fbpx

Written by 08:00 Analys, Research

PROLIGHT: Important milestone amidst mixed news flow

There has been a somewhat mixed news flow from Prolight after the close of Q1’24. The finalization of the cartridge design to be used on the commercial platform marks an important step in product development and opens up for assay performance evaluation. Prolight has also announced a positive SEK 5.6m revision to the FY’23 result stemming from understated claim on the UK tax authority regarding R&D. Additionally, the SEK 113m write down the capitalized development costs regarding troponin testing on the analogue POC system MicroFlex, is of course noteworthy but has no impact on cash flow and means no real changes to the case we’re seeing in the company’s digital POC system Psyros.

All in all, with proof-of-performance for its proprietary digital technique for detection of high-sensitive biomarkers even in whole blood, we now expect the company to continue it’s progress with prototype development and IVDR certification towards launch in 2026. This in turn should catalyze a revaluation that better reflects the long term prospects we’re seeing, where we continue to find support for a fair value of SEK 1.1 – 1.2 per share.


Johan Widmark | 2024-04-25 08:00 

This commissioned research report is for informational purposes only and is to be considered marketing communication. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and Emergers is not subject to any prohibition on dealing ahead of the dissemination of investment research. This research does not constitute investment advice and is not a solicitation to buy shares. For more information, please refer to disclaimer.  
 
SEK 113m write down not affecting the case we’re seeing

Earlier in April, Prolight announced that it had decided to write down the capitalized development costs regarding troponin testing on the analogue POC system MicroFlex with SEK 113 million. While the impairment impacts the result for 2023 it has no effect on the cash balance. The impairment is motivated by the fact that testing single biomarker troponin on the MicroFlexPOC system is no longer believed to be successful as Prolight’s digital POC system Psyros™ has demonstrated superior performance. As for the commercialization agreement with The Technology Partnership plc (TTP) signed in 2022, this will not be affected as it covers several other biomarkers with big market potential. The write down and its effect on reported numbers will be published in the annual report on April 30, 2024.

Finalization of the cartridge design an important milestone

Besides the upwards adjustment of 2023 result stemming from the understated claim on the UK tax authority, the most noteworthy news item is the finalization of the cartridge design to be used on the commercial platform. With that, the process of design transfer to Prolight’s contract manufacturing partner Flex Medical Solutions can begin, and the pilot manufacturing processes can now be ready for internal validation by the end of 2024, ahead of the clinical validation during 2025. Prolight’s cartridge has a number of key competitive features including: Simple low part count design, a design for large scale manufacturing ensuring a competitive low cost. It contains all the reagents required to complete the test with dried cartridge chemistry to avoid the complexity and cost of expensive liquid reagents/blister packs. It is also compatible with venous and capillary blood (fingerstick), and plasma samples, and has multiplex capability for multiple analytes on a single cartridge.

Significant long term potential

Prolight has developed a single molecule counting (digital) immuno analysis device that enables detection of biomarkers at extremely low concentrations, using a single drop of blood. Following the proof-of-performance announced in mid-June, followed by whole blood in November 2023, Prolight now focuses on the development of the commercial instrument prototype for digital immune analysis and the preparations for the IVDR certification, with commercialization of the troponin test expected in 2026. Adding the potential for BNP and D-Dimer POC-tests, this translates to a NPV of SEK 680m, supporting a fair value of SEK 1.1-1.2 per share, factoring in additional new equity of a total of around SEK 100m.

DISCLAIMER

This commissioned research report is for informational purposes only and is to be considered marketing communication. This research does not constitute investment advice and is not a solicitation to buy shares. Information provided here or on Emergers’ website emergers.se is not intended to be financial advice. This research shall not be construed as a recommendation or solicitation to invest in the companies described. Emergers cannot be held liable for either direct or indirect damages caused by decisions made on the basis of information in this analysis. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.

This material is not intended to be financial advice. This material has been commissioned by the Company in question and prepared and issued by Emergers, in consideration of a fee payable by the Company. Emergers charges a standard fee for the production and broad dissemination of a detailed note following by regular update notes. Fees are paid upfront in cash without recourse. Emergers may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained herein represent those of the research analyst at Emergers at the time of publication. The company has been given the opportunity to influence factual statements before publication, but forecasts, conclusions and valuation reasoning are Emergers’ own. Forward-looking information or statements contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Emergers shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained in this material.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Emergers’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in this material may not be eligible for sale in all jurisdictions or to certain categories of investors. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.

Investment in securities mentioned: Emergers has a restrictive policy relating to personal dealing and conflicts of interest. Emergers does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Emergers may have a position in any or related securities mentioned in this report, subject to Emergers’ policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Incirrata AB (Emergers)

United Kingdom
This document is prepared and provided by Emergers for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ”FPO”) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States
Emergers relies upon the ”publishers’ exclusion” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Emergers does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Read Less Read More

For new research on growth stocks, sign up to our newsletter