2021 the year of break through for universal plasma?

2021-02-28 18:32, Edited at: 2021-04-16 10:54

Is 2021 the year of break through for universal plasma and whole blood of Glycorex? Todays stock value of 10 SEK should at least double considering the new sales oriented management, the new UBP produkt and the very promising projects!

Summary

Glycorex is a medtech company that more than a decade has been selling their world leading product Glycosorb AB0, that makes it possible to make blood group independent organ transplantations possible. It is used mainly when living donors and kidney transplantations (80%), but also for liver, lung and heart transplantations.

During these years, Glycosorb-AB0 has gradually improved and it has also generated so much sales that it has been possible to conduct a number of promising development projects without having to shell out too much money.

The company has always been run by the inventor and his son, in a way that makes one believe that the goal has not been to grow with the potential their excellent products This was changed during 2020 with the following game changing improvements:

1. A new more experienced and sales-oriented CEO was appointed, with extensive experience in the blood industry and the US market.
2. A new board member was appointed with extensive experience in the medtech industry and also knowledge of the US market.
3. A new product to make blood plasma universal (Glycosorb-UBP) was approved (CE-APPROVED) and launched. Market potential for UBP is estimated to more than a billion SEK only in Europe.
4. The product for treating Rheumatoid Arthritis (RA), with a potential multi billion SEK market potential only in Europe, is now ready for clinical trials.

In other words, the for long promising company has now shifted up to be avled to grow to its full potential.

What has happened 2020-2021

During the last 12 month we have seen a lot of significant progress in the company:

1. In June 2020 a new board member (Christer Ahlberg) was recruited, who in 2017-2021 has been CEO of the fast-growing company Sedana Medical. A medtech company with a product that during his time has been launched in the US market.
2. In October 2020 a new CEO (Pontus Nobreus) was recruited with experience from several different blood-related companies, of which the last 2 years as marketing manager for Biovica in the US.
3. The company's medical service for making universal blood plasma (UBP), with a potential multi billion SEK market, was CE registered (June 2020) and launch has begun by letting strategically important clinics and blood banks in Europe and the US evaluate the product. 
4. Since march 2020 UBP has been used in selected hospitals to make convalescence plasma against covid-19 blood group independent. One of these hospitals is Lund Hospital in Sweden.
5. Promising tests for the use of UBP for platelets were presented in June 2020. This could potentially double the market for UBP.
6. In the US, there is an interest in using UBP for whole blood and since nov 2029 a prominent center is evaluating this application. 
7. The company's medical device project for treating Rheumatoid Arthritis (RA), with a potential multi billion SEK market, is now ready for clinical trials after successfull preclinical tests and compatibility tests.
8. A collaboration has started with a distributor in Turkey for the product Glycosorb AB0 and it has been approved for use (Feb 2021). Turkey, with a big medical tourism, is the third largest market in the world for kidney transplantation from living donors, with a yearly market potential of 25 MSEK
9. In sep 2020 an Austrian study was presented that showed excellent results for Glycosorb ABO for treatment after stem cell transplants. The market potential of this new area for Glycosorb AB0 is estimated to more than 200 MSEK. 
10. In dec 2020 Glycosorb ABO has been used intraoperatively for blood group incompatible liver transplantation in India . This could potentially pave the way for the use of Glycosorb ABO intraoperatively also for blood group incompatible transplants from deceased donors and thus significantly increase the market potential.
11. To attract bigger investors and funds Glycorex has announced that they are investigating the possibility of a list change to Nasdaq small cap Stockholm.

Triggers 2021

2021 looks very exciting with the following expected triggers to wait for:

1. Promising tests for the use of UBP for platelets were presented in June 2020. This could potentially double the market for UBP. More information on this is expected.
2. Tests at a prominent clinic in the United States began in late 2020 to see if UBP can be used for whole blood in a smooth way. Results from this are expected. Is this related to the tests with UBP for platelets?
3. Results from RA biocompatibility studies were completed in November 2020, next step is to start Clinical studies and they are expected to start in 2021.
4. Reference customers among hospitals and blood banks that use UBP have been appointed. One of them is Lund Hospital in Sweden. We are waiting for more reference customers to be official.
5. First commercial sale / agreement on the UBP product is expected.
6. Information is expected from discussions with clinicians about clinical study of Glycosorb in the USA.
7. An agreement has been signed with a distributor in Turkey for Glycosorb AB0 and approval from the Turkish authorities to start selling is ready. Now we are waiting to hear about sales in Turkey.
8. Further information on changing the list from NGM Main Regulated Equity to Nasdaq small cap Stockholm is awaited.

Economy

Accountings

The Covid-19 pandemic 2020-2021 has made a big impact in sales last year, when many transplants were canceled. With more knowledge and with the roll-out of vaccines, transplants have picked up again so that sales in the second half of 2021 are expected to be back to normal levels.

The company has no debts. With a relatively large directed new share issue that added 40 MSEK to the company in January 2020, cash after the annual accounts for 2020 is approximately 50 MSEK. 

During the exceptional year in 2020, Glycorex reached sales of 27 MSEK (2019 37 MSEK) and a loss of -8 MSEK (2019 + 7 MSEK)

The stock

The Price of the Glycorex share is arround 10 SEK (Mid April 2021), which corresponds to a market capitalization of 730 MSEK. At most the share price in 2020 was just over SEK 20 (April), but surprisingly during the second half of 2020 a significant sales pressure started, where every positive news was followed by large sales. Surprisingly since the future looks very promising and many excellent news have been delivered during the last 12 months.

The private placement in January 2020 of 4 million shares for 10 SEK each was subscribed for by 2 big players and some minor. One of the big players began selling off its shares immediately, including a large previous holding, and all was gone jan 2021. In jan 2021 the second big player was dumpning all shares and was ready april 2021. Selling so many shares in a company when turnover is very low has made a major impact on the share price, so it was cut by more than 50% since the top a year ago.

No major activities from insiders have taken place in the past year.

The Glycorex share is traded on the NGM (Nordic Growth Market) Main regulated Equity list, which can be a disadvantage as many funds and investors avoid this list, even though it is a reputable list with good control. Glycorex is therefore currently investigating the possibility of a list change to Nasdaq small cap Stockholm.

The fair value of the share?

Glycosorb AB0 is a high-margin product with a gross margin of about 80-90%. The company estimates the market potential at 420-630 MSEK. When you reach the fixed costs for the company, which are now about 30-35 MSEK, the majority of excess sales become almost pure profit. Based on the new geographic markets, the new areas of use for Glycosorb AB0 and the new more market-oriented management, I estimate that Glycosorb can reach sales of 80-100 MSEK within 2-3 years, with a profit of 35-50 MSEK. This alone should defend today's price of SEK 10.

With the marker value of 10 SEK the following is also included:

1. Glycosorb-UBP, a product that has just been launched and is considered to have a much greater market potential than Glycosorb AB0. The company estimates that the market potential in Europe alone exceeds SEK 1,000 million.
2. The RA product, a high-margin medical device that has shown very promising preclinical results and will soon undergo clinical trials, which in comparison with for drugs is a very fast process. This product is considered to have many times greater potential than Glycosorb AB0. The company estimates that the market potential exceeds SEK 5,000 million. I estimate that there is a 30-50% chance that the product will reach the market.
3. A number of other development projects with great potential where the Myastenia Pregnant column has come the furthest.

Based on this a fair market value of at läst 20 SEK would more reasonable, with a much greater potential in 2-3 years if UBP or the development projects will be succeessfull.

Products and projects in depth

Glycosorb AB0

Glycosorb-ABO is a product that has been used since 2001 to enable transplants where the blood groups do not really fit together. It is mainly used in kidney transplants from nearby living donors, but also for other organs. The product has so far been used in more than 5000 kidney transplants and with excellent short- and long-term results. The product has improved in batches over the years. Sales of Glycosorb AB0 have largely covered the costs for the development of new products.

Potential

There is an opportunity to increase sales as several major countries have not yet started using the product or only use it on a small scale. In addition, there are new areas of use with great potential.

The four countries with the greatest potential are India, the United States, Mexico and Turkey:

1. In India, more and more transplant centers are using the product. 
2. Mexico looks promising, not least when Glycosorb ABO has been established in the cost compensation system. 
3. In Turkey an agreement has recently been signed with a distributor and it has been approved for sale since February 2021. Turkiet is well known for its medical tourism.
4. The US market is again interesting given the authorities' initiative to double the number of kidney transplants due to the rampant dialysis costs. Discussions are therefore being held with US centers to conduct a small study required for approval.

Glycorex sees a market potential per year for kidney transplantation of 420-630 MSEK from living donors, including the USA and Turkey.

Recent studies have shown that the use of Glycosorb AB0 can be very valuable in stem cell transplants. That market may in the future provide a major addition to sales estemated by Glycorex for and at least another 220 MSEK.

A new study in India shows that a patient has been successfully treated with Glycosorb ABO while performing a liver transplant. Interoperative treatment with Glycosorb ABO could pave the way for blood group incompatible transplants even from deceased donors and thereby significantly increase the market potential.

UBP column

UBP stands for universal blood plasma, blood plasma that can be given to anyone regardless of their blood type.

Today, blood plasma from people with AB blood is used as a universal. Blood group AB is the rarest of blood groups (5%) and the need for UBP is greater than what AB plasma can fill. AB blood also contains antigens, which can potentially cause side effects, which is why UBP is preferred.

GTAB's UPB column is a simple product that uses the force of gravity to let the plasma from a plasma bag with any blood group pass through the column and you get a bag with universal blood plasma. The chemistry used in UBP is the same as for Glycosorb ABO, which is why it is a very proven method.

The UBP column was approved in Europe (CE-approved) q2 2020. The initial launch has begun by having specially selected reference customers among blood banks and transfusion centers evaluate the product, which is now underway. It has also been used for convalecens plasma during the pandemic, but this is not a big market in the end.

Potential

The UBP column has significantly greater market potential than Glycosorb AB0. GTAB has mentioned that the market potential exceeds 1,000 MSEK in Europe alone.

One possible development is that blood centers completely cease to have plasma from different blood groups and switch to having all plasma as UBP. It would increase patient safety and simplify handling / logistics and would possibly also be cheaper overall, despite the costs of producing UBP.

UBP has begun to be used sharply to produce blood group-independent convalescence plasma for the treatment of covid-19 patients. It is a very good gateway to the hospitals for the product, but not a giant market in itself.

Promising internal tests have been done to use the UBP column for universal platelets (Platelets), which could potentially be as large a market as the one for blood plasma.

In the US, there is interest in using UBP for whole blood and a prominent center is currently evaluating this application. Whole blood has been used more and more in the US for some years now and the market for this in US was 500 MSEK 2019.

Development projects

RA column

RA stands for rheumatoid arthritis (rheumatism).

GTAB is developing, together with a major European institute, a column that is expected to bind the antibodies that make people sick in RA. Tests are done with blood samples from RA patients, which claim that it works excellently.

The column is intended for those RA patients who do not get well enough or have severe side effects from the medication, which is 1-10% of the patients.

A full-scale RA column has undergone successful biocompatibility tests and is currently being prepared for clinical trials, which are expected to start in 2021.

Development of the RA column is prioritized by GTAB over other development projects.

Potential

Within the EU, there are approximately 5 million RA patients, which gives a potential of 50,000-500,000 patients for the RA column. The market is thus expected to be many times larger than that of Glycosorb AB0.

UBP large column

Larger amounts of blood plasma (pooled plasma) are used for the extraction of intravenous immunoglobulin (IVIG), which is used in, among other things, immunodeficiency diseases and for several other indications. IVIG contains A and B antibodies from the blood plasma, which can cause more or less serious side effects.

Glycorex has previously stated that they have developed a variant of Glycosorb AB0, which can be used cost-effectively to eliminate antibodies to blood groups A and B from pooled plasma, so that a safer IVIG can be created. The status of this project is unclear, but it has been mentioned in connection with the clinical evaluation of the UBP column. The clinical evaluation was carried out by OctaPharma, which is a major player in IVIG.

Potential

The total market for IVIG was estimated in 2009 at USD 5.5 billion.

MG column

MG stands for myasthenia gravis. MG is a chronic disease in which the body produces antibodies against its own body. In MG, the nerve signals are difficult to transmit to the muscles.

In Europe, an estimated 50,000 are affected by MG. Most people manage with medical treatment. About 3,000 need to change their blood plasma several times each month to get relief.

Plasma exchange is not particularly effective and entails medical risks for the patient and means that replacement fluids for the plasma need to be used. GTAB sees the group receiving plasma exchange as the target group for the MG column.

The MG column is hopefully fully developed. Various evaluations of it remain before it can be registered and launched.

Since 2019, development has been stagnant as resources have been invested in the RA column.

Potential

Larger than for Glycosorb according to systemets from Glycorex.

HLA & AB0 column

GTAB has earlier projects that have shown good results in the tests performed.

HLA and A / B column is a column that removes antibodies to HLA while taking care of blood group antibodies. GTAB believes that it is intended for those patients who have extra high levels of HLA antibodies and therefore cannot undergo a transplant. At the same time, the column provides an opportunity to transplant without taking into account blood group boundaries. The development is stagnant as the RA column is prioritized.

Potential

GTAB believes that the HLA / AB column has approximately the same potential as Glycosorb.

Galectin column

Galectins are proteins that are involved in a variety of inflammatory conditions. In some cases, galactins do more harm than good. GTAB is developing a galactin column that has shown good results so far. It is not said what type of galectin gets stuck in the column, nor what diseases it targets. The development is stagnant as the RA column is prioritized.

Potential

GTAB writes in the annual report. The potential for this product is estimated to be very high provided that the product proves to have a clear clinical effect, for example in renal failure and / or metastatic cancer.