Unknown BTCY May Have Big Upside Ahead of Likely Near-Term FDA Approval

January 19, 2018 - By: Baystreet Staff


- Health care as an industry will only continue to grow and offers an exceptional place to invest. Drug stocks face a historically high chance of failure, but medical devices are an attractive addition for investors wanting exposure to this booming market, up 440% over last few years.

- Biotricity (BTCY) just received FDA clearance for a new cardiomonitoring device and will be launching the product this year into a multi-billion dollar market with just a few competitors. With more devices planned for 2018 and 2019, this could be the next big multi-bagger winner among small medical device companies.

Developing new drugs is difficult, and most drugs will never make it to the market. Just about 1 in 10 drugs that go into human testing will ever actually be approved, thus the odds are stacked against investors betting on the publicly traded companies that discover and test new drugs.

But health care is still one of the best places to invest as the global population grows and people live longer, but with chronic conditions. Despite the allure of investing in the next big drug-and seeing 500% stock returns like Sangamo Therapeutics (NASDAQ:SGMO) in the last year-looking for alpha generation in other health care segments makes sense. The medical device sector has been a major winner in the last ten years, and one up-and-coming company has caught our eye. Biotricity (OTCMARKETS:BTCY) just received U.S. Food and Drug Administration clearance for their unique Bioflux device, which monitors a patient's EKG readings remotely. This cardiomonitoring market is already ramping up quickly as connectivity gets cheaper, and Bioflux is only one of a half-dozen approved products like it. With the launch underway into this billion dollar cardio monitoring market, BTCY could be positioned for a great 2018 and 2019.

Drug Development Is Littered With Failures; Device Market Booming

An analysis by trade group BIO that looked at 9,985 clinical and regulatory transitions from 2006 to 2015 found that the probability of progressing from Phase I early human studies all the way to U.S. FDA approval revealed that only 9.6% of drug development programs successfully make it to market. That's not great, and it's especially bad for investors who do individual analysis and look for long-term winners among drug developers. This 90% failure rate means that most companies will never successfully develop a drug and take it to market, and that the odds are stacked against the public markets drug company investor.

The medical device market has been on fire, meanwhile, with the iShares U.S. Medical Devices ETF (NASDAQ:IHI) up 440% since the bottom in 2009. Compare that to 250% for the S&P 500. Fewer medical devices get rejected outright by the FDA, and in 2015 the FDA approved 98% of high-risk medical devices submitted to the agency! That's not always the case, but since the passage of the 2012 FDA Safety and Innovation Act this rate appears to have increase from about 59% in 2010.

For public markets investors, investing in higher probability devices may be the golden ticket.

FDA Cleared Bioflux Hitting The Market Now

Biotricity just received US FDA clearance for their new Bioflux MCT (mobile cardiac telemetry) device, which takes EKG measurements and transmits the results remotely to a monitoring center and/or a patient’s physician, and the device is entering a multi billion dollar market. The global cardiac monitoring market is projected to reach $28.0 Billion by 2021, according to Markets and Markets, and over time we expect more and more of this industry to move towards remote, software-driven products like Bioflux as costs of the technology become less expensive.

Bioflux and the few similar devices also on the market are rapidly taking over from more cumbersome, older technology like Holter monitors and event monitors, which may only collect data for 24-48 hours, or only when a patient thinks they’re experiencing a heart rhythm “event.” Ultimately, Biotricity is streamlining diagnostic efficiency for physicians who suspect a patient may have atrial fibrillation or a similar cardiac irregularity.

Biotricity’s Bioflux is getting attention for the right reasons: a big market opportunity, a compelling product, and an attractive commercial model. Bioflux is small, and it monitors EKG data continuously, compared to other products on the market that only send periodic EKG readings to the remote monitoring center, and Biotricity plans to incentivize physicians with improved economics for the prescribing physician. It could be a win-win that turns this emerging market on its head by giving physicians more of the money made from using these products.

Biotricity isn't sitting still either. The company already announced the addition of artificial intelligence to the next generation Bioflux device and expects to file a 510(k) clearance application with the FDA by this fall, setting up another major event for this year. And, the company is also expanding their product portfolio, from one device to multiple in the next two years. Biotricity is a remote monitoring company, not just a cardio company. With the launch of 1-2 more devices in the next 24-36 months, potentially, bringing in just $10-30 million in sales each, this lean company could be on the way to significant cash flows quickly. Medical device introductions take a fraction of the time required for drug development-measured in months, not years-and Biotricity could be introducing their next remote patient monitoring device sometime this year based on comments from management. That’s another event to be thinking about, as BTCY appreciated 3X in 2017 based on the clearance of Bioflux.

Currently, Biotricity has global rights to Bioflux, but it's conceivable that a larger company could license the technology for sale overseas. NeuroMetrix (NASDAQ:NURO), another medical device developer, sold off ex U.S. rights to their Quell technology to GlaxoSmithKline (NYSE:GSK) this week, sending NURO ripping higher, mostly because this company was so under the radar for most investors. Biotricity is similarly under-followed. Health care deal flow is expected to continue to increase in 2018, and with repatriated cash to put to work at larger pharmaceutical companies, BTCY could even be on the auction block.

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