Nemaura Medical has a big winner in its painless SugarBEAT glucose monitor

• The Loughborough, UK-based medtech company has developed SugarBEAT, the world’s first non-invasive glucose monitor • The genius of SugarBEAT lies in its skin-patch technology which allows for better glucose management • Analysts says SugarBEAT’s superior product profile will drive market share gains   What the company does:

Nemaura Medical Inc (NASDAQ:NMRD), a medical technology company, has developed SugarBEAT, the world’s first non-invasive continuous glucose monitor (CGM) for people with diabetes and pre-diabetes.

SugarBEAT consists of a daily disposable adhesive skin-patch connected to a rechargeable transmitter, with an app displaying glucose readings every five minutes for up to 24 hours. The genius of SugarBEAT lies in its skin-patch technology which allows for better glucose management.

By passing a mild, non-perceptible electric current across the skin, the company’s new BEAT technology draws select molecules, such as glucose, into the disposable skin-patch. These molecules are picked up from the tissue fluid which pools naturally below the top layer of skin. With the help of a Nano-sensor, the patch measures the molecules, giving the person a quick clinical read and diagnosis.

The technology has broad applications and can help with handling diabetes and measuring blood lactate levels in patients in intensive care. For now, Nemaura is using its BEAT technology to battle diabetes.

The Loughborough, UK-based medtech company is led by Dr Faz Chowdhury, who loves a good dare. The pharmaceutical scientist received his PhD in Nanomedicine from the University of Oxford. As a young undergrad, Chowdhury spent a year interning with healthcare heavyweight 3M where he received a challenge from a star professor.

“In the first week, they gave me a box of powder, a tablet formulation they were trying to fix. There was a note inside the box from a top professor of pharmaceutics,” Chowdhury told Proactive Investors.

“The note said, ‘This isn’t possible.’ Here’s the thing, I had to pick up the gauntlet.”

Three months later, Chowdhury solved the riddle though lateral thinking and 3M promptly filed for a patent.

Today, Chowdhury holds 50 patents on drug delivery systems and sensors, across 15 technology platforms. He is the inventor and driving force behind SugarBEAT. 

How it is doing:

Deciding how to value pre-revenue companies is often like deciding how much a one-of-a-kind painting should be worth. However, with Nemaura its easier because medical technology stocks live and die by regulatory decisions. And, SugarBEAT which has been in the making for seven years received CE approval in May.

Since SugarBEAT doesn’t require needles or insertion it will challenge entrenched players like DexCom Inc (NASDAQ:DXCM) which markets the Dexcom G6 and Abbott Laboratories (NYSE:ABT) Libre System.

Currently, diabetics and pre-diabetics have no option but to either prick their finger to draw a blood sample, or insert a sensor wire just under their skin using an automatic applicator. The insertion is painful, to put it mildly.

“I can’t see a scenario where a pre-diabetic would want to stick a sensor inside his arm and keep the device there for a few days,” said Chowdhury, whose product offers a choice to people with needle phobia.

Since Nemaura is a pre-revenue company you have to look at what the competition is doing to figure out revenue potential. Dexcom which has had its device on the market for eight years has roughly 300,000 patients.

On the other hand, it’s nimbler competitor Abbott, which launched the Libre five years ago, is hitting over a million patients. Most of them are Type II insulin requiring patients.

“It just goes to show that if you’ve got a device that has form factor, usability, then it opens up a broader market. The SugarBEAT caters to Type I and Type II diabetes patients, and is also expected to be used for screening pre-diabetics,” said Chowdhury.

Abbott’s Freestyle Libre 14-day system generates strong sales and netted roughly $1 billion in sales in 2018.

Given the high rate of diabetes, Europe represents a $3 billion market opportunity, while the United States is a $4 billion market.

Inflection points:

In May, the company gained traction after SugarBEAT received a CE mark from the British Standards Institute. This clears the path for SugarBEAT’s commercial launch.

Nemaura plans to launch SugarBEAT in the UK in the third quarter, followed by Germany. The price is expected to be comparable to the cost of using glucose meters and strips, said the company.

Nemaura is gearing up to sell its glucose device in other geographies like the Middle East and Australia that accept CE Mark approval.

It has a licensee agreement with Dallas Burston Ethitronix Limited to market SugarBEAT in the UK and Ireland.

In July, Nemaura submitted a De Novo medical device application to the US Food & Drug Administration for approval of SugarBEAT. For certain low-risk novel devices, the FDA’s De Novo pathway offers a swifter route to market.

What the boss says:

“The FDA has a structured review process, which should allow the review to be expedited,” said Nemaura Inc CEO Faz Chowdhury. “While waiting for feedback on the application, we have started to enter into discussions with key global companies for SugarBEAT’s commercialization in the US.”

What the broker says:

Analysts at Ascendiant Capital Markets initiated coverage of Nemaura in June with a Buy rating and $3.25 price target.

“CE mark approval is the most recently achieved milestone. The next milestone we expect is FDA approval,” wrote Ascendiant analyst Theodore O’Neill in a note to clients.

“The technology has additional target markets that will also be pursued including continuous lactate monitoring which is aimed at elite athletes, those who train to become elites and those that simply want to perform at their best,” added O’Neill.

The analyst said Nemaura is targeting a $179 billion global market opportunity including insulin and non-insulin dependent diabetics, pre-diabetics, and wearable health-tech markets.

“Nemaura has game-changing technology to help those with diabetes and those who want to improve and extend life spans,” wrote O’Neill.

O’Neill said the “fastest growing adopter group” for SugarBEAT will be biohacking’s poster boys like Geoffrey Woo, cofounder and CEO of specialized foods company HVMN and Twitter Inc (NYSE:TWTR) CEO Jack Dorsey.

Meanwhile, Acorn Management said SugarBEAT’s “superior product” profile will drive market share gains.

“SugarBEAT comes in as the world’s first noninvasive, needle-free, continuous CGM that can address >70% of the Type 1 market, can be used by Type 2 patients, and most importantly can also be used by prediabetics,” wrote Wright.

Acorn said SugarBEAT’s costs per day to insurers is targeted at 50% of Abbott’s FreeStyle Libre, or 25% of DexCom’s G6, making Nemaura the cost leader in the CGM market.

Acorn Management said the stock is “vastly undervalued” and it expects impending EU commercialization and the FDA filing to correct the price-value mismatch.

“We retain our estimates and reiterate our view that Nemaura deserves to be re-rated — it is trading very cheap (market cap $175 million/$0.84 per share) versus our intrinsic value estimate of $715 million or $3.45 per share,” wrote Wright.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive 

Story by ProactiveInvestors