Salter Brothers – which specialises in alternative assets – sees great potential in these three ASX-based medtechs, both for patients and investors.
Today we hear from Salter Brothers director of equities and portfolio manager Gregg Taylor.
Firstly a little bit about Salter Brothers, which is a $3 billion alternative asset manager in Australia. The fund manager concentrates on alternate assets including property and microcap listed companies, along with unlisted private equity.
Within equities the company has the Salter Brothers Emerging Companies Fund (ASX:SB2).
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“It’s one of the larger microcap listed investment funds with ~$100 million specialised in that space,” Taylor said.
“With alternative assets we think the markets are less crowded so there are greater opportunities and less investors looking at them.”
“There are thousands of blue chip investors all looking at the same thing but we believe if you go a bit wider and look at asset classes with less eyes on them there are greater opportunity to make attractive returns.”
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Taylor said he was bullish on ASX medtech companies in the small cap space, particularly in the current market environment where they were not getting a lot of love from investors.
He said Australia had a very strong medtech sector and was a global leader.
“A lot of investors are risk adverse and focusing on the mainstream defensive assets, so I think the current environment creates an exciting opportunity in the medical technology space within small caps,” he said.
“There are some ASX small cap medtech companies achieving great results and are global players but they’re not getting much attention from investors in the current environment.
“There’s significant opportunity for investors with a medium to long-term view.”
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NOVA EYE MEDICAL (ASX:EYE)
EYE (a very cool and appropriate ticker code) is tackling two of the biggest diseases leading to blindness in the developed world – glaucoma and macular degeneration.
In late March Nova Eye Medical achieved US FDA clearance for its updated iTrack surgical device to treat glaucoma and now the company has officially launched the treatment in the US.
The iTrack Advance is the new generation canaloplasty device for canal-based glaucoma surgery. Taylor said EYE was leading the way globally in the treatment of glaucoma with its previous generation iTrack device already used extensively worldwide.
“It’s a big significant problem and a multi-billion addressable market,” he said.
“They’ve got the leading medical device to help treat this global problem at scale and that’s why we like them.”
He said EYE had a strong presence in the US, Germany, throughout Asia, including China, as well as Australia and New Zealand.
“They’ve developed the product, got the distribution and necessary approvals and they’re selling meaningful numbers of units of iTrack Advance, which is without peer and quite transformational in the treatment of glaucoma,” he said.
Taylor said EYE was an Australian success story of a business forging its way globally and has a market cap of only $50 million which it think presents opportunities.
“They are not discovered or appropriately valued in the Australian market,” he said.
“It is well funded with over $11 million of cash in the bank and for us it ticks all the boxes of a genuine global player – unique intellectual property, advanced global opportunity set and already commercialised.”
EYE’s share price is up by 10 per cent over the past month.
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NUHEARA (ASX:NUH)
Taylor said NUH, with a market cap of around $20 million, was a significant player in self-fitting hearing devices and had partnerships with some of the world’s leading companies in the world.
“They have FDA approval in the US, a partnership with HP, who white label their technology in their HP self-fitting OTC hearing devices, and they’re sold in the mainstream retails outlets of the US,” he said.
“So you think of CVS – which is the largest pharmacy group in the US – Best Buys and all the major retailers stock this product as their self-fitting hearing device.
“Nuheara have democratised hearing, which is a global significant addressable market and with their technology they’ve been able to lower the price of self-hearing aids.”
He said NUH had US FDA approval, was manufacturing thousands of the devices and had partnerships with major distributors in the US market.
“They’ve got a strategic investor called Realtek, who owns just on 20 per cent of their company, which is a massive Taiwanese semiconductor company,” he said.
“Nuheara use their semiconductors in their devices and they’ve been helping scale this opportunity.”
NUH’s share price is up 3.7 per cent across the past five days.
MEDADVISOR (ASX:MDR)
MedAdvisor, which boasts a market cap of around $130 million, offers a medication adherence platform.
It is a major player in the US and Australian markets.
Stockhead’s Tim Boreham describes MDR well.
“At a simple level, MedAdvisor’s local platform reminds patients (via mobile software application or text) to take their meds,” he writes.
“But the company’s reach has extended to other forms of health communication, such as conveying regulators’ drug warnings and facilitating vaccination campaigns.”
In November 2019, MDR inked a deal with logistics company Kings Transport to deliver medication to patients’ homes, with MedAdvisor receiving a cut of the delivery fee.
The company has deals with Chemist Warehouse, Amcal, Guardian, Terry White, Pharmasave and National Pharmacies.
MedAdvisor’s US business is based on the medication communications system Adheris, acquired from Syneos Health LLC, in 2020.
The year before, the companies entered a joint venture to sell MedAdvisor’s programs to Adheris’s pharmacy base.
“It’s all about digital medication management and decluttering the medical system and enabling scripts to be digitally received and then delivered,” Taylor said.
He said MDR almost had a monopoly, with 70 per cent market share, in Australia and very significant market share over in the US.
“They’ve got a multi-billion market, they’re a leading player in the US and Australia, had over 100 per cent growth in revenues last year and are a very well capitalised business,” he said.
“They’ve had extraordinary growth in the US market and have potential to be a $500 million company in the next few years.”
MDR’s share price is up more than 30.5 per cent across the past year.
This content first appeared on stockhead.com.au
At Stockhead, we tell it like it is. While Nova Eye is a Stockhead advertiser, it did not sponsor this article. Salter Brothers holds positions in these companies. The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
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