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Nemaura Medical: A Diabetes-Oriented Med-Tech Play

Pharma and biotech have been among the best-performing sectors in the current environment, where the Covid-19 pandemic has ripped investors' portfolio values to shreds. Global indexes continue their bear run, but one of the few beneficiaries in this situation are pharma and biotech companies (along with manufacturers of sanitizers, surgical masks and other essential products). Interestingly, not all the pharma companies gaining momentum from the coronavirus outbreak are focused on anti-viral solutions. A good example of a med-tech player that has gained fantastic momentum since February 2020 and more than doubled in value is a diabetes device company, Nemaura Medical Inc. (NASDAQ:NMRD).


Company overview

Nemaura Medical is a New York-based medical technology player that essentially operates in the diagnostic medical devices space. The company has hardly any link to Covid-19 and is essentially engaged in developing and commercializing glucose monitoring devices for individuals with Type 1 and Type 2 diabetes. Its 2 core products are sugarBEAT and BEATdiabetes. SugarBEAT is a non-invasive and flexible continuous glucose monitor providing actionable insights derived from real-time glucose measurements and daily glucose trend data, which help people with diabetes manage their glucose levels and pre-diabetes patients to prevent the onset of diabetes. P

BEATdiabetes, Nemaura's other product, is a health subscription service providing lifestyle coaching and behavioral change recommendations to people driven by personalized data provided by sugarBEAT.

The sugarBEAT success story

Recently, Nemaura was in the news for sugarBEAT being cleared for immediate launch in the United States under the Wellness Category after receiving feedback from the Food and Drug Administration. Dr. Faz Chowdhury, the company's CEO, is highly optimistic about sugarBEAT and the company has already started entering into verbal, non-binding agreements with regional as well as global distribution players to push the product into the market.

Nemaura aims to gather a large amount of consumer data after popularizing sugarBEAT, which will enable the company to further optimize its artificial intelligence-based predictive algorithms and enhance its product offerings to the mass market. This FDA approval of sugarBEAT comes after the company's success in getting the CE Mark approval for its continuous glucose monitoring system in the U.K. in 2019, but the company supplied a very limited number of devices owing to its limited manufacturing capabilities.

Currently, Nemaura is planning a user study comparing sugarBEAT with other successful major CGMs. Since sugarBEAT is not only cheaper, but also much more flexible and non-invasive, it could come across as a much better solution rather than the incumbent CGMs. The product's U.K. licensee, DB Ethitronix, is currently in the process finalizing the launch of online sales of sugarBEAT and the company is also looking to launch an app for Android users in the Play Store than can help users monitor and manage their lifestyle changes and their glucose consumption. It appears to be only a matter of time before sugarBEAT becomes a household name in the diabetes health market.

The diabetes and pre-diabetes addressable market is huge

The potential impact of non-invasive CGM is huge and sugarBEAT caters to practically the entire adult market. It helps users develop an improved lifestyle through better dietary and health control, while managing their sugar levels, catering to about 88 million pre-diabetics and about 34 million people with diabetes. Diabetes is one of the largest market niches in diagnostics with a global addressable market of about $82 billion per annum for CGM. It can be split into about $12.7 billion for Type 1 insulin users, accounting for about 5% of total diabetics, and another $38 billion for Type 2 insulin users, which accounts for approximately 15% of diabetics. The balance of $31.4 billion is Type 2 non-insulin users, which accounts for the remaining 80% of diabetics. Nemaura caters to each of these categories and also to the entire consumer group of the pre-diabetes population, which is expected to be nearly three times as large as the diabetes population.

Key takeaways

There was a huge spike in Nemaura's stock in February, which can be attributed to the advancement of its sugarBEAT studies. The company is debt-free and has shown strong resilience to the Covid-19 market selloff. While it faces all the risks that are typically associated with most microcaps within the health care space, such as nominal revenues and no profitability, regular funding requirements creating a risk of dilution and so on, the company does have a promising product that is verified by the food and drug authorities of two countries. Despite the triple-digit appreciation, the company certainly looks to have steam and could start zooming up once the sugarBEAT revenues kick in.

Disclosure: No positions.

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This article first appeared on GuruFocus.