- Biotricity's (BTCY) new medical device Bioflux now USFDA cleared and ready for commercial launch. Company has key components in place for successful sales effort, including financing and probable insurance & Medicare reimbursement.
- Comparable cardio monitoring company Biotelemetry (BEAT) worth $1 billion in market value, suggesting huge upside possible for BTCY as company enters unsaturated space with attractive and possibly disruptive product and unique commercial strategy to win over physicians.
- Buildout of additional remote biometric monitoring devices in 2018 and 2019 into full portfolio offering could make BTCY worth multiples of today's prices.
With their novel Bioflux MCT device just USFDA cleared in December and a financing out of the way, Biotricity (BTCY) has all of the pieces in place for a successful launch of this new cardiac monitoring device into a $22 billion market. Unlike many other medical devices that reach FDA clearance, Biotricity has many of the facets already in place for strong commercialization in 2018, like reimbursement procedures for insurance providers & Medicare, and a unique marketing strategy.
A similar public company BioTelemetry (BEAT) is already valued at $1 Billion by the public markets just a few years into launching their own suite of cardiotelemetry devices, indicating that BTCY could be in for a huge 2018 and 2019 as they move from development to revenue-generation. It's a hot sector, and the company plans to build out a suite of high-value medical devices in the near-term. Savvy investors have finally started to pay attention.
Biotricity Has The Right Pieces In the Right Places
Biotricity appears to have the pieces in place for a booming launch of its new mobile cardiac telemetry device, called Bioflux, which was just cleared for marketing by the USFDA last week. This remote EKG monitor transmits data continuously to data monitoring centers, to help in the evaluation and diagnosis of atrial fibrillation.
Bioflux is perfectly positioned to make a splash in this market because mobile, continuously transmitting monitors are a major, growing segment of cardiac monitoring; Bioflux should be ready to roll under existing reimbursement coding practices; and the company has a plan to incentivize health care providers.
For example, similar company Biotelemetry (BEAT) reports $80 Million in quarterly sales and has said that mobile cardiac out-patient telemetry devices, like Bioflux, make up a massive 70% of their current business. For a product that emerged only a few years back, that's an incredibly quick displacement of older technology, like Event and Holter monitors, which don't last as long and do not always transmit data remotely.
Here's the real clincher for Biotricity: the company has also said they plan to improve economics for health care providers. This is important, as low economics for health care providers has been a hurdle for other cardiac players.
BioTelemetry said on their first quarter 2016 conference call:
"The economic incentive for a physician to use this service is almost non-existent specific to the service itself. However, we have thousands of physicians that use it, because it produces a yield that nothing else is even close to, which means, [physician's] revenue will come with follow-on procedures and inflations and implants and such...But I'd be lying if I told you that hadn't been a barrier to growth and a challenge to growth over the years that we've been in the marketplace with it..."
This company, generating $80 Million in quarterly sales is admitting that physicians aren't thrilled to be using these products because their offices don't make much money! In short, if Biotricity can turn this commercial process on its head, and get physicians invested in using Bioflux, the upside could be tremendous.
This is not a saturated market, with only four players in real-time remote monitoring. Bioticity only needs to capture $10 to $20 Million of this market quickly to make a meaningful impact on the company's lean income statement.
Biotricity Could Sidestep Pitfalls Where Other Medical Devices Fail
Reimbursement, or payment from insurance companies, isn't always the first element that a company considers when developing a medical device or drug - but it should be. Biotricity has the makings of a success on this front.
Companies might assume that a medical need will ensure payment from insurers and government entities like the Centers for Medicare & Medicaid Services (CMS), but that's not always the case. This is especially important in the age of the Affordable Care Act, where the need to reduce health care expenditures while improving health care outcomes means medical need alone is not always sufficient to "get paid." About 1 in 3 Americans are covered by either Medicare or Medicaid, the government entities that cover older Americans, the disabled, and lower-income individuals. They make up a huge portion of health care spending in the United States, and getting Medicare to reimburse, or pay for, a new device isn't always easy.
Coding is the language of CMS, private insurance companies, and physicians, and it translates into payment. A "CPT" code (for Current Procedural Terminology) from the American Medical Association is a numerical code that identifies medical services and products to streamline reporting and increase accuracy and efficiency. CPT codes are how health care providers bill insurance companies and Medicare or Medicaid. Without a CPT code, no one gets paid, and this is where many companies stumble without the proper plan or codes in place for their new product or drug.
AliveCorp's recently approved KardiaBand is a good example where the product may not find it's feet, despite excitement in the press. This is the first FDA-cleared medical device accessory for Apple Watch, and it can record an EKG in 30 seconds with a touch of its integrated sensor. It's far from the first remote EKG monitor, but it is the first to be cleared by the USFDA for use with the Apple Watch.
KardiaBand may face a major uphill battle, however, as it doesn't have clear CPT codes in place for use with insurance companies or CMS. It may be relegated to the self-pay or consumer market, where people buy the band for their own use, not necessarily at the behest of their health care provider. The "sell" may be harder than recent headlines make it appear.
As a 3-lead monitor, Bioflux, meanwhile, can probably be reimbursed, initially, under one of a few CPT codes covering ambulatory cardiac event monitor technology or external mobile cardiac telemetry monitors, all of which have been established for years and are well understood by insurers and the Centers for Medicare & Medicaid. These are reimbursed at anywhere from $700 to $1000 per use.
With these facets in place at the time of launch, Biotricity doesn't have to waste time or money establishing processes with insurance companies or CMS - they can sidestep the pitfalls that cause the failure of so many other new medical devices and launch straight into a willing and receptive market.
Remote Monitoring To Become Next Major Medical Revolution?
Bioflux is only Biotricity's first product to receive FDA clearance, and the company is hinting at a rapid portfolio buildout of additional remote biometric monitors in other medical segments in the short-term. Biotricity raised $2.5 Million in a financing lead by existing investors in the days following the company's FDA clearance. This is encouraging, seeing current investors double down at higher prices in front of the next phase of growth for the company.
But the company has also been hinting at plans to quickly expand their product portfolio into other medical segments where remote monitoring could be transformationa l as technology goes mainstream in health care. With Bioflux in 2017, the company has established that they can bring a device to market quickly and efficiently. With three or four devices capturing $10-$50 Million in annual revenue in a few years, BTCY could trade to multiples of its current valuation.
Rapid transformations at small companies often go unnoticed by the public markets, but once these transformations catch on they can have big impacts even on small-cap companies.
Little Pain Therapeutics (NASDAQ: PTIE) saw their shares double in price after the company said that their experimental Remoxy drug had significantly lower abuse potential than the highly addictive oxycodone. Same for Novavax (NASDAQ: NVAX) after a Wall Street research analyst increased their price target on the stock by almost five-fold to $10 after the company announced details about an ongoing phase 3 trial of their RSV.
Although we believe Biotricity has great upside potential, there's always risks associated with investing in small cap biomedical companies. Biotricity isn't alone in this space, and they'll be going up against some larger companies in the race to bring this compelling technology to the mass market. They may need to raise additional capital for their commercial efforts, which could be poorly received by the public markets. As a small-cap company, BTCY carries greater risk than investing in larger, established medical device companies.
Biotricity plans to expand their suite of biometric remote monitoring products rapidly, which is where things get truly interesting for BTCY shareholders. Diabetes care, as an example, is on the precipice of a major change as remote, rapid diagnostic devices simplify glucose monitoring, which has created huge opportunities for small companies bringing new hardware to the market. Other therapeutic areas are following suit, and 2018 should be a big year for BTCY as they launch Bioflux and begin portfolio expansion.
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