We have been bullish on Biovica. The idea got delyed by the FDA congestion with Covid applications. Last week Biovica announced submission of the updated FDA Application. Biovica also announced investor day for 17 May, where details will be provided. Both should be positive news.
Redeye Research Summary:
Biovica FDA Submission: Goal in Sight
Biovica has now submitted the updated FDA application. This is achieved ahead of Biovia’s schedule and well ahead of the approaching capital market day on the 17th of May. The following trigger is the FDA decisions which we expect any time after late June.
The submission is excellent news. Under normal conditions, we can expect a decision and a 510 (k) approval after 30-60 days. The FDA has suffered from delays earlier, but the handling times are recovering to more normal levels. The risk of further enquiries is not nil but, in our view, modest. Our view is based on the added studies and the interactive FDA process where Biovica has addressed multiple questions. We set a very high probability of approval based on the body of scientific support and the quality of studies supporting DiviTum.
The Capital Market Day on the 17th of May is an excellent opportunity for Biovica to present the clinical, commercial plan for DviTum in more detail. It is already clear that Biovica will handle tests from a central CLIA certified lab (CLIA = The Clinical Laboratory Improvement Amendments) in San Diego that can cater for the whole US market. After the FDA approval, we can expect the company to expand the marketing and clinical team supporting the launch. A 510 (k) approval is also a green light for the process of securing private and public reimbursement.
Another point is that Biovica has already attracted independent studies and pharma collaborations well ahead of the FDA approval. With an approval during calendar Q3, we can expect more interest that could open up for financial commitments and even financial support that can provide growth capital supporting the in-house activities.
The next key trigger
We can expect FDA feedback and a decision within 30-60 days. Prudently we point to a likely approval in July. The current share price level reflects a challenging macro environment with geopolitical disturbances. The current share price levels also reflect low specific expectations for Biovica when considering the size of the futures market and the scientific support to date. As a result, Biovica represents an unusually attractive risk-return profile for a pre-revenue company over the next six months. The company is now likely to graduate into a revenue company in H2 2022. Our value proposition is a base case value of SEK 95 (Bull SEK 325, Bear SEK 20).
Disclosure:
The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.
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