ClearPoint Neuro Inc. (CLPT) research, news, and more from GeoInvesting

Company description

Thu, 13 Feb 2020 17:48:18 GMT

Clearpoint Neuro Inc, formerly MRI Interventions, Inc., MRI Interventions, Inc. is a medical device company. The Company develops and commercializes platforms for performing minimally invasive surgical procedures in the brain and heart under direct, intra-procedural magnetic resonance imaging (MRI) guidance. It has two product platforms: ClearPoint system, which is used to perform minimally invasive surgical procedures in the brain and ClearTrace system, which is under development, to be used to perform minimally invasive surgical procedures in the heart. Its ClearPoint system is a neuro-navigation system designed for placing catheters and electrodes to treat a range of neurological diseases and conditions and for performing biopsies. Its ClearTrace system is designed to deliver catheter-based therapies to treat certain cardiac diseases. Both systems utilize intra-procedural MRI to guide the procedures.

Research

Wed, 16 Feb 2022 14:53:21 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($8.35; $197.3M market cap), a leading neurosurgery platform company is back on our radar after it provided strong preliminary 2022 guidance and comments that it has sufficient liquidity with no need to raise capital in 2022.

The Company estimates revenue in 2022 to be between $20.0 and $22.0 million, representing growth between 23% and 35%. Current analyst estimates are for $20 million. More importantly, the Clearpoint stated, “our current cash position entering 2022 is $54.1 million and we do not at present feel the need for additional capital at any time in 2022.”

The nosebleed valuation that CLPT attained, along with our fear that the company would need to raise money due to recurring losses was one of our biggest hurdles to consider a bullish stance on the company again. We removed the stock from our Long Disclosure Model Portfolio in 2020 after shares increased 300% since its initial inclusion in the portfolio. Shares are now down from highs of just over $30 to its current price of about $9. The stock had been trading at premium valuation with a P/S multiple at times being higher than 30x. We believe investors were a little early in paying forward for the expected growth to come.

We think we are getting closer to a point where we can start looking at the company's 2023 prospects. They might help us decide if we want to get bullish on the company again.

Current sales estimates for 2022 and 2023 are $20 million and $58.2 million, respectively. But more importantly, analyst estimates have the company earning $0.46 in 2023, which we think should help shares attain very high premium valuations, given the company is a medical device company with unique best-in-class solutions.

Without any further dilution, we feel shares will eventually trade at a Price to Sales ratio of more than 10x on 2023 estimates, implying a market cap of near $580 million and a stock price of about $24.00. We also think there’s a good possibility that Clearpoint will become an acquisition target. Again, the slight wrinkle in the story is not knowing if the company will have to issue shares in 2023 to reach profitability.

For some extra background on CLPT beyond what we have provided, you can view a video at a Bobby Kraft conference where Maj hosted investor pitches of a few investors, one of which was Kelvin Seetoh, (@Slingshotcap) who pitched CLPT.

Our past coverage on CLPT:

December 27, 2019 initial Reasons for Tracking piece and added the stock to our long disclosure model portfolio @ $4.80.
March 2020 live premium member fireside chat with CEO Joseph Burnett
December 2020 received funding from Petrichor Healthcare Management
January 2021 removed the stock from our long disclosure model portfolio @$19.95, an over 300% rise over our initial disclosure, and trading at a P/S of 20.
February 2021 shares hit highs of $31.29

Research

Wed, 20 Jan 2021 05:00:00 GMT

**Call To Action - Closed Out Our Select Long Position In CLPT

Yesterday we issued the following tweet:

While we think very highly of management and the company, we feel shares are more than fairly valued at current prices. With shares now up over 300% since we added the stock to our disclosed long portfolio on December 27, 2019. To see our past coverage on CLPT, please go here.

Research

Wed, 13 Jan 2021 05:00:00 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($15.46; $260.8M market cap) a leading platform neurosurgery company announced. record preliminary Q4 results.

From the release:

“...

Preliminary unaudited revenue for the fourth quarter of 2020 will be approximately $3.7 million, an increase of 14% over the same period in 2019. Preliminary revenue for the full-year 2020 will be an estimated $12.8 million, representing 14% growth from 2019.

The Company supported 175 cases in the fourth quarter of 2020 against the backdrop of continued postponements of elective procedures due to the COVID-19 pandemic.

Cash used in operations for the quarter and year ended December 31, 2020, is expected to be approximately $2.4 million and $7.9 million, respectively. The full-year amount includes the payment of $1.0 million in accumulated interest on secured indebtedness that the Company repaid in January 2020.

The Company had approximately $20.1 million in cash and cash equivalents at December 31, 2020.

“We were pleased with our revenue performance in the fourth quarter, augmented by capital purchases of ClearPoint installations,” commented Joe Burnett, President and Chief Executive Officer of ClearPoint Neuro. “While some hospitals have resumed capital acquisition activities, we, like most of our peers, continue to see the adverse impact of the most recent surge of COVID-19 cases globally, and we expect downward pressure on elective procedures to continue at least through the first half of 2021. I look forward to providing more detail on our full fourth quarter earnings call, the specifics of which we plan to announce next month.

…”

Research

Wed, 30 Dec 2020 05:00:00 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($14.35; $241.9M market cap) a leading platform neurosurgery company, announced additional $7.5 million of convertible note funding on improved terms from Petrichor Healthcare Management. The key takeaways from this development are that the conversion price of the note was materially increased and the combined interest rate of 7% represents a reduction from the original note’s all-cash rate of 9%.

“The amendment provides for an additional $7.5 million strategic investment from Petrichor and improves terms relative to the original conversion price and interest rate. The Company intends to use net proceeds to continue funding global product commercialization, external strategic portfolio partnerships, and internal research and development efforts...The conversion rate was increased from $6.00 per share in the original agreement to $10.14 per share, which represents the volume-weighted average price over the 45-trading day period immediately preceding the closing date.”

Comments from CEO Joe Burnett:

“We are thrilled by our continued partnership with the team at Petrichor and the successful closing of this strategic financing...We have the vision of becoming the premier navigation and delivery partner for our Biologics and Drug Delivery customers, and we believe this funding will bolster our balance sheet ahead of a pivotal year. This important capital increase enables us to seize the opportunities ahead by accelerating our product development efforts, expanding our global footprint, and adding to our pre-clinical capabilities to start these relationships well before the clinical trial stage.”

Shares of CLPT have now increased over 200% since we added the stock to our disclosed long model portfolio on December 27, 2019. To bring you up to speed on our past coverage on CLPT, please go here.

Research

Wed, 11 Nov 2020 17:05:06 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($6.85; $113.9M market cap) a leading platform neurosurgery company announced Q3 2020 results:

Sales of $3.5 million vs $2.9 million in the prior year and well ahead of analyst estimates of $2.4 million
Loss of $0.09 vs loss of $0.08 in the prior year and ahead of analyst estimates of a loss of $0.14

“While there remains uncertainty due to the pandemic, our team is being proactive in redeploying our resources to further our engineering efforts and investing in our people and our pipeline of future products and services.

As we look to the conclusion of the year, we believe that total revenue for 2020, absent a resumption of a partial or full suspension of elective procedures due to the progression of the COVID-19 pandemic, will be in a range of $12.0 million to $12.5 million, which would represent growth over the prior year of between 7% to 11%,” continued Burnett. “Nonetheless, it should be kept in mind that our case volume currently represents approximately 80% of our pre-pandemic estimates, and, while hospitals are willing to treat very sick patients, many of these patients are in a high-risk category for COVID-19 based on age or other conditions. As a result, patients, rather than hospitals, are more likely to make the decision to postpone procedures.”

The company’s full year guidance range implies Q4 revenue guidance of $2.9 to $3.4 million, in line with analyst estimates of $3.3 million.

To bring you up to speed on our past coverage on CLPT, please visit this link.

Research

Thu, 13 Aug 2020 18:26:29 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($4.04; $62.0M market cap) a leading platform neurosurgery company, announced Q2 2020 results:

Sales of $2.5 million vs $2.6 million in the prior year and ahead of analyst estimates of $1.9 million
Loss of $0.11 vs a loss of $0.13 in the prior year; ahead of analyst estimates a loss of $0.16

The second quarter of 2020 was significantly affected by the COVID-19 pandemic, which adversely impacted sales across all of our business lines...More than 80% of our procedures are deemed ‘elective,’ which generally resulted in the postponement or cancellation of such procedures to give our hospital customers the capacity for treating critical COVID-19 patients, which resulted in the completion of only 11 ClearPoint cases in April. As elective procedures resumed in certain cities, May case volume increased to 44 cases and June volume followed at 71 cases, representing approximately 90% of our pre-pandemic volume. Similarly, new capital placements and evaluations were effectively put on hold in the 2020 second quarter as hospitals dealt with the influx of COVID-19 patients...

...On a more positive note, our biologics and drug delivery business increased 183% to $1.2 million, which we believe demonstrates that our strategy in this space continues to drive new business and to provide diversification in our revenue stream. While our customer-sponsored clinical trials cases were postponed as a result of the pandemic, our pre-clinical planning and clinical services continued to progress where possible...

...The pervasiveness of the pandemic continues to result in uncertainty as to the timing of the resumption to pre-pandemic levels of elective procedures, capital placements and customer-sponsored clinical trials. Accordingly, we are not yet providing a forecast for the balance of 2020. While we do not expect elective procedures to decline to the level seen in April, we anticipate, and have observed, that hospitals in cities struggling with COVID-19 cases will suspend elective procedures to ensure ventilator access and bed capacity. Furthermore, it should be noted that patients flow through a diagnostic and treatment process before they are referred to surgery. Accordingly, it follows that diagnostic work-ups delayed in March and April will cause the resulting surgeries to be similarly delayed. While we view the current situation as a temporary setback, our team continues to work tirelessly to execute on our four-pillar growth strategy, staying true to our course.”

Research

Wed, 13 May 2020 17:28:30 GMT

Clearpoint Neuro Inc. (NASDAQ:CLPT) ($3.54; $54.8M market cap) a leading platform neurosurgery company, announced Q1 2020 results:

Sales of $3.1 million vs $2.5 million in the prior year
Net loss of $0.13 vs a net loss of $0.11 in the prior year

"We were on-track for another record quarter before the measures implemented in March 2020 to address the COVID-19 crisis resulted in the postponement of elective surgeries, historically constituting approximately 80% of our case volume,” commented Joe Burnett, President and CEO of ClearPoint Neuro. “With the significant impact felt by patients, providers and other businesses from the pandemic, it seems hollow to celebrate our pre-COVID-19 successes. Rather, we want to focus on the new reality our employees and our patients face. April 2020 has been the first month in which we experienced the full impact of the COVID-19 measures. In April, we performed a total of eleven surgical cases compared to a forecast of 80 procedures, which represents an approximate 85% reduction in case volume. The eleven cases took place at sites that perform mostly urgent tumor biopsy and ablation procedures. Hospitals that perform mostly drug delivery and deep brain stimulation procedures have had to postpone them. As a result, on April 16, 2020, we withdrew our case and revenue forecast for 2020.

“We see a number of challenges to the resumption of elective procedures in the months ahead, which include the limited access to personal protective equipment and ventilators,” Mr. Burnett continued. “Our procedures are primarily performed under general anesthesia, thus requiring the use of ventilators. However, these ventilators are currently in demand to treat COVID-19 patients. Further, even if some hospitals restart elective procedures, patients might have reluctance to enter the hospital environment because their families are not allowed to be with them.”

We remain bullish on the long term story, but clearly are aware of the short term impact Covid-19 will have on its business. We need to gain a better understanding of the company's ability to sustain operations with its current balance sheet vs. needing to raise capital, before deciding to add to our position, which is currently still very small.

Research

Wed, 11 Mar 2020 04:00:00 GMT

Please join us as the CEO of Clearpoint Neuro Inc. (NASDAQ:CLPT), Joseph Burnett, discusses his company with GeoInvesting and meeting attendees. Participant Q&A is encouraged at the end of the presentation. Details at bottom.

Shortly after the LD microcap conference in December 2019, we began publishing our research on CLPT, a medical device company that develops and commercializes platforms for performing minimally invasive surgical procedures in the brain and heart under direct, intra-procedural magnetic resonance imaging (MRI) guidance.

You can see our Reasons For Tracking and associated Call to Action here.

We also followed up the LD with an interview with the CEO to learn more about the story. We thought it would be a good idea to also introduce you to the CEO since the company recently reported its 2019 year end financials and with the stock falling sharply amid the Coranvirus scare. Given our knack for buying what feel our best in class medical device companies we think now is a good time to get an update from the company.

Meeting Details:

Topic: ClearPoint Neuro, Inc. (CLPT) / GeoInvesting Virtual Meeting

Time: Mar 12, 2020 02:00 PM Eastern Time (US and Canada)

Join Zoom Meeting - https://zoom.us/j/152146075

Meeting ID: 152 146 075

Please enter your name if possible when entering the room as there is no registration or meeting password required to join the event. You will be admitted to the event by the administrator upon entering.

We look forward to seeing you there!

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Maj & The GeoInvesting Team

Research

Fri, 14 Feb 2020 17:14:41 GMT

ClearPoint Neuro (NASDAQ: CLPT) ($5.61; $85.5M market cap) (old symbol MRIC) a leading platform neurosurgery company, announced 2020 revenue guidance of $14 to $15 million representing approximately 25-35% growth.

“We have evolved to become two companies in one,” continued Burnett. “On one side, we are a platform medical device company, consistently delivering double digit growth, and continuing to expand our installed base of neurosurgery centers in the U.S. Every year more surgeons and more patients gain access to the ClearPoint system and compatible disposable devices. On the other side of the business, we are a gene therapy and biologics enabling company, providing navigation, drug delivery, and case support to more than 20 companies in this exciting and growing space. Here we currently support pre-clinical and clinical efforts, but we believe that we are on the precipice of potentially explosive growth as these therapies progress through the regulatory process toward commercial launch. We feel that our company represents both scale and purpose through a unique combination of predictable device growth and a potential biologics opportunity, all supported under a common team dedicated to treating the most debilitating neurological disorders."

Research

Thu, 13 Feb 2020 17:51:05 GMT

ClearPoint Neuro (NASDAQ: CLPT) ($5.61; $85.5M market cap) (old symbol MRIC) announced Q4 2019 results:

Sales of $3.2 million vs $2.2 million in the prior year
Loss of $0.11 vs loss of $0.11 in the prior year

“We believe that 2019 exhibited a true inflection point in our Company’s history,” commented Joe Burnett, President and CEO of ClearPoint Neuro. “We delivered growth in all four segments of our business, driven by the performance of our commercial and clinical specialist teams that exceeded our plan. We made significant progress across our portfolio of navigation and therapy programs that we expect will result in U.S. FDA submission or market introduction of several new products in 2020, a testament to our development and operations teams.

We encourage you to read the conference call transcript for a complete overview of the developments going on with the company. Two items we would like to highlight are the company’s entrance into gene therapy, and upcoming analyst day.

Gene Therapy

In transactions that were completed in May of 2019 and January of 2020, we secured more than $25 million in financing from strategic partners that strengthened our balance sheet and facilitated us becoming a Nasdaq-listed company, an accomplishment driven by our finance and legal teams.

And finally, the culmination of all of these individuals parts enabled us to win multiple new biologics and gene therapy partnerships, which will lead to exciting new applications in the years ahead. It is not a coincidence that the totality of these developments led us to change our corporate names to ClearPoint Neuro, we feel we are a truly new company with an exciting future ahead…

...We are very excited about our increasingly proven partnership approach, as it further demonstrates the unique important – and important benefits of precise navigation and real-time monitoring for critical and high-cost clinical programs. We’re also thrilled in the confidence of many gene therapy companies that now feel commercial approval for these types of new to world therapies may be measured in the months ahead and not necessarily years.

Analyst Day

I hope that you can feel the excitement and optimism that we all share here at ClearPoint Neuro. We plan to publicly announce preliminary guidance for revenue in 2020 on Friday of this week at our Investor Analysts Day. Also, on Friday, we’ll help to expand on other aspects of what is taking place in the year ahead.

On December 27, 2019, we initiated a speculative starter position in MRIC based on the Company’s bullish long term outlook. You can see our interview summary note here.

Research

Thu, 13 Feb 2020 17:20:41 GMT

ClearPoint Neuro (NASDAQ: CLPT) ($5.61; $85.5M market cap) (old symbol MRIC) announced Q4 2019 results:

Sales of $3.2 million vs $2.2 million in the prior year
Loss of $0.11 vs loss of $0.11 in the prior year

“We believe that 2019 exhibited a true inflection point in our Company’s history,” commented Joe Burnett, President and CEO of ClearPoint Neuro. “We delivered growth in all four segments of our business, driven by the performance of our commercial and clinical specialist teams that exceeded our plan. We made significant progress across our portfolio of navigation and therapy programs that we expect will result in U.S. FDA submission or market introduction of several new products in 2020, a testament to our development and operations teams.

Gene Therapy

In transactions that were completed in May of 2019 and January of 2020, we secured more than $25 million in financing from strategic partners that strengthened our balance sheet and facilitated us becoming a Nasdaq-listed company, an accomplishment driven by our finance and legal teams.

And finally, the culmination of all of these individuals parts enabled us to win multiple new biologics and gene therapy partnerships, which will lead to exciting new applications in the years ahead. It is not a coincidence that the totality of these developments led us to change our corporate names to ClearPoint Neuro, we feel we are a truly new company with an exciting future ahead…

...We are very excited about our increasingly proven partnership approach, as it further demonstrates the unique important – and important benefits of precise navigation and real-time monitoring for critical and high-cost clinical programs. We’re also thrilled in the confidence of many gene therapy companies that now feel commercial approval for these types of new to world therapies may be measured in the months ahead and not necessarily years.

Analyst Day

I hope that you can feel the excitement and optimism that we all share here at ClearPoint Neuro. We plan to publicly announce preliminary guidance for revenue in 2020 on Friday of this week at our Investor Analysts Day. Also, on Friday, we’ll help to expand on other aspects of what is taking place in the year ahead.

On December 27, 2019, we initiated a speculative starter position in MRIC based on the Company’s bullish long term outlook. You can see our interview summary note here.

Research

Wed, 12 Feb 2020 18:26:34 GMT

Mri Interventions, Inc. (NASDAQ:MRIC)($5.14; $80.4M market cap) has changed its name to ClearPoint Neuro and will trade under the symbol CLPT starting today. The company will also be announcing its Q4 2019 results after the close today.

On December 27, 2019, we initiated a speculative starter position in MRIC based on the Company’s bullish long term outlook. You can see our interview summary note here.

Research

Mon, 13 Jan 2020 15:15:32 GMT

Mri Interventions, Inc. (NASDAQ:MRIC)($5.15; $78M market cap) announced it has obtained a $17.5 million strategic investment from PTC Therapeutics and Petrichor Healthcare Capital Management.

“We view the unique differentiation of the ClearPoint neurosurgery platform and its ability to enable the next generation of CNS gene and cell therapies as key growth drivers for the Company,” said Tadd Wessel, Founder and Managing Partner of Petrichor. “CNS gene and cell therapies are poised for tremendous growth and we are excited to partner and provide strategic insights to the Company as they become a leader in this field.”

The company plans to use the proceeds from this strategic investment to pay down in full its existing secured indebtedness and to fund product commercialization, internal research and development, and general corporate requirements.

MRIC also issued preliminary Q4 2019 revenue guidance of $3.2 million, a new quarterly record and a 43% increase from the $2.3 million in the prior year period.

Lastly, the company also announced a corporate name change to ClearPoint Neuro, Inc. The company will commence trading under its new symbol CLPT on February 14, 2020.

“Over the past two years we have worked tirelessly as a team to evolve our portfolio of products and services from a neuro navigation system to a neuro therapy enabling platform. The name ClearPoint reflects our success in those efforts and leverages our proven ClearPoint® System already present in more than 60 active clinical sites in the United States. Additionally, ClearPoint Neuro underlines our commitment and focus to treat the most complex neurological disorders. As our portfolio and the procedures our clinical team support expand beyond the MRI suite, the name MRI Interventions is limiting and simply does not capture the vision or value that we will offer moving forward.”

On December 27, 2019 we initiated a speculative starter position in MRIC based on the Company’s bullish long term outlook. You can see our interview summary note here.

Reasons For Tracking

Fri, 27 Dec 2019 14:15:32 GMT

**Call To Action

We Initiated A Very Small Speculative Starter Position in Mri Interventions, Inc. (NASDAQ:MRIC)- Bullish on Long-Term outlook Despite rich Short-term Valuation; Management has accepted our invitation to present the company’s story to GeoInvesting Premium Members.

I hope you are having a great start to the holiday season. I wanted to let you know that we are aggressively hunting for “moat” type medical device/test companies to actively track and potentially buy. Since we launched GeoInvesting in 2007, our coverage on the this space has been limited, but encouraging. On the bullish research side we have disclosed long positions on eight medical device/test stocks:

Repro Med Systems, Inc. (NASDAQ:KRMD) (Home Infusion Therapy) has risen 2404% since our initiation of coverage in June of 2014.
Semler Scientific Inc (OOTC:SMLR) (products include QuantaFlo, blood flow measurements to examine vascular conditions) rose 358%, when we sold the stock in january 2019, 6 months after we disclosed that we were long and is up 2300% since a GeoInvesting Premium Member, Jakewell Parker, published his bullish research exclusively on GeoInvesting on November 30, 2015.
Pharmchem Laboratories Inc (OOTC:PCHM) (Drug/narcotics Testing Product) is up 460% since we disclosed our long position and bullish research in December 2016. The company has also paid 4 dividends, totaling $0.28.
Stereotaxis, Inc. (OOTC:STXS) (Robotic Heart Surgery) is up 155.8% since we initiated coverage in February of 2019.
Electromed, Inc. (NYSE:ELMD) (SmartVest airway clearance) up 41% since being added to our Mock Takeover Portfolio in August 2017, although we currently don't own the stock and sold shares too soon.
Cas Medical Systems, Inc. (NASDAQ:CASM) (Measurement of oxygenation for cerebral tissue during surgery or critical care situations), was acquired at a modest premium of 20% in March 2019, about 9 months after we disclosed we were long the stock in June 2018.
Biomerica, Inc. (NASDAQ:BMRA) (Various Medical Diagnostic Tests) is flat, as the market waits for clinical results data on some of its products. Coverage began in May 2017.

On the bearish research side, $GBSN is trading at $0.02, for all intents and purposes down 100% from its reverse split adjusted price of $6000.00 when we first shorted the stock and published our negative findings on the company.

New Medical Device Stock In Our Cross Hairs

MRIC is one of the 10 stocks on our interview list after my visit to the December 2019 LD Micro Conference.

As scheduled, we conducted our interview with Mri Interventions, Inc. (NASDAQ:MRIC) this past Monday. MRIC helps doctors see the brain when they are preparing and performing minimally invasive surgical procedures. MRIC is:

“a medical device company focused on the development and commercialization of technology that enables physicians to see inside the brain and heart using direct, intra-procedural magnetic resonance imaging (“MRI”) guidance while performing minimally invasive surgical procedures.”

The company’s current emphasis is to focus on the brain.

Detailed description from Company’s SEC filings:

“ClearPoint system, which is in commercial use in the United States, is used to perform minimally invasive surgical procedures in the brain. It provides guidance for the placement and operation of instruments or devices during the planning and operation of neurosurgical procedures performed within the MRI suite using MRI guidance. Our ClearPoint system is intended to be used as an integral part of procedures, such as biopsies and the insertion of catheters, electrodes and fiber lasers.”

Description from Company’s website:

“Our ClearPoint® system is the only surgical platform that provides real-time MRI guidance for a range of minimally invasive procedures in the brain. It is an integrated system of hardware components, disposable components and intuitive, menu-driven software.

MRIC operates a razor-razorblade model that is typical of medical device companies. The Razor is the Capital equipment that is installed at a hospital such as:

Computer Workstation
MRI-compatible Monitor
Head Fixation Frame
Software

The Razorblade includes disposables such as Equipment (SmartFrame trajectory device) and components, such as the company’s proprietary Cannula, to help guide and facilitate the MRI-guided neurosurgical procedure The interview went very well. The CEO, Joseph M. Burnett, conducted the interview from his car on his way to a meeting and didn’t miss a beat during the hour-long call. We were impressed by his knowledge of the industry and the very clear strategy he has implemented since joining the company in 2017.

Management has accepted our invitation to present the company’s story to GeoInvesting Premium Members. We are working on a date. In the meantime, we wanted to give you an early look at a few quick bullet points to outline some of the key aspects of the story and disclose that we will be taking a small early position in MRIC.

Key Points of MRIC Story:

First class CEO with deep experience in the healthcare industry
First class product that appears to be the only real-time solution to view the brain, which should help the company gain a bigger share of and expand the market.
Razor-razorblade - Appears that disposable/recurring revenue accounts for roughly 70% of total revenue.
Significant opportunity exists to gain market share
- Currently serving only 57 of 257 target hospital settings
- Currently targets two markets where they have significant market share opportunities
  - Deep Brain Stimulation (DBS) - They perform about 500 procedures out of a 5000 to 6000-procedure total addressable market, an 8.3 to 10% market share
  - Laser ablation therapy - They perform 300 to 400 procedures out of a 1200 procedures addressable market. 25 to 33% market share
  - Significant opportunity exists to increase procedure counts in hospitals in which they currently offer services.
Burnett makes changes upon his arrival in 2017:
- Focusing solely on the brain. Will come back to the heart, later.
- Abandons company efforts to develop therapies that would cost way too much to commercialize
- Rightsized the sales force
- Makes changes to create a platform solution. Before Burnett arrived, the company was generating sales from selling ClearPoint for use in approved surgical procedures developed by other companies. However, he is adding other revenue streams:
  - Sell ClearPoint in clinical trials
  - Sell more of the Razorblades
  - Create their own therapy solutions

While we are developing an initial bullish view of the company, we do need to be aware of some important caveats:

The company only has enough cash on hand to finance operations for 12 to 18 months. However, we think it’s quite possible that its pharma partners could provide the company with non-dilutive capital.
$1.9M in debt comes due in late 2020.
Doctors are creatures of habit and may resist change, according to Burnett.
Since the commercial launch of its products in 2010, multi-year revenue growth was flat until 2015 when growth began to pick up. A clearer understanding on what happened in the early years might mitigate some of our concerns on this front.
Of the 2 currently addressed procedures, one is only growing at a single digit percentage per year.
During our interview, CEO Joseph Burnett indicated that his primary focus was on growing revenue. We'd like to dig into this objective further on how he views profitability as a goal, because this could alter our views on the Company's stance towards raising equity capital to fund growth in the future. However, it's worth pointing out that in his role with his prior company he was with for 15 years, one of his main objectives was tightening up cost structure to improve profitability. So, Burnett seems to have an understanding of what it takes to drive profitable growth.

Valuation

MRIC Currently trades at a rich valuation at an enterprise to sales (EV/S) of 9. However, we think a significant premium valuation may be justifiable based on:
- High amount of recurring revenue
- Tier 1 product that can quickly gain significant market share
- Potential for significant revenue contribution from several Pharma partner relationships offers some optionality

Still, we would be more comfortable adding to our position if shares pulled back. On the flip side, we feel there is a good chance that MRIC announces noteworthy progress with respect to its pharma relationships.

Disclosure: Long MRIC

Maj & The GeoTeam