Fast and objective cervical cancer screening

TruScreen 5 December 2018 QuickView
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TruScreen

Fast and objective cervical cancer screening

Pharma & biotech

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5 December 2018

Price

NZ$0.19

Market cap

NZ$41m

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Share details

Code

TRU

Listing

NZAX

Shares in issue

216.9m

Business description

TruScreen’s real-time cervical cancer technology measures electrical and optical signals from cervical tissue and uses a sophisticated proprietary algorithm framework to distinguish between normal and abnormal tissue, to identify precancerous changes, or cervical intraepithelial neoplasia.

Bull

Regulatory approvals, distributor relationships in place and initial sales achieved.

Instant result readout and better sensitivity than Pap test.

Growing traction in key China market.

Bear

Increased utilisation of HPV testing may affect adoption by government screening programmes.

Sales are below break-even level.

TruScreen test specificity is below the ideal level.

Analyst

Dennis Hulme, PhD

+61 (0)2 8249 8345

TruScreen is focused on the effective commercialisation of its second-generation TruScreen2 optoelectronic cervical cancer screening device, which has already been launched in key target markets. The device provides objective and real-time cervical cancer screening assessments and requires only limited training for the operator, which makes it well-suited for developing countries.

Fast and objective cervical cancer screening

TruScreen2 is a rapid, easy-to-use screening tool that provides real-time objective detection of precancerous and cancerous cervical cells. Direct comparison studies have consistently shown the first-generation TruScreen1 device has a higher sensitivity (70–79%) than the widely used Pap test (36–73%) for detecting high-grade precancerous changes, the key goal of cervical cancer screening programmes. Interim analysis from a clinical assessment of TruScreen2 reported improved sensitivity. Specificity of both TruScreen devices is acceptable.

Well-suited to low healthcare-resource countries

We see the main commercial opportunity for TruScreen as underserved, often rural and regional, populations in developing countries. The minimal training required and instantaneous result with TruScreen are important advantages in regions that often do not have established laboratory infrastructure or processes for recalling patients to report test results several days later.

Approvals and distributors in place to drive growth

The second-generation TruScreen2 device gained CE Mark approval in April 2016 and CFDA approval in China in December 2017. Distributors have been appointed in 24 countries. Sales in FY18 were modest, in part due to the delayed approval in China, but sales grew by 523% in H1 FY19 to NZ$1.4m. In September, TruScreen received an initial order from the National Aids Council of Zimbabwe to supply NZ$0.5m of TruScreen systems for a pilot programme providing cervical cancer screening to HIV-positive women. Africa represents a major market opportunity.

Gaining traction in key China market

China is the primary market for TruScreen, with growing demand and a number of initiatives underway. TruScreen’s devices have been selected as the primary screening tool for up to 50 planned clinics, with the first eight now installed. A large-scale evaluation with the Centre for Disease Control in at least 12,000 women across eight provinces is expected to be completed by the end of FY19. Separately, a major programme in Xinjiang Province will see TruScreen installed in 190 hospitals.

Historical financials

Year end

Revenue (NZ$m)

PBT* (NZ$m)

EPS (c)

DPS (c)

P/E (x)

Yield (%)

03/16

1.6

(1.3)

(0.8)

0.0

N/A

N/A

03/17

1.4

(3.5)

(2.1)

0.0

N/A

N/A

03/18

2.2

(4.2)

(2.1)

0.0

N/A

N/A

Source: TruScreen accounts

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1 APKS Note: Amended as the report prepared does not fall within the regulatory definition of "Investment Research".

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The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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, Edison 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.

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Sydney +61 (0)2 8249 8342

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Disclaimer

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison 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 in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report 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, Edison 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 on this note.

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 Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group 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 Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

1 APKS Note: Amended as the report prepared does not fall within the regulatory definition of "Investment Research".

2 APKS Note: Please confirm that any such shareholdings are held subject to the personal dealing/conflict policy.

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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, Edison 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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