SVRE: Offers a vision to protect vulnerable road users. Forms new subsidiary to commercialize the technology.
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WHAT’S NEW
➢ SaverOne (NASDAQ:SVRE) published a 27-page PowerPoint pitch deck on its investor website on earlier this week which detailed the opportunity that the company and a consulting firm see in the vulnerable road user safety market. The company offered up some eye-popping predictions around the size of this market and the potential for its VRU solution and while we recognize the need in the market, we would remind investors that the company is targeting delivering an MVP of this solution in 2025 and commercialization in 2028. The company also indicated that it expects that it will require roughly $35 million of outside capital to bring this product to commercialization which it hopes to secure from a strategic partner.
➢ Since our last update, SaverOne announced that it had received a purchase order for a proof-of-concept (POC) for its vulnerable road user solution from its long-term partner Iveco. This solution could be integrated into an existing Advanced Driver Assistance System (ADAS). We are encouraged by Iveco’s continued support of the SaverOne approach to safety and we believe Iveco’s purchase order will speed the development of the company’s MVP expected to be delivered in 2025.
➢ The company also announced in mid-May that it had received a new patent from the European Patent Office that covers its core technology for selectively blocking certain functions of a driver’s cell phone while still allowing other occupants of the vehicle full access to their mobile devices. This was the company’s 11th granted patent and the company has another 12 patents pending as of June 2024.
We think investors should think of the VRU subsidiary as a pre-seed, pre-MVP startup pitch. At this stage, it is an idea that has some validity because the RF-based sensor technology has been proven to work in SaverOne’s core product. If the company can deliver an MVP to partners and potential customers and we can see a working demo in 2025, we think it will be appropriate to assign some value to this operation. Alternatively, if the company can attract an outside investment into the VRU subsidiary, this would provide instant validation of the business and provide a solid foundation to measure the current and future value of this subsidiary.
Given, SaverOne’s current capital structure and cash burn rate, we think financing the rollout of the VRU subsidiary could be the greatest challenge that the company faces when trying to commercialize the VRU solution. The company indicated that it could require up to $35 million to achieve commercialization and generate its first sales of the VRU solution in 2028. This is significantly higher than SaverOne’s current market value and the magnitude of any potential dilution as a result of the financing will have to be evaluated at that time. The company indicated recently that it is approaching potential strategic partners and investors about financing the VRU subsidiary.