By Jason Napodano, CFA
This morning, Zacks Small-Cap Research Biotechnology Analyst, Jason Napodano, CFA, initiated coverage of LabStyle Innovations Corp. (OTC BB:DRIO) with a 'Buy' rating. LabStyle is a healthcare technology company that has developed an ultra-convenient, affordable, and easy-to-use glucometer for the self-monitoring of blood glucose in patients with type-1 or type-2 diabetes.
Napodano states, "We think that Dario is of elegant design, with outstanding usability and accessibility by integrating a pocket-sized glucometer with a smartphone and mobile application. Dario combines a lancing mechanism, disposable strip cartridge, and glucose monitor with attached plug for insertion into a smartphone audio jack. It is the first and only produce to date that we see that combined all three components, along with intuitive and valuable application software. We see the Dario glucometer and diabetes management system as revolutionary in design and function."
To download the full initiation report, please click this link >> DRIO-May15/2013/Napodano
Dario - Glucose Monitoring For the Mobile Age
Management anticipates the commercial launch of Dario in the European Union in the second half of 2013. A U.S. 510(k) application as a Class-II medical device is also expected in the second half of 2013, which if approved, could lead to the U.S. launch in 2014. Sales of glucometers and test strips are dominated by only a handful of major players like Johnson & Johnson (NYSE:JNJ), Abbott Labs (NYSE:ABT), and Sanofi-Aventis (NYSE:SNY). The big players above each hold 10-15% market share.
"We believe LabStyle Innovations, with Dario, can become a major player in this area given the differentiating characteristics of the device." Napodano sees Dario, along with sales of disposable test strips, mobile applications, and community and physician interaction software, as a $1 billion peak worldwide opportunity for LabStyle Innovations. The analyst notes, "We have built a detailed financial model to capture this opportunity, and conclude that the shares are worth significantly more than today. Our target is $12 per share."
On May 10, 2013, LabStyle announced it had completed a $10 million financing through the sale of common stock and warrants to a group of accredited investors. The company sold 4.0 million units at $2.50 per unit, with each unit consisting of 1 share and 0.5 warrants. The warrants are exercisable at $5.00 per share and expire in early April 2016. Net procedure from the offering totaled roughly $9 million. "We believe the company is well-capitalized to fund operations, including the launch of Dario in the EU, for the foreseeable future," says Napodano of Zacks.
Additional information can be found on SCR.Zacks.Com
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