US-launch anchored with the largest dermatology network and a 90% likelihood of achieving reimbursement
Commercially de-risked roll out of Nevisense 3.0 with Advanced Dermatology and Cosmetic Surgery (ADCS) group- the premier dermatology network in the US with over 150 practices aiming to “bring more science into Dermatology” through the adoption of Nevisense.
SciBase has been granted a Category III CPT® code by American Medical Association. Once in effect, estimated in July 2021, the code becomes automatically available to all providers, including Medicare and Medicaid advantage providers. The code is an important step towards securing payment coverage in the US and broaden market adoption. There is a high likelihood that CMS MACs will assign reimbursement to the code in initially selected states (NY/tri-state area and Florida); we estimate a 90% likelihood on the basis of 1) recent enactment of CMS legislation to provide coverage of CPTIII (40%); 2) Nevisense being a PMA product with extensive documentation on clinical efficacy and utility (15%); 3) a high level of need in the Medicare population (10%); 4) solid record of payments from private payers and generation of claims from local providers, being accelerated in collaboration with ADCS (15%); and 5) support from KOLs and providers (10%). We ascribe the last 10% to execution risk.
We initiate coverage with an Outperform rating and a target price of SEK 7.5, corresponding to an equity value of SEK 413m non diluted. Our target price is derived from a DCF valuation of the initial opportunity in melanoma and non-melanoma skin cancer in the key markets Germany and US, limited to initially selected states. We have not baked in any upside from other applications under way.
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