MRI Interventions: Growth Still Strong 4 Months After IPO
In recent months, MRI Interventions (MRIC.OB) has been making headway - and headlines - with their proprietary MRI imaging technology for use in neurological diseases. Their marketed ClearPoint system allows doctors a real-time view of intracranial procedures that previously required complicated, time-consuming invasive techniques. But more important for investors, the company went public just earlier this year on the OTC markets and has made notable gains in a short time period. Since debuting in May of this year, share price has more than doubled from a $1 initial price offering. And unlike many overbought biotech IPOs that shortly thereafter plummet on unrealized dreams, MRIC has made steady gains as the company's technology finds footing in the marketplace. Just last week, First Analysis Securities initiated coverage of MRIC with a Buy rating and a twelve-month $4 target price. Here are some of the company's most recent highlights.
On August 14th, MRI Interventions announced that the ClearPoint system is being used in a clinical trial to treat pediatric brain cancer at the Memorial Sloan-Kettering Cancer Center. In the trial, a cancer-fighting agent called 124I-8H9 was administered directly to the brain tumor utilizing MRIC's three-dimensional, MRI-guided system. The case involves a rare form of brain cancer known as a diffuse infiltrative pontine glioma (DIPG) tumor, which is inoperable due to its location on the brain stem. Previous attempts to inject the immunotherapy directly have failed, as have traditional radiation treatments. Pediatric patients diagnosed with the cancer usually die within a few months, but the success of the procedure where previous administration attempts have failed offers hope. The lead surgeon in the trial, Dr. Mark Souweidane, said:
It's a departure from the standard therapy and has the potential to create a whole new paradigm in brain tumor treatment.
Along the same thread, ClearPoint was recently utilized in the administration of a development-stage product from Tocagen called Toca-511. The product is a replicating retroviral vector that selectively targets cancer cells and must be applied directly to the brain tumor. In this trial, the treatment is being testing against glioblastoma multiforme, the most aggressive form of brain cancer, along with an oral flucytosine prodrug from Tocagen. If trials involving direct application of cancer treatments prove effective, opportunity exists for ClearPoint to become the standard-of-care in these procedures. As a relatively inexpensive addition to existing MRI suites, ClearPoint reduces procedure time and cost, while improving surgeons' ability to properly implement treatments of these types.
The company released its second quarter earnings report in August, detailing income and financial balances. A cursory glance at the balance sheet reveals a bleak outlook for the young company. But the company's actual cash position is poorly reflected due to a major omission, made necessary by timing alone. Just five days after the end of the second quarter on June 30, the company issued a public offering of common stock that grossed a cool $6 million in capital for sustained operations. The balance sheet should more accurately reflect $6 million in cash (after expenses of the offering and existing cash) and more than $8 million in current assets. MRIC burned through roughly $2MM in the first six months of 2012, but it should be noted that revenues are growing, up 50% this quarter over last year's second quarter. Research and development expenses have dropped by 50% as well since the same time last year as the company moved from development to commercialization of ClearPoint. It is now installed in 15 medical institutions in the U.S., two in Europe (ClearPoint is approved domestically and in the EU), and the company is increasing its sales force and utilization of ClearPoint as a platform technology.
While ClearPoint adoption grows, the company is pioneering a second platform using similar hardware. ClearTrace, like ClearPoint, uses MRI-guidance for minimally-invasive procedures in the heart that have traditionally been performed in a fluoroscopy suite. Catheter-based cardiac interventions such as stent placement and cardiac ablations will benefit from the use of ClearTrace by allowing high resolution imaging in real-time. And unlike a Cath Lab, providers use ClearTrace alongside an MRI suite, where there is no radiation exposure, or more importantly, risk of overexposure as with X-rays, standard in fluoroscopy. Doctors are moving more exclusively towards minimally-invasive procedures, specifically in cardiology, and MRIC's technology allows for more options with future technology in the field.
The company has a strong partnership history with industry providers like Siemens AG (SI) and Boston Scientific (BSX). And ClearPoint is compatible with MRI providers Imris (IMRS) and GE Healthcare (GE) among others. It is also worth noting that while ClearPoint implementation begins with the up-front hardware purchase, the company's primary income-generation comes from the disposable facet of the system. The SmartFrame is a single-use module with high margins that will create lasting revenue for the company; every ClearPoint case requires a separate SmartFrame. In its most recent investor presentation, MRIC revealed a utilization goal of one ClearPoint case per week; two of its 17 current sites are already operating at this rate. This razor-blade model will maintain the lasting revenue that investors look for in the healthcare industry, while ClearTrace presents the next platform technology for this maturing company.
Disclosure: I am long MRIC.OB. 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.
Additional disclosure: I may add to my position in MRI Interventions without notifying Seeking Alpha.
