InspireMD Inc.

InspireMD (AMEX: NSPR) is a commercial-stage medical device company with proprietary and innovative stent designs with integrated embolic prevention systems (EPS) delivering neurovascular protection and stroke prevention. 

Key Updates:

• On April 14, 2021, the company announced a 1- for-15 reverse stock split of its common shares, effective from April 26, 2021. The number of authorized shares of the company stock will remain at 150 million while the outstanding shares would reduce to 7.9 million from 118.0 million.
• The company has decent pipeline at commercial stage for stroke protection namely CGuard EPS and Myocardium Protection which is MGuard EPS. Additionally, NSPR owns developing stage products for Carotid treatment. Furthermore, company is seeking expansion opportunities in the Peripheral and Neuro treatment via PGuard and NGuard Embolic Prevention System (EPS).

Product Pipeline (Source: Company Presentation)

FY20 Financial Highlights:

• NSPR announced its full-year result, wherein the company posted revenues of USD 2.485 million, decreased from USD 3.721 million in the previous year.
• Gross profit was lowered to USD 0.083 million, from USD 0.756 million in the previous year, due to lower revenue.
• The period was marked by lower research and development expense, a decline in selling and marketing expense, and a higher general and administrative expense.
• Loss from operation widened to USD 10.380 million from USD 9.816 million in FY19.
• Net loss stood at USD 10.544 million, as compared to USD 10.040 million in FY19.

Source: Company Report

Risks:  The company is yet to report income from operations, while the management is expecting to incur loss and negative cash flows unless its primary product CGuard™ EPS commercializes. Hence, the company might witness a liquidity crunch in the coming days.

Stock Recommendation:

The company is yet to report a stable income, and its proprietary product is yet to be commercialized, which remains a key concern. Moreover, the company is witnessing constant losses causing erosion of capital, which might lead to a liquidity crunch. In addition to this, the company’s input costs have remained elevated in the recent past, which has resulted in higher net losses. On the valuation front, the stock of NSPR is trading at an NTM EV to Sales multiple of 7.7x which is higher than the industry (Healthcare) median of 4.6x. Hence, considering the above facts, we prefer to remain on the sidelines and suggest an ‘Avoid’ recommendation on the stock at the last closing price of USD 6.92 on April 27, 2021.

1-Year Price Chart (as on April 27, 2021). Source: Refinitiv (Thomson Reuters)

Disclaimer

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