We are long Sedana Medical a pioneer medtech and pharmaceutical company dedicated to making inhaled sedation a standard therapy in ICU (Intensive Care Unit). The company was the beneficiary in Covid, and a victim of post Covid sell off. We bought in believe that post Covid sell off was excessive. It is a smaller position for us now, in review now for potential position increase. More details on the company http://www.sedanamedical.com
Redeye Research Summary on Sedana Medical
Q2: Continues to build a base for wider roll-out
Redeye lowers its full-year sales estimates for 2022E from SEK 180m to SEK 149m and our 2023-2024E sales by 4-8%, following the report. Once the market normalizes (the company hopes for early 2023), we believe Sedaconda will be more widely implemented in ICUs and its long-term potential will be better recognised by investors. We reiterate our fair
value range, consisting of a SEK 101 Base Case.
Q2 2022 in brief
Sales in the quarter of SEK 26.9m (39.5) were 35% below our expected SEK 41.1m and 32% lower than in Q2 2021. The sales figures can be explained by a drop in ventilated ICU patients (c40-50% compared to Q2 2021, according to Sedana Medical). We had higher expectations for the roll-out of on-label Sedaconda in the quarter. However, we believe sales could jump aggressively in Q4 2022E as national approvals (specifically the UK with
its NICE guidelines) and reimbursements should be in place.
On the cost side, OPEX amounted to SEK -48.7m (-42.6) compared to our SEK -48.2m estimate and none of the line items were particularly off from our projections. As we go forward, we anticipate improvements in administrative costs as the company implements its cost-cutting program.
Some estimate changes, but the fair value range is intact
We have downed our FY 2022E estimates from SEK 180m to SEK 149m (-17%), but as we believe 2023E will offer an entirely different playing field (i.e., national approvals, reimbursements, and guidelines), our sales estimate changes are small for the coming years. For 2023E, we lower by 8%; for 2024E, we lower by 4%; for 2025E, we lower by a mere 1% and we still expect Sedana Medical to reach its sales target of SEK 500m by that year.
Our fair value range is intact and consists of a SEK 101 Base Case, a SEK 21 Bear Case and SEK 149 Bull Case.
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