Point-of-care monitors and diagnostic devices company Sphere Medical Holding PLC (LON:SPHR) narrowed its losses in 2016 and launched its latest Proxima blood gases analyser towards the end of the year.
The group posted a total post-tax loss of £4.5mln for the 12 months to 31 December 2016, down from £5.5mln a year earlier, and said the initial reaction from customers to Proxima had been “very encouraging”.
Chief executive Wolfgang Rencken said: “As we build a growing customer base, who routinely use Proxima, more patients will be able to benefit from being managed with the system.
“We continue to advance distributor negotiations to expand Proxima 4's commercial launch with the aim to make it available to a wider patient population across Europe.”
New model gaining traction
Despite only launching in December, the first sales of Proxima 4 have been achieved, with four hospitals having monitored patients with the product already.
On top of that, more than 20 hospitals have requested evaluations of Proxima 4, including some paediatric centres which were unable to use Proxima 3 due to restrictions on adults-only use.
The Cambridge-based company said it expects sales traction to continue to accelerate throughout 2017, and opened a new production facility in north Wales earlier this month to help keep up with the expected increase in demand.
What’s new with Proxima 4?
The premise with the latest product is the same as it was with the previous models; to help doctors make quicker, more informed decisions about a patient’s treatment.
That said, the fourth edition of the blood gases monitor comes with a broader array of functions than its predecessor, Proxima 3.
This means the device can be deployed in a wider patient group, including those requiring blood sugar control and those undergoing cardiac surgery.
Analysts, as well as the company itself, estimate that the new device has a target population of around 50% of patients in intensive care.
Proxima 4 has been developed so that it can be used in children (over 15kg), while the addition of glucose to the list of chemical constituents that can be measured was also a big step forward.
Sphere reckons these changes have expanded the addressable market for the product fourfold to around £130mln in Europe.
Last year it appointed distribution partners in Italy and Spain to try and take advantage of this, while it already has a direct sales presence in the UK, Germany, the Netherlands and Belgium.
At the end of 2016, cash and short-term investments stood at £3.2mln, down from the £10mln it had in the bank a year earlier.
In January 2017, Sphere put in place a £3mln loan facility and drew down an initial £1.5mln, with the remaining £1.5mln conditionally available until next March.
In its recent results release, the firm said it is exploring “the best financing options” to support its working capital requirements through the ongoing commercialisation of Proxima.
What the brokers are saying
Julie Simmonds, an analyst at Panmure Gordon, is firmly of the opinion that Proxima 4 is a significant upgrade on Proxima 3
“[Proxima 4] has both an improved interface and an expanded metabolite panel, including both glucose and sodium,” she explains.
“The ability to measure metabolites accurately and frequently without a nurse leaving a patient’s bedside or increasing the risk of infection through repeated blood draws in this patient group, should make it of interest to many hospitals.”
Moving away from the product and onto company itself, Simmonds believes Sphere will likely need to generate some cash through some form of funding in the not-too-distant future.
“Sphere’s expenditure is now focused on production and marketing rather than product development as in previous years,” says Panmure Gordon analyst Julie Simmonds.
“Our forecasts indicate the company is likely to require additional funds to support the early stages of Proxima 4 sales. The loan facility goes some way to address this and should enable the company to gain traction in the early stages of launch.”
Here from the boss himself...