Third Animal Surgery On Its Way
Scandinavian Realheart AB (publ) (”Realheart” or the ”Company”) holds the world’s first unique and patented four chamber Total Artificial Heart (”TAH”), which mimics the human heart’s blood flow. With a cash position that still remains strong, the Company is closing in on its third live animal study. Expectations of human trials are still set for 2024, where we maintain our estimate of market launch during the latter part of 2025. From this point, sales could increase rapidly, with revenues reaching SEK276 M in 2028 in our Base scenario. Based on an applied P/S multiple of 5x (5), and an applied discount rate of 18%, this yields a present value per share of SEK 9.4. Before market launch, we continue to see several key value-driving activities, where steps in right direction could reduce the current valuation discount.
- Second Animal Surgery Has Been Conducted…
The clinical version of the Realheart® TAH – the version that will eventually be used in humans – has during July been successfully implemented in a second animal trial, following the first successful implantation of the Company’s TAH reported during early June. Overall, the surgery was rapid and went well and marks a key milestone where time of survival reached over 24 hours.
- … And A Third Is One Its Way
On the second day following the implant in the sheep, the animal moved a lot which resulted in dislocating some of the life support equipment and the decision was taken to end the study. Measures have been taken to avoid recurrence. The Company plans to achieve longer survival times in future sheep studies, where the next surgery is planned for September 2022. Hence, this will be very important to monitor from an investor perspective.
- Listed Peer Illustrate the Valuation Potential
Realheart TAH has a unique design that mimics the biological heart. The design, like the biological heart, enables Realheart TAH to deliver a pulsatile blood flow gentle to the blood, in an extremely energy effective way. So far, there is nothing that suggest that Realheart TAH will not be significantly better than what is on the market today. Realhearts market cap is approx.
EUR11 M which can be compared to Carmat SA, the developer of the bioprosthetic artificial heart Aeson®, that have a market cap of approx. EUR258 M, hence a 24x greater than Realheart.
- Valuation Range Unchanged
As Realheart develops in line with our expectations, we choose in conjunction with the Q2 report to make only minor adjustments to our forecasts and maintain our valuation range for Base- Bull-, and Bear. Hence, we still see an attractive risk reward from current trading levels.