Taking Steps Forward
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 remains solid, the Company is continuing their animal trials. So far, three implantations have been completed and an additional 3-4 have been scheduled. 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% (18), this yields a present value per share of SEK 9.4 (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.
- Continued Animal Study’s
During the end of October, Realheart announced that the Company had performed a third implantation in sheep to test the clinical version of Realheart TAH, the version that will also be used in human trials, expected to start in 2024. Realheart states that the implantation went quickly, and progress was made, including the optimal placement of the pump. So far, during these animal trials, Realheart TAH has managed to keep the animal alive for the first 24 hours, which is the most critical time. This is a significant milestone and Realheart can now focus on successively improving this. 3-4 more implantations are planned in the series and is something that an investor should monitor closely.
- Solid Financial Position – But Still In Need Of More Cash
During Q3-22, Realheart showed a positive net result for both the group as well as the parent company, which is explained by the fact that the Company has obtained parts of the previous won EIC grant. At the end of September, Realheart’s cash amounted to SEK22.1 M for the group. On top of this, the Company still has remaining capital secured from the previous EIC grant during 2022/2024. Also, during February 2023, shareholders can exercise their TO1 warrants, which may strengthen Realheart’s cash position even further. However, the Company do guide for the need of additional funding, and based on the current development, Realheart may need more capital during Q2-23.
- Valuation Range Updated In Bull
As Realheart develops in line with our expectations, we choose to make only minor adjustments to our forecasts and maintain our valuation range for Base- and Bear. However, based on market observations from Carmat, we do believe that Realheart’s TAH could be priced higher in a Bull scenario once launched, motivating a higher valuation of future cash flows.
