There are a number of medical technology companies that have gained momentum in an otherwise pessimistic market amid the Covid-19 pandemic. Most of the med-tech companies gaining from the crisis are diagnostics-focused and have some link to the value chain of the virus' testing process. However, one of the few exceptions to this trend is Nemaura Medical (NMRD, Financial), a diagnostics player within the diabetes niche that has gained about 45% over the past three months. The company is planning to launch a new product and is an interesting pick for further analysis.
What does Nemaura Medical do?
Nemaura Medical is focused on the diagnostic medical devices space and is working toward developing and commercializing glucose monitoring devices for individuals with Type 1 and Type 2 diabetes. Its core product is sugarBEAT – a non-invasive continuous glucose monitor that provides actionable insights derived from real-time glucose measurements and daily glucose trend data, which help people with diabetes manage their glucose levels and pre-diabetes patients to prevent the onset of diabetes.
The company’s stock zoomed up after sugarBEAT received approval by the relevant food and drug authorities within the U.K. and the U.S. and was cleared for launch. Management hopes Nemaura will become a leading player in the micro-systems-based wearable diagnostic devices and digital solutions for the medical and consumer markets.
ProBEAT launch in the United States
After sugarBEAT’s successful clearance, Nemaura announced its plans to launch a digital health care subscription service in the U.S. under the brand name proBEAT. It aims to make proBEAT a general health care product that is available for all adult diabetes patients as well as those who have been classified as pre-diabetic. This is the same exact target market as its flagship CGM, sugarBEAT. However, proBEAT looks to add an additional customer segment of people seeking to lose weight and have a healthier lifestyle.
The purpose of the proBEAT health care subscription service is to help users improve their knowledge of how a range of lifestyle, dietary health and wellbeing factors impact their sugar levels by acting as a black box flight recorder. Given the increasing obesity levels as well as the large population of diabetics and pre-diabetics in the U.S. this product is a wonderful complimentary launch to the sugarBEAT. It seems that the Nemaura management is prioritizing the proBEAT launch and is seemingly expediting the launch through potential partnerships with large, multi-national players. As per the Food and Drug Administration's guidance, proBEAT falls under the general wellness products category and the company intends to market it along the same lines.
Big data – Nemaura’s futuristic approach
While Nemaura’s offerings are both seemingly good products, the biggest factor that makes the company’s future so promising is its big data endgame. Through its products, management looks to collect the health-related data of millions of Americans and build predictive algorithms and artificial intelligence-based feedback and prompts.
The use of AI in health care data and in providing digital guidance to people to help lead a healthier lifestyle opens a realm of new opportunities for the company. It is worth noting that diabetes and obesity are among the most rampant health-related disorders in the U.S. There are close to 88 million pre-diabetics and about 34 million people with diabetes in the country and the global market size for Nemaura’s sugarBEAT alone is $82 billion. ProBEAT caters to a much larger market. It is quite likely that the company’s products will end up gathering a large user base that contributes a significant amount of data to help Nemaura’s AI-related algorithms.
As illustrated in the chart above, Nemaura’s share price shot up after the company announced the approvals for sugarBEAT, which should start getting distributed very soon as Nemaura has already started collaborating with regional as well as global distribution players. Dr. Faz Chowdhury, the company's CEO, is pushing the research forward through equity-based funding as Nemaura continues to be debt-free. Potential investors must beware of the inherent risks associated with micro-cap investing, particularly within zero-revenue health care companies. After taking these factors into account, Nemaura does appear to have a very compelling investment proposition with a powerful big-data-related endgame.
Disclosure: No positions.
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