Insulin Pump Company Cellnovo Has an IPO
This past week, Google (NASDAQ:GOOGL) announced their intention to work with Dexcom (NASDAQ:DXCM) to create a glucose monitor that is easy to afford and maintain and which does not involve the need for a blood sample. For people that suffer from diabetes, monitoring their glucose levels has been a painful practice that involves pricking one’s finger and then testing the blood sample for glucose levels. DXCM claims to be the world leader in continuous glucose monitoring and has managed to achieve a 70% market share behind medical device maker Medtronic (NYSE:MDT). This success has lead to a skyrocketing share price giving DXCM a current market cap of $7.86 billion.
If you invested in DXCM 5 years ago, you would have realized a return of nearly +700% on your investment so far. With all the success DXCM has seen, other companies are working on solutions that address glucose monitoring in an attempt to capitalize on this huge opportunity. One such company which saw an IPO last month is Cellnovo which claims to offer the world’s first mobile diabetes management system.
Founded in 2002, London based Cellnovo had taken in just over $43 million in funding prior to their IPO last month on the Euronext Paris exchange (EPA:CLNV) which raised an additional $35 million. With a valuation of just $154 million, Cellnovo is currently selling an all-in-one diabetes management system that helps make life easier for type 1 diabetics.
Just 17% of diabetics use an insulin pump with the remainder being forced to administer daily injections. The Cellnovo system continuously monitors glucose levels and administers insulin when needed. The Cellnovo Pump is used with disposable cartridges that the user fills with the equivalent of three days of insulin. The Company provides two pumps to its users. Every three days, the pumps are recharged and used alternately. This “razor blade” business model allows Cellnovo to capture revenue from consumables that will last potentially for the patient’s entire life.
In their IPO filing document, Cellnovo stated that 50 patients are currently benefiting from use of the system and consequently their current revenues are minuscule. However in 5 years, Cellnovo expects 45,000 patients to be using their system. In order to reach this goal, they anticipate an in-house annual production of 55,000 insulin cartridges, the “razor blades” of their business model, by the close of fiscal 2015. After that, they will outsource production to Flextronics who will then begin producing the insulin cartridges with estimates of 350,000 cartridges by 2016 and 7,000,000 cartridges by 2020.
The purpose of the Cellnovo IPO is to scale the manufacturing of their devices with a focus on selling into the European market first. The Cellnovo system has already received CE Marking (the European equivalent of FDA approval) , is reimbursed in most countries and is already being marketed in France and the United Kingdom. U.S. based investors who may want to purchase Cellnovo stock can learn how to do so by reading our past article titled “How to Buy Foreign Stocks“.
Diabetes treatment continues to be a hot topic for biotech investors, and probably the most exciting diabetes startup right now is Intarcia Therapeutics, a U.S. based company that we highlighted several weeks ago.
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