FBDU Research Note

Disclaimer/disclosure: nothing on this blog constitutes investment advice. Research and targets published here are personal opinion of investors and usually created because the writer and/or publisher is invested or interested in taking a position in the company. 

Guest post by Ash (@ashtrading51)

Current Market cap: £2.1m

Current Share price: 3.25p

Director of FBDU Trevor Brown:

25% stake in the company

78.6% of shares are held tightly by directors and major shareholders, leaving a tiny free float

Stone Checker:

Kidney stones are treated using an expensive procedure called lithotripsy which uses a laser to break the stones in the kidney. However, this expensive treatment is only successful in around 60% of patients. Therefore, the treatment wastes a lot of money and vital hospital resources due to its high failure rate.

Stone Checker is designed to help combat this, it is a patented software that uses algorithms to determine the likelihood of kidney stone treatment being a success or failure. A potentially indispensable tool for Doctors.

The product has successfully completed clinical trials. And statistical analysis of 600 stones from an NHS hospital and Peking Union hospital in China, showed the software having a sensitivity of 94% and predicative value of 78%. Figures which exceeded the boards expectations greatly.

To Summarise: A commercial product which is successfully able to predict the likelihood of success for kidney stone treatment, with global reach.

Stone Prevent:

Stone Prevent is the second product which is designed to combat kidney stone reoccurrence. It provides detailed data which is beneficial for both patients and doctors, when trying to prevent Kidney stones from occurring again. Having this information at hand for patients is in line with recommendations by the American Urology Association.

Company has already commenced discussions with a single metabolic screening laboratory with global reach to implement this product.

This product will be available in private and public labs all over the world.

Obtaining CE and FDA approval

Stone Checker is a class 1 medical device so the risk of failing the regulatory processes with the FDA or CE are negligible. Also the regulatory burden in China and India, two of the countries in which the company plan to launch both products commercially, the risk is minimal.

For both products there is no scaled up commercial provider of any similar services, putting the company in a unique position.

Scale of reach

In UK there are 120 NHS hospital with around 80% active in the kidney stone field, Dr Balaji Ganeshans using his connection in the professional community of urologists will penetrate Stone Checker into leading centres in UK. Before moving on to countries such as USA, India and China where there is already huge interest.

In 2013 there was an estimated 27 million kidney stone sufferers in the USA, leading to a direct cost of $4.5bn. If 40% of procedures are likely to fail, one can imagine the costs attributed from the $4.5bn which are wasted. And if Stone Checker is able to accurately predict treatment success in up to 80% of patients. There would not be such a high treatment failure rate and therefore the cost saving benefit of the product is potentially huge! And this is the US alone. Not even accounting for the 5% of Chinese population estimated to be kidney stone sufferers or even the 12% of Indian population estimated to be sufferers. And then the rest of the world!

One market leader in the manufacture and sale of lithotripsy solutions has already expressed a high level of interest in the Stone Checker product. In the US, there are multiple opportunities to partner with niche companies in the radiology market, such as PCAs (personal care agency) providers, x-ray scanner companies and contract media pharmaceutical companies.

50% of kidney stone sufferers have a reoccurrence within 10 years, a problem, Stone Prevent is designed to combat.

The Board

Mr Trevor Brown- CEO of Bravehart investment group and Feedback PLC also ex CEO of AVO. During his time the share prices of all three groups increased remarkably. Trevor Brown has great experience in the medical fields and certainly knows how to create shareholder value.

Dr Qu Li- Non exec director- has over 25 years of experience in international mergers, acquisitions and joint ventures and has completed transactions ranging from $5m-$200m. She specializes in international business transactions.

Mr Kaushal- Mr Kaushal was part of the team that orchestrated the international launch of Losec©/Prilosec© at Astra Zeneca and also headed global strategic marketing of Novo Nordisk’s diabetes business.

Share Price Targets

Minimum share price target of 20p by year end, which would be a MC of around only 13m, due to near term catalysts and revenue.  However, looking at this as a product which can realistically be used by doctors in hospitals all over the world, who knows where the share price can end up to.

Short term news-flow expected (Q4 2017)

• Obtain CE mark certification
• Manufacture of the commercial version of Stone Checker software
• Completion of an online/mobile platform for Stone Prevent which generates reports
• Launch of Stone Prevent in UK market
• Selling of Stone Checker in UK