The Market That Took BEAT Higher By 800% Could Do The Same For This Strong New Competitor

July 18, 2018 - One Equity Stocks

- Cardiac monitoring is a $32 billion market, and the companies that are successfully navigating this space with new technology are seeing huge returns: IRTC is up 300% in 3 years, and BEAT up 800% in 5 years. Remotely monitoring patients is saving the healthcare system money, and making investors money too

- Biotricity (BTCY) is the most recent entrant into the remote monitoring space with their first FDA clearance in December. The launch of Bioflux, an advanced remote ECG monitoring device, is underway and first sales should emerge in the coming months after having signed some respected anchor clients

- Biotricity is building a portfolio of products, and their second device could be announced soon, with another FDA submission by the end of the year. If Wall Street's interest in this medical device space is any indicator, competitor valuations could substantiate 3X or more of upside for BTCY with the right sales figures in 2019 and beyond

An explosion in the use of new remote monitoring technologies is underway, and a handful of publicly traded companies are benefitting as this tech goes mainstream.

In the last 5 years, the two premier companies executing in this field, iRhythm (IRTC) and Biotelemetry (BEAT), have increased in market value by 305% and an incredible 803%...from $22 to $89, and $5.50 to $49, each!

These companies are pioneering a little-known but strong undercurrent in the healthcare space - remote patient monitoring tech. Both companies develop and sell remote ECG monitors, which are sent home with patients when a doctor suspects some kind of heart arrythmia to help diagnose them over the following weeks or months. Sales are climbing consistently at both companies.

Another public company has recently entered the field with their own device. Biotricity Inc's (BTCY) Bioflux was approved in December of last year, and the company is already off to a strong start in selling the device to high profile medical institutions. They're now pioneering a second generation version, with the potential for another FDA clearance later this year or in 2019. The growth potential in this sector is immense, with a small field of contenders, and if IRTC and BEAT are any indicator, BTCY could be another major winner.

One valuation metric suggests that BTCY could be worth $9 even with very conservative sales figures in the coming years, from $3 today.

Remote Cardiac Care Is A $32 Billion Market

Atrial fibrillation (often called AFib or AF) is the most common type of heart arrhythmia. An arrhythmia is when the heart beats too slowly, too fast, or in an irregular way. According to the CDC, an estimated 2 to 6 million people in the United States have AFib, and with the aging of the U.S. population (i.e. Baby Boomers), this number is expected to increase substantially in the coming years.

It should be no surprise that research firm Allied Market Research expects the market for cardiac monitoring and rhythm management globally to grow to $32 billion by 2022, up from only $19 billion in 2015. Cardiovascular disease continues to be the world's leading cause of death, and cardiac care, including diagnosis, plays an increasing role in the strain on healthcare providers.

Remote monitoring options offer a solution that can reduce caregiver and physician burden and expense by streamlining the diagnosis process. In fact, Medicare and Medicaid are slowly improving the way they pay for remote monitoring technologies in order to get more doctors using them. In July 2018, they proposed changes "to improve access to solutions via remote patient monitoring technology, and to update the payment model for home health care."

You can see the trend in the revenue gains at companies like Biotelemetry (BEAT) and IRhythm (IRTC). Biotelemetry's revenue has risen from $130 million in 2013 to $325 million in the last fourt quarters. IRTC has gone from $22 million in 2014, when they went public, to an amazing $107 million in the last twelve months. The sheer size of these markets is why investors continue to bid up these two names.

Biotricity's New Entrant Bioflux Has Launched In The U.S.

Surprisingly, this is still a somewhat fragmented market, and a new entrant is making waves with their first device. Biotricity's (BTCY) Bioflux is a proprietary mobile ECG unit that patients wear for a few weeks at a time comprised of a wet electrode and worn either on a lanyard around the neck or on a belt clip around the waist. Impressively, it uses remote telemetry (a cell signal, essentially) to transmit the patient's ECG data in almost real-time; the patient's doctor and a data center can then monitor for signs of arrhythmia anywhere and anytime.

Biotricity passed a huge hurdle in December when the Bioflux device received a clearance from the FDA, meaning they have full approval to sell this product in the U.S. The product launch started in the second quarter; Biotricity announced a first key client, the San Antonio Endovascular & Heart Institute (SAEHi), in April, a practice specializing in diagnosing, treating, managing, and researching diseases and disorders of the heart and vascular system.

All signs thus far, suggest the launch is off to a strong start. CEO Al-Siddiq said in a July update, "Our anchor clients have been immeasurably supportive of our technology and are placing additional orders, and we look forward to the prospect of working with them. We expect to see continued uptick in our commercialization efforts as we solidfy ourselves as a leader within the medical remote monitoring space."

In June, Bioflux won the prestigious MedTech Breakthrough Award 2018 for Best Remote Patient Monitoring Solution, and the first revenue figure should be out in Q3 or Q4.

Second FDA Filing Coming As BTCY Builds A Portfolio Of Products

Now, Biotricity has outlined plans to bring a second-generation version of Bioflux to the FDA, possibly by the end of this year, with a potential FDA device clearance in 2019.

With Bioflux 2.0, the company will integrate cloud-based Artificial Intelligence, improving diagnostic accuracy and efficiency. The industrial design requirements for Bioflux 2.0 have already been finalized, and the company plans "to file a second 510(k) application with the FDA between the end of Q4 and early 2019."

Additionally, Biotricity is testing and prototyping their next remote patient monitoring solutions, with details to be announced in the third quarter. The company isn't standing still, and they're aggressively planning a portfolio expansion into complementary remote monitoring verticals. Details of this next device are being closely guarded for now, but more information soon could put new eyes on this under-the-radar name as the portfolio expands into more verticals.

Sales Are Imminent, And BTCY Could Be Worth As Much As $9

So, revenue are on their way soon and it shouldn't take a huge launch to justify a higher market capitalization for BTCY if competitors are any indicator.

Wall Street darling IRhythm is a $1.9 billion company, with just $107 million in sales during the last twelve months. This implies a 19X Price-To-Sales multiple, one metric from which investors determine fair value for publicly traded companies.

Thus, for Biotricity even $20 million in sales in the coming years - very reasonable in this growing market - and a similar 15 to 19X Price-to-Sales multiple, this stock could be worth over $300 million in market value, or a stock price of $9.00.

As a microcap company, Biotricity does carry particular risks. The company may fail to finance the business adequately, and their sales may never reach analyst or investor expectations. Even though there is limited competition in this market, the company faces larger medical device companies, which could prove difficult. Ultimately, this should be considered a high-risk equity.

Things can change fast in the world of biotech when traders and investors realize that companies with upcoming events are trading at a discount to their potential asset value, as evidenced by companies like Zogenix, Inc. (ZGNX) or Endocyte, Inc (ECYT) recently, which have both been outperformers. With the Bioflux launch underway and more medical devices planned for 2018, Biotricity remains an attractive long-term potential hold.

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