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MYOS: Several Development-Related Milestones Upcoming

By Brian Marckx, CFA

NASDAQ:MYOS

Q1 2018 Update:
MYOS RENS Technology (MYOS) reported Q1 ’18 financial results and provided a business update. Relative to the financials, revenue was just $57k, all of which relates to sales of their Qurr product, which launched in April 2017. While revenue remains muted, that was not unexpected as much of MYOS’ activities continue to be focused on further expanding the evidence surrounding Fortetropin and its beneficial effects in improving muscle health. This evidence-based approach has the potential to pay dividends in the form of more efficient (and successful) commercialization.

In the meantime, MYOS will look to opportunistically leverage the NSF Certified for Sport designation with their new Yolked product. The certification, which MYOS announced in April, is considered the gold standard for ensuring high quality and verification that the product is free of banned substances – which can be particularly important for competitive athletes that are subject to drug testing (such as college and professional athletes). In late-2017, MYOS entered into a strategic partnership with IMG College to market their products to collegiate athletic programs. Initially, the IMG agreement covers nine Division I colleges (in the NE). Management noted on the Q1 call that they have begun meeting with several of these schools and that initial feedback has been positive.

Other initiatives related to MYOS’ commercialization efforts include working on a more targeted sales approach as well as the impending launch of a new website which management noted has been designed to better communicate the science-based benefits of Fortetropin. This fits with MYOS’ strategy of leading their sales efforts with an evidence-based approach – which we think is critical in order to separate their products from the plethora of protein powders and other supplements that largely lack the efficacy-related evidence that Fortetropin does.



Product Development…
MYOS continues to make progress on the research front as well and currently has four studies ongoing, several of which could have results in the near-term. As a reminder, in just the last 13 months MYOS contracted with four universities to conduct as many studies of Fortetropin in different indications. Three of the four research agreements were entered into since December, including a randomized, controlled clinical study with University of Berkeley.

‣ The study at the University of Berkeley aims to understand the impact of Fortetropin on the rate at which new muscle is synthesized in men and women between 60 and 75 years of age. Positive results from the study could help bolster sales of MYOS’ product in the future. If all goes well, results of the study could be available later this year

‣ The most recent research collaboration came in May when MYOS contracted with Weill Cornell Medical College for a preclinical study that will evaluate Fortetropin in preventing weight and muscle loss associated with lung cancer. MYOS anticipates the study to start sometime this summer and have results early next year.

‣ In March 2018 MYOS entered into a research agreement with Rutgers University to develop product candidates for preventing muscle loss (resulting from sarcopenia and cachexia) and improving muscle health. The program will be led by Joseph W. Freeman, Ph.D., an Associate Professor in the Department of Biomedical Engineering at Rutgers. Dr. Freeman is also part of the University's Musculoskeletal Tissue Regeneration (MoTR) laboratory which focuses on developing engineering techniques to repair and regenerate musculoskeletal tissue.

‣ In April 2017, MYOS initiated a study at Kansas State University, College of Veterinary Medicine, to assess the impact of Fortetropin on reducing muscle loss in dogs that have undergone surgery after ligament tear. To-date, 90 dogs have been enrolled in the study and the goal is to test Fortetropin on 100 dogs by mid-2018. If the results are positive, the firm would likely continue developing Fortetropin-based products for pet nutrition as well as humans recovering from musculoskeletal surgeries.

Cash
MYOS continues successfully raise operating funds on favorable terms. MYOS exited Q1 with $230 in cash and subsequently raised another $1.2M. This includes ~$180k via the ATM program and $1M through the sale of 806k shares (@$1.24/share) through a private placement in April – two MYOS Directors participated.

Maintaining $3.50/Share Price Target…
We incorporate a discount rate of 15% and 2% terminal growth rate. We value MYOS at approximately $3.50/share. This valuation provides more than 100% upside to the current trading price of $1.56/share.

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