DALLAS, TX -- October 20th, 2023 -- Belluscura PLC (AIM: BELL): Stonegate Capital Partners initiates their coverage on Belluscura PLC (AIM: BELL).
BUSINESS OVERVIEW
Belluscura’s current products are addressing the growing global demand for medical oxygen with its Portable Oxygen Concentrators, or POCs. The Company’s first product X-PLOR received 510(K) clearance from the Food and Drug Administration (FDA) in March 2021 and was launched the following September 2021. Since then, two subsequent generations have been launched, one in September 2022 and the latest in April 2023, and the product has gained good market momentum. Sales initially were primarily directly to patients, but the sales channel has since expanded widely through distributors and DME providers.
The Company has its next ground-breaking device, DISCOV-R, which is estimated to deliver more oxygen by weight than any device currently available on the market, expected to launch 2H 2023. DISCOV-R will be primarily marketed through Durable Medical Equipment (DME) providers and other distributors. Belluscura meanwhile is currently evaluating proposals from third parties interested in white labeling the X-PLOR product for the US market.
Belluscura’s products are presently being manufactured in both the US and China in ISO:13485 certified facilities, and accreditations/registrations in China, UK and Europe have commenced. Within three years, the Company expects to be manufacturing ~75,000 units between the two locations.
Belluscura was founded in 2015 in London, the United Kingdom, but has headquarters in the United States. The Company trades on the AIM under the symbol “BELL”. Belluscura currently reports 33 patents and pending patent applications mostly related to POC technology and other oxygen enrichment
COMPANY UPDATES
- Most Advanced POC Design: Following the success of the X-PLOR® portable oxygen concentrator (POC), Belluscura’s DISCOV-R™ will officially launch 2H 2023 and delivers nearly 3x the oxygen by weight than the leading dual flow oxygen concentrator on the market; it additionally provides 60% more oxygen than the leading pulse dose concentrator. Belluscura’s POCs also have unique patented cartridges that are capable of changing the oxygen flow concentration of the unit. Notably, DISCOV-R is expected to be covered by two CMS codes for superior reimbursement.
- Insider Ownership: Over the last three months, there has been significant buying at Belluscura; overall, three insiders purchased approximately UK£490K in shares in the Company, and none sold. This is a strong indication of alignment between management and smaller shareholders. Insiders currently own ~18% of Belluscura shares.
- Manufacturing Capacity to Scale: The Company currently has two high quality manufacturing facilities, both ISO:13485 certified, with one in the US and one in China. The group transferred US manufacturing in-house in April 2022 to increase production output and reduce manufacturing costs, and management also signed an MSA in March 2022 with InnoMax to manufacture its POCs in China, opening access to international markets.
- Nomad App: Recently, the Company signed a cooperation agreement with a leading respiratory software company to incorporate its Nomad Biometric™ Application into their telerespiratory services. The app was first launched with X-PLOR, making it the first POC with a mobile app to connect with other devices, and it will also be included with DISCOV-R.
- Pipeline and Sales Channel/Market: The addressable markets for POCs are sizable; over 300 million people worldwide suffer from COPD, and it’s predicted to be the #3 leading cause of death globally by 2030. Management notes that over 125 distributors have requested access to sell the newest DISCOV-R unit. Preliminary unit demand is now estimated at 2,000+ units/month, with profitability anticipated to be ~250% higher than X-PLOR.
- Funding Update: Since the beginning of 2023, the Company has raised capital both through the issue of 10% unsecured convertible loan notes ($5.1M net) and through an equity issue ($3.7M net) for a total of ~$8.8M. Proceeds will go towards finalizing the launch of DISOV-R as well as expanding sales channels for X-PLOR.
- TMT Acquisition: Recently, BELL and TMT Acquisition reached an agreement on a possible share for share offer. This transaction was proposed at an exchange ratio of 15 BELL shares per 22 TMT shares. If completed the transaction would add a significant cash infusion to. Currently, the transaction is expected to be completed in early November.
- Valuation: We are using a comparison analysis to help frame valuation. Given the current stage of the product life cycle we are looking forward to 2025 for our valuation metrics. When comparing Belluscura to its peers we look at it through a EV/Sales, EV/EBITDA, and a BV/Share lenses. By averaging these valuations, we arrive at a valuation range of $0.72 to $1.10, with a midpoint of $1.09.
