NEW YORK, NY / ACCESSWIRE / July 5, 2017 / SeeThruEquity, a leading independent equity research and corporate access firm focused on small-cap and micro-cap public companies, today announced it has issued an update on Great Basin Scientific (GBSN) with a 12 month target price of $1.00.
The report is available here: GBSN July 2017 Update Note.
Based in Salt Lake City, UT, Great Basin Scientific (OTCQB: GBSN, "Great Basin") is a molecular diagnostics company focused on developing and commercializing cost-effective molecular diagnostic testing for infectious diseases. The company's proprietary analyzers and cartridges are differentiated in the market by offering a cost-effective means to access next-generation molecular testing, while providing an attractive reimbursement profile for hospital and lab customers. Great Basin's sample-to-result, low-plex and mid-plex panels are sold by a direct sales force, primarily to small-and-medium sized hospitals, which have a need to replace less accurate testing formats to more accurate molecular diagnostic testing. In our view, Great Basin is worth a fresh look, as the company has purged its balance sheet of toxic instruments, and reported 120%+ growth in its pipeline after expanding its menu of molecular tests.
Expanding Menu of Tests Drives Opportunity
Since we last covered the company, Great Basin has expanded its menu of molecular tests significantly, following through on its plans to expand to five assays for bacterial targets ranging from C. difficile to whooping cough to sepsis. The company is currently awaiting FDA clearance on a sixth molecular test for foodborne illness, which is expected later this year. Importantly the new tests should have significantly higher ASPs than C. difficile, which should help the company's gross margin structure. Of course, they also expand the company's revenue opportunity. Great Basin now estimates that its test targets an addressable market opportunity of $1.75 billion in the US alone, leaving ample room for growth in future years.
Growing Pipeline Highlights Corporate Update
We were impressed by the rapid growth in Great Basin's sales pipeline announced in its June 26, 2017 corporate update. The company stated that its pipeline grew by an impressive 120%+ versus 4Q16, driven by its expanded test portfolio and demand for its new stool bacterial pathogens panel ahead of FDA clearance. Importantly, Great Basin has seen supporting data that suggests the growing pipeline may be a trend that can continue. The number of customers placing orders with Great Basin has increased to more than 230, with the company's direct sales team now targeting larger hospitals as well as its core group of small-and-medium-sized customers. Moreover, Great Basin's average expected annual revenue per new customer has risen sharply, from $16,740 in 3Q16 to $47,866 in 1Q17.
Updating price target to $1.00
Although Great Basin has grown revenues and approved products over the last two years, the company's stock has languished due to toxic financings. Great Basin appears to have turned a corner, with reduced costs, an improved balance sheet, and what appears to be a rapidly expanding sales pipeline as it nears an FDA clearance for its new Stool Bacterial Pathogens Panel. Our revised target of $1.00 is based on an enterprise value to sales methodology, assuming a multiple of 6x our 2018E revenue estimate of $8.3mn, a multiple in line with molecular test industry peers.
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About Great Basin Scientific
Great Basin Scientific is a molecular diagnostics company that commercializes breakthrough chip-based technologies. The Company is dedicated to the development of simple, yet powerful, sample-to-result technology and products that provide fast, multiple-pathogen diagnoses of infectious diseases. The Company's vision is to make molecular diagnostic testing so simple and cost-effective that every patient will be tested for every serious infection, reducing misdiagnoses and significantly limiting the spread of infectious disease. More information can be found on the Company's website at www.gbscience.com.
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