Yahoo Finance

By Anita Dushyanth, PhD

Since the beginning of the year, ChroMedX’s (MNLIF) management has been busy raising capital and building a strong technical development team. In the first half of 2015, ChroMedX hired experts to seek their expertise on the sensor technology and cartridge design. The company also received some financial assistance in the form of grants, which were non-dilutive, that aided in continuing the prototype development. However, in order to complete the design of their prototype device, ChroMedX had to raise capital, which has resulted in dilutive financing. The company experienced a temporary slowdown in its operational front. Nevertheless, it seems they are likely on track to launch their product in 2017.

A few important milestones have been achieved since the beginning of this year:

In our opinion, the company is gaining momentum on the operational front and we are positive that management is on-track to achieve its targeted milestones for HemoPalm. Hence, we have reduced our discount rate to 16% from 20% and keeping the terminal growth rate of 1.5% we arrive at an NPV of $20 million. With other parameters remaining unchanged, based on our DCF model, we arrive at a target price of $0.35/share (previously valued at $0.20/share). Despite the temporary slowdown, ChroMedX has picked up steam in its operations and we envision these changes positively. The uncertainties associated with obtaining regulatory approvals, any hurdles that the company might encounter until HemoPalm launches; keep us at a ‘Hold’ rating. However, this is subject to change as the story progresses, risks abate, and we gain visibility in the coming quarters.

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• Polygenesis Corporation, led by Henry Wieck Ph.D. who had been a senior executive with POCT device manufacturing company i-STAT (acquired by Abbott), is now engaged in the development of HemoPalm’s alpha prototype system and the biosensor array. ChroMedX has recently completed the fabrication of a prototype version of the HemoPalm cartridge, a key component of the HemoPalm analysis system at McMaster University's Manufacturing Research Institute (MMRI). The newly designed transparent cartridge allows the easy observation of fluid flow. The cartridge testing process and the development of CO-oximetry calibration algorithms at McMaster University are underway.

• The company has also begun testing on the spectroscopic component of the HemoPalm blood analyzer. The spectroscopic analysis of blood samples is a key aspect of the HemoPalm system that significantly differentiates it from other POC blood analyzers and replicates the testing methods seen in lab benchtop devices. These developments have provided a significant headway to get the ball rolling for ChroMedX.

• Subsequent to end of the third quarter, the company obtained roughly CDN$1.5 million in cash from a non-brokered private placement. The new financing has given an immediate boost to the balance sheet, which also remains debt-free. This cash will also be sufficient to continue with the HemoPalm aanalyzer’s alpha prototype development.

• ChroMedX beefed up its technical development and advisory team with Mr.Cozzette, Dr.Smit and Dr.Smyth who have the expertise and knowledge to help in building the initial prototype.