anxiety and stress. An option for gender determination has just been added.
► Strategic investment: Premaitha also announced a strategic partnership with Thermo Fisher Scientific (TMO), that supplies the DNA sequencing instruments for the IONA pre-natal screen. TMO is investing £5.0m to help Premaitha improve its offering and the efficiency of the IONA test.
► Risks: After receiving CE Mark for IONA, Premaitha received notification that Illumina Inc. had filed patent infringement claims against the company. Although Premaitha will put up a vigorous defence and has provided £1.9m for costs, litigation is an expensive and time consuming distraction for management.
► Investment summary: Premaitha Health Plc has an EV of £39m. The IONA test is the only product for NIPT with regulatory approval in Europe. Although the patent litigation is a distraction, commercial partnerships are being signed and these will drive future revenue growth. Our conservative assumptions, based on signed deals, still suggest that Premaitha will be EBITDA positive in fiscal 2018.
