It's not every day that an investor stumbles across a hidden gem biotech company before anyone else seemingly discovers it. We recently discovered what we believe is truly a hidden gem in a new public company called Catheter Precision (NYSE: VTAK), which could and should be worth many multiples of its current valuation. Catheter Precision has remained hidden from the public eye since its merger with its shell company, Ra Medical, which had its products discontinued with new VTAK management and personnel taking charge. Essentially VTAK is a completely new public company, but there is little insight into current operations given the company’s recent sales and marketing progress. As such, it's important to understand the company’s products, management, recent progress, and market potential.
Catheter Precision was started years ago by an industry veteran and successful investor, David Jenkins, who took the helm at VTAK; there is not yet an updated presentation available nor do the financials fully reflect the current state of the company.
The reason this company is a hidden gem is that, from an unknowing investor’s point of view, they will take one look at the stock chart over the past 5 years (-99.99% return) along with the company’s past 4 years of financials which included poor profitability and tons of cash burn, and be immediately deterred. These numbers are enough to send any investor running for the hills, never to set eyes on the ticker again. So no unknowing investor will have looked into the company.
Because of this, VTAK is currently overlooked. The simple fact is that these major red flags have changed within the past year-and-a-half and this performance does not reflect the current management or financial state of the new company. In this article, I will discuss the new company and its potential value with its two medical device/technology solutions which are currently being launched.
Old History and New Management
The company right-sided operations after the merger, which drastically reduced cash burn via a reduction in headcount. Concurrent with the merger, the company brought on medtech veteran and Catheter Precision CEO David Jenkins as its executive chairman. Jenkins is a very successful venture investor who has invested ~$30 million of his own money into Catheter Precision, aligning his interests with shareholders’ interests, rather than taking a fat salary and shirking the responsibility of driving shareholder returns. In fact, if all of Jenkins’ preferred stock (Series X) is converted to common stock, he (and his affiliates) would own close to half the company. This is an equity play for him and personal enrichment by salary compensation will likely be negligible. This alone could be enough to ensure new VTAK investors that things will be different moving forward.
In contrast to the new Catheter Precision, some investors familiar with microcap medtech and biotech may know of a company called enVVeno (NASDAQ: NVNO). I would argue that this is a similar investment opportunity without the management risk that faces NVNO. enVVeno is working on vascular implants to solve diseases like chronic venous insufficiency (CVI) and their products work extremely well and address large unmet medical needs with total addressable markets in the billions of dollars. However, NVNO’s CEO has been a very poor steward of shareholder capital despite any other positives he may bring to the company. He uses the company as a lifestyle vehicle and the longer he takes to make the company a success, the more stock options he gets paid—not that this executive behavior is entirely uncommon in the biotech space. enVVeno recently released positive topline results for their VenoValve, a first-in-class surgical replacement venous valve being developed for chronic venous insufficiency (CVI). Despite the developmental success, the stock has not been a good investment, and two of the key reasons for that have been poor fundraising/management, as well as a biotech, medtech, and microcap bear market.
In contrast, David Jenkins of Catheter Precision is a cash-concerned serial entrepreneur with skin-in-the-game and a long track record including many successes in the medtech space including two notable successful exits: EP MedSystems, Inc. to St. Jude Medical (now owned by Abbott (NYSE: ABT)) in 2008 and Transneuronix to Medtronic (MDT) in 2005, for $91 million and $260 million respectively. These are companies where Jenkins was instrumental in operating, rather than just passively investing. Once again, this company appears to be undiscovered. Once investors check under the hood I think they'll like what they see given the founder and CEO’s full alignment with shareholder value.
Following Jenkins Into Another Investment
According to available information, Jenkins’ performance as an operator/investor has been fairly consistent and it’s safe to say that he’s a very successful businessman, especially in the electrophysiology market. First was the aforementioned EP Medsystems, which if they had the company today in this more developed EP market, might be a billion-dollar company. The company returned investors about 4x in 10 years ($20 million to $100 million with some dilution) which averages out to a 15% CAGR. Transneuronix was a bigger winner for the investors as Jenkins managed a 10x return in about 7 years, or a 39% CAGR.
The difference with Catheter Precision is the entire career of experience he has brought to the table and the fact that the company is sporting a microcap valuation while already having innovative products on the market. His other companies were developmental at the beginning. Investors buying the Catheter Precision merger are introduced to a company ready to ramp up commercially while the stock is misunderstood and in a very poor capital market. This makes the valuation depressed even though the markets are not as much of a concern since the company might not need another capital raise to accelerate its products’ hard launches.
To reiterate, Jenkins has invested $30 million of his own money into the company and is therefore aligned with shareholders as he and his family own about half of the company. He, as his own entity, is also well-capitalized. This is not the first time he has personally invested in his own ventures, as he invested his own funds in EP Medsystems to “push it over the hump” to success before its eventual acquisition. The EP market is growing at a strong pace—on J&J’s recent earnings call, they said again that EP divisions are experiencing double-digit growth. This market is also more mature than it used to be so the investment thesis for VTAK versus Jenkins’ prior projects looks even more attractive.
Background and Summary of Catheter Precision
Catheter Precision is a small medtech company bringing novel solutions to market in the electrophysiology space, specifically for cardiac arrhythmias. Founded in 2006, the company has been developing three devices for the EP market, namely 1) a non-invasive 3D imaging system called VIVO that enables physicians to identify the origin of arrhythmias pre-procedure, 2) an advanced suture (stitches) retention device called LockeT, which is intended to improve the wound healing, ease of stitching, and reduced scarring or deformation in wounds (applicable to a wider market than just EP), and 3) a developmental stage remote catheter system called AMIGO, which will take a bit more time and capital to bring to market, so will not be the first priority.
Jenkins tried to merge Catheter Precision years ago but the opportunity finally appeared for the company to merge and become publicly traded.
Jenkins, who is also the company’s founder, has worked as an entrepreneur in the medical device industry his whole career. According to Jenkins, this is his last company (the third company in cardiac electrophysiology), he has personally invested $30 million in the company, and all of his focus is on the company. I question that all his focus is on this one company since he was just added to the board of Crdentia Staffing, but Catheter Precision should be a primary focus. Jenkins has developed a deep understanding of the competitive field and industry, as well as the field’s key opinion leaders and leading physicians. He knows the competitive and clinical field as well as the key doctors in the electrophysiology field.
Last year, the company hired sales reps in Europe and the U.S. to spearhead the full launch of the VIVO system and the LockeT device, and recently they followed up by hiring an experienced and highly successful commercial electrophysiology team. We’ll get to the significance of these attractive products and how they’ll drive profits later. To simplify things, the company’s comparables might lie in the $300 million to $900 million range, without revenues. The company has approved products (VIVO, LockeT) and has begun to launch sales.
The VIVO System
The VIVO (View into Ventricular Onset) system is an FDA-approved (as of June 2019) “non-invasive 3D imaging system that enables physicians to identify the origin of ventricular arrhythmias pre-procedure, streamlining workflow and reducing overall procedure time.” This allows physicians to more accurately pinpoint the desired efficacious location for ablation, which should decrease the risk of ineffective ablation, decrease the procedure time, and decrease the risks of procedural complications.
Ventricular Arrhythmias
For those who aren’t familiar with the heart or arrhythmias, they are essentially malfunctioning contractions of the heart due to improper electrical impulses sent to the muscles of the heart that cause it to pump in a well-timed fashion. Arrhythmias can range from benign to life-threatening depending on a range of variables, similar to how piston misfiring in an engine can be damaging to an engine. Atrial fibrillation is an irregular beating of the heart localized in the left or right atrium, and this condition can commonly be treated with an ablative procedure where the part of the atria responsible for the aberrant electrical signaling is electrically isolated or destroyed. Ventricular arrhythmias are improper signals/contractions in the right or left ventricles, and the most common are premature ventricular contractions (PVC) and ventricular tachycardia (VT). When a ventricle contracts before it's completely filled with blood, this impairs blood flow and stresses the heart. Three or more PVCs in a row are typically characterized as VT. PVC is common and usually benign but can lead to ventricular fibrillation which is a quivering of the ventricles instead of pumping, often leading to cardiac arrest and death. The problem with PVC and VT is that the ablation procedures targeting the ventricles, particularly the left ventricle, can be more difficult than atrial ablation due to the difficulty in finding the origin site of the arrhythmia (e.g. papillary muscles, ventricular septum). This has stymied the increase in ventricular ablation procedures being completed despite their effectiveness in correcting ventricular arrhythmias.
How Do Papillary Muscles Work - Rectangle Circle (rectanglecirclee.blogspot.com)
Ventricular fibrillation is considered more immediately life-threatening than atrial fibrillation. VT usually occurs when the heart muscle has been damaged and this causes abnormal electrical pathways in the ventricles. Below is a diagram showing the correct pathway of electrical impulses from the sinus node (natural pacemaker) to the ventricles. Various deviations in signaling that encourage a contraction at the improper time may cause arrhythmia. Normally, the atria need to contract to fill the ventricles with blood, and only after the ventricles are filled do they contract to pump the blood.
Premature ventricular contractions (PVCs) - Symptoms and causes - Mayo Clinic
As opposed to ventricular fibrillation, atrial fibrillation is not directly fatal, but it is associated with a high risk of clotting and other complications. For instance, patients with AFib have a 3-5x increased stroke risk, and untreated AFib can weaken the heart and eventually cause heart failure. This underscores the importance of a properly pumping heart.
Individuals who only have infrequent PVCs with no structural heart disease usually have normal lives. However, those with at least 10,000 PVCs per day or greater than 10% PVC burden are at risk of dilated cardiomyopathy and significant clinical symptoms. However, recent European Society of Cardiology (ESC) guidelines recommend catheter ablation for patients experiencing >10 PVCs/hr (burden rate of 0.27%) or where PVC-induced cardiomyopathy is suspected. Supposedly this is recommended to prevent further complications and reduce symptoms.
VIVO’s Accuracy: Detecting PVC and VT Origin
After a series of fairly successful studies for locating VAs to guide treatment, and then subsequent VIVO system optimization, VIVO was shown to be 100% accurate in identifying a PVC (100% site of origin, 99.5% paced location) or VT foci in the right, left, or septal region of the heart in clinical trials. Catheter Precision conducted two self-funded trials that have proven VIVO’s utility for treatment on the ventricular side of the heart. It also demonstrated a reduction in mapping time of 30% with a reduction in overall procedure time of 38 minutes.
The system, an ECG imaging system, works by combining a myocardial model from CT or MRI, a 12-lead ECG for ventricular arrhythmia localization, and a 3D photo for electrode positioning into computer algorithms to pinpoint the required site for ablation, guiding more successful procedures.
The system can also aid in identifying sites of pleomorphic PVC (multiple sites) which have lower success rates and more repeat procedures. This also benefits the patient as they are able to be counseled more accurately to assess risk by identifying the site (LV summit, epicardium, etc) which affects the procedural risk profile, making VIVO valuable to patients with questionable PVC burdens or otherwise only contemplating ablation.
Current Solutions for Ventricular Arrhythmias
In some cases, VAs like PVC can be managed with lifestyle changes or pharmacological solutions. Antiarrhythmic medications like beta-blockers, calcium channel blockers, and ACE inhibitors have been available for nearly a century and are a key therapeutic solution, with the intent to reduce the frequency and duration of arrhythmic episodes, along with potentially reducing hospitalizations due to atrial fibrillation. However, drug use is often limited due to proarrhythmic and noncardiovascular toxicities and limited effectiveness. Regardless of the drawbacks, the medications are widely prescribed and new antiarrhythmic drugs are under development. Thus, the opportunity to accurately identify the location of VAs so that they can be ablated is very large.
The LockeT Device
Cather Precision’s closure device is a lot simpler to wrap one’s head around and there’s also not as much public discussion on it. In February 2023, the company announced the launch of LockeT, its suture (stitches) retention device. The way it works is by distributing suture tension over a larger area on the patient, in conjunction with the suture closures, while also providing visibility to the area. Thus, medical professionals can see that stitches are causing a high amount of localized skin tension. This helps with healing but also to smooth out the way the skin heals back together, to reduce the ugliness of scarring.
LockeT applies to percutaneous wound sites; for instance, it can be used with an EP procedure where a catheter has been placed through the skin and into a blood vessel. In this case, the physician would suture the site and the vessel, and the LockeT device would hold the sutures in place, being either a complement or an alternative to other closure devices such as Perclose, sold by Abbott (NYSE: ABT) (acquired for $680 million), Vascade, sold by Cardiva which was acquired by Haemonetics (NYSE: HAE) for $510 million, and Angioseal, sold by Terumo (OTCMKTS: TRUMY) and formerly acquired by St. Jude for $167 million. Other markets besides cardiac electrophysiology include structural heart and other vascular surgeries—millions of applicable procedures according to the company. The selling point is that it is user and patient-friendly as well as a low-cost, simplifying closure. The company claims market uptake will be rapid. Lastly, Catheter Precision expects to receive a CE Mark for LockeT in Q3.
Catheter Precision completed its feasibility study and found the device to be successful, creating hemostasis in all venous sites, as well as being safe and easy to use. The company is enrolling in additional studies to compare LockeT to manual compression, to evaluate time to hemostasis, and to evaluate time to ambulation. There are no initial 510(k) filing requirements to allow marketing requirements, but the FDA does require studies and 510(k) submission and approval for broader labeling claims.
Product Economics
We expect these products to carry excellent gross margins. The LockeT device disposables reportedly cost $8 to produce and sell for $150 each. The estimated market for this is 4-5 million annual procedures, including ~1 million EP procedures, 1.5 million interventional radiology procedures, 200k structural heart procedures, and 500k vascular surgeries, with not a lot of competition. VIVO is supposed to cost about $45,000 upfront, with disposables selling for around $1,500 and costing $125 to manufacture. Catheter Precision should approach gross margins of 90% or greater as disposables for both VIVO and LockeT overshadow VIVO system sales.
Commercial Launch
We expect the company’s near-term commercial uptake to be relatively strong. Jenkins has good connections with some of the best KOLs in the electrophysiology field. The company had been slowly rolling its commercial launch for the past two years months, and over the past year, it has finally ramped up sales efforts. We expect an 18-24 month ramp to a run rate of $25 million in annual revenue, with about $8-10 million in revenue for this year.
Data on the incidence or prevalence of PVC, VT, or other ventricular electrophysiological maladies that may benefit from VIVO is difficult to find as there is simply not a lot of data on the subject. PVC is extremely common but its burden widely varies as does its symptomology. There are also conflicting opinions on the usefulness and risk-reward ratio of ablation for PVC; however, when looking at the totality of literature being published, the electrophysiology field is generally moving in the direction of pro-ablation, especially with severe or moderate PVC burden, with the true risks of PVC not being a totally benign condition being elucidated as well as the benefit of ablation for LVEF, exercise tolerance, and other symptoms being further studied.
Atrial ablation has a large failure rate, with many patients coming in a second or third time for repeat ablations. Currently, the growth in this procedure is from the atrial ablation side, particularly with repeat patients with recurrence, with recurrence rates estimated to be between 20% and 40%. Industry growth is not on the ventricular side, which includes ventricular tachycardia (VT) or premature ventricular contractions (PVC). The reason for the lack of ventricular ablations is that it takes a long time to figure out where the arrhythmias originate. Catheter precision focuses primarily on the ventricular side of the heart, helping physicians pinpoint exactly where the pathological ventricular cardiac activation is, with high accuracy. This sharpshooting of ventricular arrhythmias with accurate pre-mapping reduces the time patients are under anesthesia on the operating table and also reduces complications. The cost savings are estimated to be about $15,000 per procedure while also enabling more procedures per day (another $30,000-$45,000 per day in revenue for the electrophysiology practices). There are an estimated 3,000 EP labs around the world.
Incidence rates for idiopathic symptomatic ventricular arrhythmias including PVC (with reduced ejection fraction) were found to be 62 per 100,000 person-years versus 90-123 per 100,000 person-years for Afib. Therefore I assume the total number of ventricular ablations will increase over time to match the total number of ablations for atrial fibrillation, which is estimated to be 75,000 procedures per year with an estimated 400,000 current candidates for ventricular ablation in the U.S. Catheter Precision’s 10-K show 2023 ventricular ablations at 155,113 procedures annually. Also, VFib is considered much more dangerous than Afib, and PVC is becoming more understood as a serious condition that can also give way to Vfib. Therefore this, in the long-term, in my opinion, is not a poor assumption; however, the confidence in this estimation of future ventricular arrhythmia ablations is comparatively low. Given the vast market of 400,000 patients who may currently benefit from ventricular ablation, the 75,000 (mostly atrial) ablations that are currently done annually, and $1,500 in revenue per procedure, it isn’t unreasonable to think that VIVO could generate $15 million annually in disposables - 10,000 procedures per year. This is also only 2.5% of the readily available addressable market of 400,000 patients and 3,000 EP labs.
To aid in the full launch, Catheter Precision hired a few additional sales personnel and some clinical representatives to support the launch and gather information on patients entering their European observational registry; previously, there had been no fully designated sales employees in any prior quarter. Recently, the company hired a highly experienced EP commercial team who grew their prior electrophysiology company’s sales to over $100 million annually before selling for a $1.7 billion exit. The implication might be that this was Boston Scientific’s (NYSE: BSX) buyout of Baylis Medical. As for near term commercial potential for Catheter Precision, they will soon have more clinical validation and market acceptance for VIVO, with potentially 40-50 systems in use in U.S. hospitals by 2025.
Robert Locke, VTAK’s new VP, commented on the new sales launch:
“I have been on board for just over one month and already I have over ten hospital accounts that either have agreed to order or agreed to try out the new LockeT product. Each of these hospitals performs hundreds of Afib ablations per year. I expect Locket, with its compelling value proposition, to become widely utilized, not just in the US, but worldwide as well, and not just in EP, but in vascular surgery and interventional radiology."
That optimistic comment was followed shortly by a first purchase order from a large healthcare system, with the specific hospital representing a potential 1000 LockeT purchases annually.
Financials
Catheter’s recent quarterly financial release showed $3.6 million in cash on hand as of end of year 2023. The third and fourth quarters saw a modest increase in sales to ~$130k/quarter, while operating expenses were reported to be $2.7 million per quarter. Prior to the sales team expansion, we expected the company would be using $550,000/month excluding contributions from COGS—gross margins are high so we expect this contribution to be minimal. Based on the recent financial release, it appears that the overhead expenses will rise, but will be met with robust commercial uptake. $2.7 million per quarter in operating expenses translates to $10.8 million annually, roughly in line with cash flow breakeven at revenues of $10 million.
In the following chart, I model a parabolically increasing revenue model to the target $25 million annual run rate by the end of 2025 to test if their cash balance might be enough. The revenues are parabolic as it's a conservative assumption from a cash perspective and the recurring revenues from disposables will take time to build. I model COGS as 10% of revenues. Inferring current overhead/SG&A/operating expenses from Q4 2023 and Q3 2023 financial results, I assume SG&A (and including other operating expenses like R&D) will total $1.837 million per quarter moving forward. This roughly agrees with the $550,000/month overhead figure from above. The purpose of this simple chart is to see if they might need to raise money in the next year or two to support VIVO and LockeT’s launches.
As one can see, the company may need to raise cash depending on how fast its revenues increase. For instance, if the company’s sales follow a linear path to $25 million in annual run rate, the company is not estimated to need to raise money, as shown below.
Either way, this isn’t much of a concern, since David Jenkins has been known to support his companies in the past, participating in small financings to move the projects forward to profitability. The recent EP commercial team hire is likely to increase the company’s expenses, but their announcement highlighted an expectation of cash flow breakeven by end of 2024. This implies a fairly robust commercial uptake in the next 8 months and revenues likely exceeding $8 million, especially given the team’s prior commercial successes and investment exits.
Valuation
One can value the company based on EV/EBITDA on forecasted revenues but it’s probably easiest to value the company based on comps. Should the company reach a $25 million run rate in two years, using a 25x EV/EBITDA multiplier (a bit high to account for some continued growth based on being still early in the launch process in a growing subsector), the company would be valued at $313 million, assuming 90% gross margins and about $10 million in SG&A. This is in line with recent comps.
Based on the company’s prior 10-K, the fully diluted share count is approximately 34.2 million based on 7,573,403 shares of common stock outstanding, 12,656,011 shares of common stock if Series X preferred stock is converted, 11,042,137 warrants (most exercisable at $3.00), 614,593 options, and the potential conversion shares of Series A convertible preferred stock into 2,313,956 shares. These options and warrants also represent another source of funding for the company, but it is unclear whether they’ll be exercised before additional fundraising activity.
Based on an estimate of a future 34.2 million fully diluted shares, a $313 million value would be $9.15/share. We believe it's reasonable that if sales traction shows that the company will not need to dilute significantly, the shares could approach $2-3 in the next 12-18 months.
Comps and Competition
The best comp for Catheter Precision is a company called CardioInsight, which Medtronic (MDT) bought for $100 million ($93 million net of cash) in 2015. The company developed its ECVUE system which was designed to “non-invasively generate images of the electrical activity of the heart by combining body surface electrical data with 3-dimensional (3-D) anatomical data. The system then reconstructs and displays 3-D maps and other useful measures of cardiac electrical activity.” The CardioInsight vest uses 252 electrodes. While this sounds similar to VIVO, the key difference is that VIVO uses MRI/CT and has been developed to model the heart in 3D but not just a surface model. ECVUE/CardioInsight “is limited by only being able to map the epicardium [surface] as well as its cumbersome nature and high radiation exposure. View Into Ventricular Onset™ (VIVO) is a novel non-invasive mapping tool that has been previously shown to accurately localise the site of origin of ventricular arrhythmias by using the 12‑lead ECG to create a 3-dimensional (3D) model of ventricular activation – an ‘electrical roadmap’" Since VIVO localizes the VA origin, it is much more useful to the physician and fits into their workflow. Since it enables VA ablations, it provides an opportunity in a blue ocean market on the ventricular side for electrophysiology. That wasn’t really the case for CardioInsight’s product.
Notably, at the time of acquisition, CardioInsight’s ECVUE system had been used with more than 1,400 patients and featured in more than 120 peer-reviewed journals and presentations. While VIVO hasn’t been featured in nearly as many journals, it has already been used in procedures 800 times. ECVUE (CardioInsight Workstation) is also much more expensive than VIVO (almost 10x), and seems to be mostly used for AFib.
A comp for the LockeT device, which is initially targeted for EP procedures but applicable to a wider range of indications, is Cardiva which Haemonetics bought for $510 million in 2021. It's important to note that Cardiva Medical was expected to add $70 million in revenues for Haemonetics in the first fiscal year and the company’s collagen-based vascular closure products were shown to allow patients to be discharged after AFib ablation the same day as well as reduce the risk of complications; the company and its sales were more mature at this point in time compared with Catheter Precision. So this value comparison is definitely a current overestimation.
Another pseudo competitor to Catheter Precision is BioSig (NASDAQ: BSGM). The company has a market cap of almost $90 million. The company has developed and is launching, to explain in simple terms, a more accurate ECG device, intended to aid electrophysiologists in reading various signals. This product, PURE EP, we don’t consider as “necessary” as VIVO in identifying and treating VAs, though would be a nice complementary product for an electrophysiologist. The company does have a collaboration with the Mayo Clinic, but the best this device can currently do is just provide another signal for the physician to help diagnose. They are currently running a study to see if signals from PURE EP result in different ablation targets and improve procedural efficiency for AFib. In our opinion, Catheter Precision has a more valuable product.
CEO/COB Jenkins has experience with investment exits as mentioned before. Therefore it is not unrealistic to think about larger suitors who might purchase the company outright and compare the values of the aforementioned comps to the potential value for VTAK. For instance, J&J (JNJ) mentioned on their Q1 2023 conference call that their electrophysiology sales continue to grow at a double-digit pace: “As we continue to increase our reporting transparency, beginning this quarter, we are providing visibility to Electrophysiology sales. Electrophysiology continued to deliver double-digit sales growth in all regions with the exception of Asia Pacific, which reflects impacts related to volume-based procurement in China.” Other suitors whose strategies Catheter Precision’s business might fall into include Medtronic, and Boston Scientific (BSX). VIVO would be additive to their product lines, not cannibalistic.
Risks
There’s a high amount of risk in investing in cash-flow-negative companies launching new products. It’s fairly clear how valuable VIVO is. However, success will boil down to operations and execution. There are regulatory risks such as not obtaining CE Mark for LockeT, and unexpectedly poor outcomes in post-marketing surveying (European observational registry) which the company is pursuing. I mention this as a risk because VIVO has performed very well to date so there is much more room for error on the downside when measuring VIVO’s effectiveness in the clinic, even though poor performance isn’t expected. Funding and dilution is always a risk. Lack of market uptake and competition are significant risks. While there is no direct competition, BioSig and others may have products that provide alternative solutions, in a way.
Most notably, a majority of the company’s fully diluted shares are not outstanding yet (in the form of warrants, etc), the company has about a $5-6 million market cap. This is very low and while exciting to think about returns from such a low valuation, the risks tend to be very high with many companies failing. While we like Jenkins and Cather’s products, this is still a risky investment. Oftentimes companies with depressed valuations have difficulty raising money to support operations or product launches and enter into a death spiral of dilution.
Conclusion
The company’s products are immediately and obviously valuable to healthcare providers. For instance, last year there was a European Heart Rhythm Association (EHRA) conference in Spain. One well-respected doctor stood up and said he would never do a particular ablation case without VIVO. I suspect this was a pleomorphic PVC case. At the Heart Rhythm Association meeting in New Orleans a month after EHRA, there was a live left ventricular procedure done in front of ~150-200 doctors, and the LockeT device was demonstrated in front of everyone during the live procedure. So anecdotally, there has been some positive feedback from the initial product launch from the EP physicians. Since then, the confidence from the newly brought-on, seasoned EP sales team is very high as communicated through recent VTAK press releases.
The company is currently at a very low valuation as it launches its two EP products. This valuation is not pricing in very much commercial success, including reaching breakeven within the next year. We expect the company to have a strong 2H 2024 commercial uptake, followed by a larger ramp in 2025 as VIVO is accepted by several major hospitals and VIVO disposables revenue rises. On the other hand, if the company fails to reign in its expenses, massive dilution could occur. However, under the leadership of David Jenkins, who has a significant ownership stake and who has a successful track record, the chances of commercial and financial success we believe minimize dilution risk. If in the next few years, the company is very successful in its product launch, dilution is avoided, and LockeT studies are successful, we believe shares could trade above $10. Shareholders considering going long VTAK should consider an appropriately weighted position given the company’s small size and unproven revenue potential and cash flow neutrality, weighted against potentially robust returns. VTAK shares are likely to rise rapidly if the company shows that it is on the path to cash flow breakeven.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. A guest contributor wrote this article and solely reflects his opinions.
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