Proteomics International Laboratories [ASX:PIQ]
Healthcare & Biotechnology
We initiate coverage on Proteomics International Laboratories Ltd. (ASX: PIQ) with a fair valuation of A$2.84, representing a 331% potential upside from the latest share price of A$0.66. We have taken a highly conservative approach in arriving at our valuation, using very cautious assumptions throughout the analysis. By estimating lower market penetration under the direct-to customer/patient (DTC/DTP) model, compared to the potential impact of a licensing agreement with a major diagnostics or pathology company, we've ensured that our A$2.84 fair valuation is based on the most prudent expectations. This leaves significant room for upside if PIQ were to secure such partnerships or expand market reach beyond our conservative forecasts.
PIQ develops accurate diagnostic tests using its proprietary Promarker™ platform. This technology leverages the science of proteomics to identify protein "fingerprints" in blood samples, enabling the detection of biomarkers that distinguish between individuals with and without disease. PIQ has a range of diagnostic tests at various stages of development, with PromarkerD, PromarkerEndo, and PromarkerEso in advanced phases. The commercial launch of PromarkerD in the US is targeted for H1 CY25 and PromarkerD and PromarkerEso in Australia for Q1 CY25, with PromarkerEndo commercialisation expected to follow shortly after
There are huge market opportunities for PIQ’s advanced diagnostic tests
PromarkerD can predict the onset of diabetic kidney disease up to 4 years in advance with a proven accuracy of 86% as demonstrated through multiple clinical studies on samples from over 5,000 patients. PromarkerEndo and PromarkerEso are novel blood tests that identify patients with endometriosis and esophageal cancer with approximately 90% accuracy, as demonstrated in clinical studies involving hundreds of patients. There are more than 500 million people with diabetes in the world, each a potential customer for PIQ’s PromarkerD. It is estimated that approximately 190 million women and girls worldwide suffer from endometriosis, each a potential customer for PIQ’s PromarkerEndo, and ~ 604,000 new cases of esophageal cancer were diagnosed globally in 2020. The current standard diagnosis procedures for endometriosis and esophageal cancer are invasive and costly.
PromarkerD commercialisation in the US is in sight
PIQ’s PromarkerTM tests, including PromarkerD, don’t need FDA approval to sell in the US. Instead, PromarkerD sales in the US will be conducted through the Laboratory Developed Test (LDT) pathway via CLIA-certified laboratories. Pleasingly, US Medicare has confirmed a US$390.75 reimbursement rate for PromarkerD tests, which enhances our optimism about the product’s future sales prospects in the large US market. PIQ is planning a US launch of PromarkerD in H1 CY25, utilising two Goto-Market approaches: licensing to alternative pathology labs and service providers, and direct-to-consumer/patient (DTC/DTP) sales.
Valuation range of A$2.59–3.10 per share
We have used a DCF methodology to value PIQ at A$2.59 per share in a base-case scenario and A$3.10 per share in a bull-case scenario using conservative market penetration assumptions through a direct-to-patient (DTP) go-to-market strategy, which is expected to help PIQ retain a much larger share of revenues compared to traditional licencing models. Our valuation is only based on the commercialisation potential of PromarkerD, PromarkerEndo and PromarkerEso and does not include the value of PIQ’s other tests in development. Key risks to our investment thesis include Commercialisation risk, market adoption risk, regulatory risk, and competition risk.