Foto cedidaGuy Wagner, director general de BLI.. Banque de Luxembourg unifica sus unidades de gestión de activos
BLI – Banque de Luxembourg Investments, the asset manager of Banque de Luxembourg, and Conventum Asset Management, fund management company for third-party fund initiators and also subsidiary of the bank, have announced in a press release that they are combining their activities with effect from 1 January 2021.
This operation means that BLI will manage the 60 employees that constitute the workforce of the two entities, under the leadership of Guy Wagner, its Managing Director. Services to third-party fund initiators will be offered by BLI under the Conventum TPS (Third Party Solutions) brand.
“The merger of the two companies will enable us to enhance our expertise as a portfolio management company and provider of services for third-party funds, and share the necessary investments to strengthen our operational, technical and control systems,” explained Wagner.
The asset manager pointed out that this merger will strengthen its positioning by “capitalizing on the combined skills, expertise and systems of Conventum Asset Management and BLI”. It also revealed that their ambition is to continue to develop a full range of offers within two key business lines: portfolio management services and investment fund management company services for third-party initiators.
Michèle Biel, Director of Conventum Asset Management, highlighted that by pooling the resources of both companies, the new entity will enable them to combine their respective expertise in the best interests of or current and future clients. “The teams’ formidable experience will be the foundation for the development of our business in a constantly-evolving market and regulatory environment”, she added.
The surge in demand for thematic funds in Europe last year is set to continue, according to the latest research of Cerulli Associates “The Cerulli Edge—Global Edition”. This demand will specially grow in 2021 and 2022 in those strategies focused on water, biotechnology, and technology.
Net flows into sector-themed equity products during the first 10 months of 2020 amounted to 89 billion euros (108 billion dollars), more than triple the net sales for 2019. Meanwhile, assets under management amounted to 512.4 billion euros at the close of October 2020.
“The consensus of managers operating in Europe is that broad themes relating to technology and sustainability will prevail in the aftermath of COVID-19 and longer term,” says Fabrizio Zumbo, associate director, European asset and wealth management research at Cerulli.
Some 84% of the ETF issuers in Europe that responded to the survey expect “significant or moderate demand” for thematic ETFs in the next 12 to 24 months. Over the first 10 months of 2020, technology-related themes were the most popular, attracting 28 billion euros or 32% of net inflows, followed by healthcare at 15%, and renewable energy or climate change at 12%.
Sustainability and technology first
Cerulli’s research shows that ETF issuers in Europe expect growth in demand over 2021 and 2022 to be strongest for sustainability-related themessuch as water and biotechnology, closely followed by technology. Almost all the managers that responded to the survey (92%) expect demand for water-themed ETFs to increase over the next two years. Combined active and passive assets in the water-themed sector have achieved a compound annual growth rate (CAGR) of 23% over the past five years.
The firm believes that asset managers can source new opportunities from working closely with technical experts in fields such as biotechnology and healthcare to ensure that specialist funds are able to capitalize on areas of potential growth.
“Technology themes, which include artificial intelligence, cybersecurity, and 5G networks, are expected to continue to attract high demand, in part due to the success of mass remote working, which is likely to continue to an extent post-pandemic. Some 84% of our survey respondents believe that technology-themed ETFs will experience an increase in demand in the next 12 to 18 months,” said Zumbo.
In his view, investors are becoming more comfortable with using thematic ETFs for diversification and to express their investment objectives: “a reflection of how the product set is evolving”, he points out. In addition, several asset managers interviewed by Cerulli in Europe highlighted that thematic funds are generally easier to sell to end clients because the attached compelling narratives make the products easier to understand.
This year will see major changes that will be highly supportive of the green bond market in Europe: the European Union’s Green Bond Standard will be published, the EU will issue green bonds for an estimated amount of 225 billion euros and several governments will start issuing this asset class. As such, NN Investment Partners estimates in a press release that the global green bond market will grow by 300 billion euros in 2021 to 1 trillion.
The asset manager believes that the EU Taxonomy and the Green Bond Standard will be the first driver of the green bond market surge in 2021, stemming from the EU’s Sustainable Action Plan to finance sustainable economic growth. In its view, the standard and the finalization of the first version of the new taxonomy will have “a long-term positive impact on the integrity and transparency of the EU green bond market and will act as the blueprint for regulation in other regions”, because it will:
Further standardize and professionalize the rapidly maturing green bond market
Raise knowledge levels on whether economic activities are environmentally friendly and how they can transition to become more sustainable
Give investors an increasingly detailed overview of what they are investing in, enabling them to make better-informed choices
Give issuers more guidance how to identify green assets or activities
Therefore, the firm believes that this legislation could be regarded as “a catalyst for the global green bond market growth”, encouraging lagging sectors such as industrials to come forward with a green bond issuance. Currently, the market is dominated by financials, utilities and government-related issuers.
“These new regulations herald what could be a watershed decade for climate change mitigation, with Europe leading the way via its target to be carbon-neutral by 2050. ESG and green finance are really entering the mainstream. The pandemic has created a positive boost too, as a lot of countries clearly need more funding, and with green ambitions stronger than ever the green bond market will be widely viewed as a major opportunity”, says Jovita Razauskaite, portfolio manager for green bonds at NN IP.
Additionally, the asset manager expects the green bond market developments will be spurred by several countries that plan to issue their inaugural green bonds in 2021, including Italy, Spain, the UK, Denmark, Ukraine and Slovenia. Also, repeated issuers such as the Netherlands, France and Germany will come back to the market with an ambition to tackle climate change. “All in all, the pipeline of government green issuances is extensive and significantly larger than in previous years”, they pointed out.
Finally, the issuance of new Next Generation EU-Bonds (NGEU), of which EUR 225 billion is dedicated to environmental projects between 2021 and 2023, will significantly enlarge the supranational share of the global green bond universe. “The EU is likely to start issuing these bonds in Q2 2021 to support the national recovery and resilience plans of member countries”, highlighted NN IP.
Pixabay CC0 Public Domain. Morningstar Indexes lanza un nuevo índice de género para mercados desarrollados
Morningstar announced the launch of the Morningstar® Developed Markets ex-Japan Gender Diversity Index℠, designed to provide exposure to developed market companies exhibiting strong gender diversity policy and practices.
In a press release, the firm pointed out that investor demand for ESG has increased drastically in the last decade, driving the need for these types of indexes. In this case, it will be powered by the data and scoring methodology of Equileap, a global provider of data and insights on gender equality for investors. More specifically, the constituents of the new index are weighted according to 19 gender equality criteria, including gender balance across the workforce, the gender pay gap, paid parental leave, and anti-sexual harassment policies.
The Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund with approximately 1.5 trillion dollars in assets under management as of June 2020, has adopted the index as its benchmark to invest.
“During a tumultuous year consumed by a global health and economic crisis in which research shows working women pay a disproportional toll, transparent practices and policies that advance gender representation should be top of mind for companies. We are thrilled to be working with Equileap and GPIF on a meaningful endeavor that we believe will have the potential to not only act as a catalyst to shape corporate behavior but also help investors achieve their financial goals”, said Ron Bundy, president of Morningstar Indexes.
This launch is in line with the white paper published by Morningstar and Equileap “Investing Inclusively: Building Shareholder Value Through Gender Diversity.” The report highlights that companies that foster gender diversity and create inclusive cultures are tapping into the potential of the full population and are positioned to benefit from the effects of cognitive diversity. In this sense, “they are not only advancing the cause of human rights but also have the potential to maximize shareholder value”.
The index is derived from the Morningstar Developed Markets ex-Japan Large-Mid Index, which includes large and mid-capitalization equities from the U.S., Canada, Western Europe, Israel, Australia, Hong Kong, New Zealand, and Singapore. “In addition to providing a similar risk/return profile to the broad market, it is built to provide exposure to publicly traded companies with strong gender diversity policies embedded in their corporate culture and that ensure equal opportunities to employees, irrespective of their gender”, Morningstar concluded.
Banco Santander’s board of directors has resolved to name Gina Díez Barroso as a new independent director after Rodrigo Echenique‘s departure, announced the bank in a press release. The board has also agreed to appoint Alejandro Butti as the new CEO and country head of Santander Argentina.
Díez Barroso is a Mexican entrepreneur, founder and president of Diarq Group, an architecture and design company that carries out real estate projects in Mexico and the United States. She has career of more than 20 years in the real estate and education sectors, in addition to the experience she acquired in banking as an independent director of Banco Santander Mexico. She is also the founder and president of Universidad Centro, Mexico City’s first university specializing in creative studies.
With this appointment, which will be submitted for ratification at the next general shareholders’ meeting of Santander, Díez Barroso will fill the vacancy left by Rodrigo Echenique, who will step down from his role as director after 32 years at the Santander Group. He also left his executive positions as vice chairman of the bank and chairman of Santander Spain in May 2019.
“Gina Díez Barroso has vast knowledge of the US and Mexico, two of the group’s most important markets. She will also add additional expertise in areas such as real state, banking, education, and sustainable business. Her arrival means 40% of our board will be women”, said the bank’s executive chairman, Ana Botín.
She also highlighted the “privilege and honor” it has been to work with Echenique. “He has been pivotal to the growth and success of Banco Santander over the last 30 years, from the launch of the Supercuenta in 1989 to the recent acquisition of Banco Popular”, she added.
With the addition Díez Barroso, the board of directors of Santander will continue to be made up of 15 members, 10 of whom are independent directors.
New country head for Argentina
The board has also agreed to appoint Alejandro Butti as the new CEO and country head of Santander Argentina, subject to regulatory approvals. He will report to Head of South America, Sergio Rial. Butti, who has been with Grupo Santander for over 25 years, is a member of Santander Argentina’s executive committee and, until now, headed Santander Corporate & Investment Banking (CIB) in Argentina.
“Sergio Lew, who has played an important role in driving Santander Argentina’s growth in the last two and a half years, will return to the CIB business in the United States, where he has spent a large part of his professional career and collaborated to implement a global service model with a focus on Latin America. He will remain as country head of Santander Argentina until 31 March 2021 to ensure a smooth transition”, revealed the bank in the press release.
Pixabay CC0 Public Domain. El departamento Federal de Finanzas de Suiza (FDF) levanta las restricciones al Reino Unido
Polar Capital has reached an agreement to acquire 100% of Dalton Capital, the parent company of Dalton Strategic Partnership, for 15.6 million pounds (around 20.85 million dollars). This UK based boutique asset manager had 1.24 billion pounds (1.68 million dollars) in assets under management as at 15 December 2020.
In a press release, Polar Capital stated that the acquisition has “a strong strategic rationale” with its growth and diversification strategy and adds “a leading European investment team” to its existing European Income team. It also provides the group with broader wholesale and institutional distribution into Europe, particularly in the German market.
The deal excludes the Velox Fund, which is on the Dalton platform, but includes the Melchior European Opportunities Fund and the existing Luxembourg SICAV umbrella which will aid the group’s product range for international distribution.
The transaction reaches 15.6 million pounds split between the initial consideration of 8.3 million of which 7.8 million will be paid in cash from Polar Capital’s existing resources and half a million pounds in Polar Capital shares. Afterwards, there will be a deferred cash consideration of 7.3 million pounds, payable 12 months after completion, with the amount being linked to the value of assets under management at the time.
A strategic fit for 2021
“The acquisition of Dalton Strategic Partnership is further delivery of our growth and diversification strategy and is an excellent strategic, geographic and cultural fit with our existing business. It delivers greater scale, new capabilities and an expanded distribution reach in Europe, as well as highly experienced investment teams with a good track record. This acquisition will also provide Polar Capital with its first Luxembourg SICAV”, said Gavin Rochussen, CEO of Polar Capital.
Meanwhile, Nick Mottram, CEO at Dalton, claimed to be “delighted” to be joining the group and pointed out that they have long been impressed by their strong client focus, proposition and growth aspirations. “It is a good cultural fit for us and that was important when we were looking to join a larger group, as we wanted to ensure we retained investment autonomy over our funds”, he commented.
Also, he pointed out that the managers of their two key investment strategies, David Robinson and Leonard Charlton, are “committed and enthusiastic” about the acquisition and the opportunity it will provide “to further develop their investment propositions to the benefit of their investors”.
The transaction is expected to complete in Q1 2021 with a transition of the DSP business onto the Polar Capital platform during Q2 2021.
Has it all worked out for you? Wake up, take stock, be honest.
Are you a gambler? Do you own real estate funds with office and hotel portfolios that were exposed to the Covid-19 lockdowns? Too bad. Do you own private equity funds that use leverage exceeding 7x cashflows for companies struggling during this crisis? Too bad. Are you invested in early-stage venture backed companies with no sure path to liquidity? Too bad! It really is too bad when investors gamble with risk.
The Covid-19 crisis exposed risk most investors never anticipated in owning leveraged office and hotel portfolios that will take years to recover, if they survive the financial pressures imposed by the crisis. Most investors never anticipated that their highly leveraged portfolio companies would see their revenues disappear during such a time. Investors never imagined that early-stage venture backed companies they liked would be scrambling for cash to survive over the last 12 months.
Conversely, those investors who cared about risk management and chose strategies that minimized use of leverage are feeling much more secure and hopeful. While GDP driven investment themes are cyclical and struggle during recessions, downturns, and global pandemics, we advised our clients to ignore temptations and instead commit to disciplined managers who create real value, avoiding unnecessary risk.
Over the last two years, we shared the following with our clients and these themes have served them well. Why? Because all of them have one thing in common. That is, they are all strategies that consider risk first and are mitigated.
Do you think proven, innovative biotech treatments will lead us to revolutionary outcomes? We do.
Do you think demographically driven real estate opportunities present less cyclical risk? We do.
Do you think proven pre-IPO growth companies have a chance to capture value that leveraged buyout transactions can’t? We do.
Do you think niche, sector specific, high quality private credit without much competition deserves our attention? We do.
Do you think a highly disruptive alternative to secondary liquidity providers deserve investment? We do.
Do you think owning minority stakes in a portfolio of large and growing private investment management firms is a good thing? We do.
So, we hope it has worked out for you! We hope you discovered a better way to invest in private investment funds by thoroughly understanding their risk profiles and choosing lower risk options. How many more shocks do we need to experience before we wake up and start taking risk considerations more seriously? Hopefully we are all aware now of how to invest by paying more attention to underlying risk because 2020 has been a needed wake up call for many private equity investors.
Column by Alex Gregory, founder of Better Way, LLC
Pixabay CC0 Public DomainAntoine Onfray, nuevo director financiero de Tikehau Capital.. Antoine Onfray, nombrado director financiero de Tikehau Capital
Tikehau Capital, the alternative asset management and investment group, has announced in a press release the appointment of Antoine Onfray as Chief Financial Officer. In this position, he will be responsible for developing and implementing the group’s financial strategy and will report to Henri Marcoux, Deputy Chief Executive Officer of the firm.
Onfray began his career in 2007 in the General Inspection department of Société Générale. Between 2010 and 2016, he was Head of Financing and Treasury and Head of Investor Relations at Unibail-Rodamco-Westfield and he was then named Deputy Chief Financial Officer at Eurosic. Prior to joining Tikehau Capital, Onfray was Group Deputy CEO of Paref, a listed real estate group, where he arrived at 2017 as Chief Financial Officer.
“We are delighted to welcome Antoine, who brings a wealth of expertise in the financial function of listed groups. He will be a major asset in the growth dynamic of Tikehau Capital, whose solid financial structure with 2.8 billion euros shareholders’ equity, contributes directly to the achievement of the Group’s strategic objectives,” said Henri Marcoux, Deputy CEO of Tikehau Capital.
Foto cedidaAdrie Heinsbroek, director de sostenibilidad de NN Investment Partners.. NN Investment Partners nombra a Adrie Heinsbroek director de sostenibilidad
NN Investment Partners (NN IP) has announced in a press release the appointment of Adrie Heinsbroek as Chief Sustainability Officer, as of 1 January 2021. In this newly created role he will advise the Board on sustainability matters and challenges, and their implications for the entire organization.
Heinsbroek will be responsible for bringing external developments that shape the operational surroundings and society, such as increased regulations and climate change, directly to the Board. He will also advise on NN IP’s own footprint and the further implementation of its responsible investing approach in its strategies. He will continue to report to Arnoud Diemers, Head of Innovation and Responsible Investing Platform, and will additionally take on a direct advisory role to Satish Bapat, CEO of NN IP.
The asset manager believes that Heinsbroek will help them remain “at the forefront of global sustainability and ESG developments”. In their view, his appointment enables NN IP to leverage on his knowledge and experience whilst setting priorities and make decisions for the future.
“As a responsible investor, we aim to improve both our clients’ returns and the world we live in. We do this by looking beyond financial performance, because the people we work for and with, represent more than just the investments we manage. The announcement illustrates our strong commitment as a responsible investor”, said Satish Bapat.
Heinsbroek joined NN IP in February 2017 as Principal Responsible Investment and has over 20 years of experience in the field of sustainability and ESG integration.
At the beginning of last September, I met by video conference with the Grifols (GRF) Investor Relations Team. We talked about accelerating immunoglobulin sales in developed markets such as the US, Canada, and some European countries. GRF produces and sells immunoglobulins for intravenous and subcutaneous administration, and they are used in part to treat diseases of patients with Primary Immunodeficiency (PIDD).
During the last week of September, I conversed with an American hedge fund manager, as we are both research contributors to Seeking Alpha (SA). In that conversation, the manager recommended Koru Medical Systems (KRMD), highly penalized by the market, but the underlying business was excellent. KRMD is an American manufacturer of low-price subcutaneous infusion devices for delivering immunoglobulin therapies in chronic diseases such as primary immunodeficiencies (PIDD), chronic inflammatory demyelinating polyneuropathy (CIDP), and others.
PIDD is a diverse group of genetic disorders caused when some immune system components (especially cells and proteins) do not work correctly.
Does it sound familiar? I repeat, patients with PIDD
Thanks to the investment in GRF and the good prospects for the immunoglobulin business, I decided to do more research on KRMD.
Its business model is very attractive due to its high recurring income component, a consequence of the fact that on many occasions, a patient with PIDD must treat for all life. Also, the maintenance and the purchase of accessories generate recurring income and high switch costs, a consequence of the fact that a machine can often only use spare parts of the same brand.
So what are the main drivers of future growth?
1. Diagnose more PIDD and SID patients
PIDD (primary immunodeficiencies) is a group of more than 400 rare genetic diseases that cause a malfunction of the immune system. These diseases affect one in every 2,000 people, 60% of cases diagnosed during childhood, and up to 10% detected at birth in countries with the corresponding screening program. According to different academic studies, globally, there are 650,000 people diagnosed and 6M who have not yet been.
Most of the people diagnosed with PIDD are in the US, specifically 500,000 of whom 130,000 receive some immunoglobulin (Ig) therapy. Of these 130,000, 35,000 are receiving subcutaneous Immunoglobulin (SCIg); therefore, there is the possibility of converting 95,000 patients from intravenous (IVIg) to subcutaneous (SCIg). PIDD therapies represent an annual recurring income per patient of $ 750, according to data from Koru Medical.
Sometimes due to external factors (those that are not caused by genetics), people develop what is known as secondary immunodeficiency (SID). As a result, patients can undergo repeated rounds of antibiotics and hospitalization for treatment. SIDs are much more common than primary (genetic) immunodeficiencies.
Chronic inflammatory demyelinating polyneuropathy (CIDP) is a rare neurological disorder that causes inflammation of the body’s nerves. Although your immune system generally keeps you healthy by fighting germs, your immune system does not recognize parts of your nerves and attacks them. Over time, this can cause gradual weakness, numbness, and loss of feeling in the arms and legs. If left untreated, CIDP can cause permanent nerve damage. CIDP therapies represent an annual recurring income per patient of $ 1,500, according to data from Koru Medical.
2. Increased adoption of subcutaneous therapies
Many reasons explain the preference for subcutaneous vs. intravenous, both by patients and doctors. Some of them are: 1) It can be self-administered at home without the help of a nurse, 2) fewer side effects in a patient with low blood pressure, 3) flexibility in scheduling injections, 4) gradual adsorption of the Immunoglobulin, 5) does not require premedication, 6) the patient can continue to perform their tasks while injecting and 7) higher frequency of administration (weekly) in SGIg.
Although SCIg therapy is more expensive in terms of price per gram than IVIg, some studies indicate that over a year, a patient generates an average savings of $ 10,000.
3. Medical devices and self home administration
There are three different SCIg infusion systems, mechanical, electronic, elastomeric, and push. Mechanics are the cheapest, and this is the segment where Koru Medical operates. The electronics inject a constant flow. They are programmable, but their sale price is higher, and they require batteries and some previous training from the patient. We will analyze in more detail the mechanical pumps and a semi-electronic one.
3.1) FREEDOM60 from Koru Medical Systems: Completely portable syringe infusion system, without the need for electricity or batteries and operates at a constant and safe pressure. The FREEDOM60 pump could use for almost any subcutaneous or intravenous administration in a standard 60 ml syringe.
3.2) Crono S-PID 50 from IntraPump: The newest, high volume ambulatory infusion pump for subcutaneous drug therapies always with a prescription. It combines high technology with an innovative design. It’s small and light, accurate, and has the flexibility to change flow rates during an infusion with ease, making it ideal for home therapy. Its use with 50 ml dedicated syringe. There is also a Crono Super PID pump designed for pediatrics with reliable 10, 20, and 100ml syringes.
3.3) EMED Technologies SCIg60 Self-Powered Pump: Utilizes a reusable constant pressure mechanical pump monitored by the VersaRate flow controller. This disposable device allows the physician and patient to adjust the inflow flow better. Today, this device is still pending clearance from the FDA.
In mid-November, and after speaking with the company’s management, it was clear that Koru Medical was present in a business with excellent growth potential and located in the right segment (subcutaneous immunoglobulins). However, I still had three questions to answer:
A. Was there a margin of safety?
B. What is the best medical device for administering SCIg?
C. Is the business model scalable outside the US?
To answer the first and most straightforward of the three questions, we must make a rough assessment of the business. We know that Koru Medical’s strategic plan is to reach $ 50M in sales by 2022, a gross margin of 70%, and organic and annual sales growth of + 20%. We propose the fundamental valuation based on two methods, and for simplicity, we do not include the clinical trials and international segments (Less than 20% of total sales).
1) Company guidance
Growth of 15% for 2020, 20% for 2021 and 25% for 2022, less than company guidance. In the gross margin, we started from 68% in 2020 to 70% in 2022. We think the company will reduce its salary cost to 40% of total revenue, which implies an Ebit margin of 23% in 2022. To estimate the target value, we applied 5x sales or 25x profits to reach a theoretical value of 6.35 dollars. At the current trading price (3.90 dollars on November 11), we obtained an upside potential of over 60% for estimates below the company’s target.
2) Total addressable market (TAM) in the US
FREEDOM60 use in 35,000 subcutaneous patients, but there are 130,000 intravenous patients. Therefore, Koru Medical has the opportunity to convert an additional 95,000 patients. If we perform the same calculation for CIDP, we see the possibility of converting 4,750 patients. If we estimate that Koru Medical will capture 30% of the market opportunity in PIDD and 15% in CIDP, we achieved target sales of 51.3 million dollars, a figure very much in line with the company’s strategic plan. Applying the valuation multiples above, we obtained a target price of 7.65 dollars or a potential upside of 96%.
Because of the assessment achieved, there is no doubt that we obtained a sufficient margin of safety, but we still had to answer two more questions. Most fundamental analyzes end at this point or much earlier. Even at DRACO GLOBAL, we go one step further, and we need to contrast the information we have obtained from the company, analysts, or colleagues.
Information Contrast
At DRACO GLOBAL, we do not make an act of faith. We believe what the company, a report, or an analyst tells us; Instead, we contrast the information with those who best know your product or service (Clients, suppliers, distributors, etc.). On this occasion, we got in touch with BarcelonaPID Foundation and we talk to your president and pediatric immunologist, Pere Soler Palacín.
The PID Foundation is a non-profit organization founded in 2014 as the initiative of a group of professionals dedicated to pediatric patients with Primary Immunodeficiencies (PID) and their families. Its objective is to promote the knowledge, study, research, and dissemination of PIDs and the complications derived from these diseases.
As president of the foundation and with more than 25 years of experience in IDPs, Dr. Soler extended information to our study with the following words:
• There is a wide variety of PID diseases, and some are more or less common and more or less serious.
• More typical in children, but it can also occur in adults.
• Treatment for PIDs can reduce the number and severity of conditions and help children and adults lead as everyday lives as possible.
• Immunoglobulin treatment is the essential treatment for many of these PIDD, helping protect against a wide range of infections and reduce autoimmune symptoms.
• Dr. Soler confirms that they mostly use the subcutaneous route due to: less need for injections, self-administration at home with prior instruction to the patient, faster administration, fewer side effects, and lower QoL.
• Artificial plasma could be a very long-term option, but today it is not possible in any case.
• SIDs (secondary) is also an exciting opportunity, although there is still a lot of work.
While talking to Dr. Soler, I convinced that I had found a great investment idea, but when I asked him about existing medical devices, his answer left me blank.
• From 2006 to 2009, they used the typical low-cost mechanical pump called the Infusa T1 from Physan. In his experience, the infusion pump did not generate a constant flow. It was easily clogged and made it difficult to administer medication. In 2009, they chose to change their supplier to InterPump, the company that owns the Crono S-PID 50 device. This device significantly reduced the problems related to tube occlusion and drug inlet fluidity. Its size is smaller, and its design is lighter, making it ideal for home therapy and providing complete freedom for the patient to administer medications at any time of the day without interrupting daily life or leisure activities.
After this revelation, I went to the InterPump website and began to read testimonial comments that had used both devices and just confirmed everything that Dr. Soler told me.
Finally, I asked Dr. Soler if there was any explanation why FREEDOM60 used more than Crono S-PID 50 in the US, and according to his opinion:
• The fact that healthcare is private and expensive encourages you to buy low-cost devices like FREEDOM60. On the other hand, healthcare subsidies in Europe and Spain and the cost is not the main problem.
Finally, I understood that the investment thesis could be valid in the US as long as the current health system continues but not in Europe. A part of Koru Medical’s future growth is international expansion, Europe included. Still, after Dr. Soler’s revelation, my opinion changed radically to the point that I am rethinking my investment in Koru Medical Systems.
There is always the possibility that Koru Medical will consolidate the market and buy another company, and why not one of its best competitors. InterPump (Crono) is a small Italian company and does not trade on the stock exchange. You never know if the owner would be willing to sell it. In the release of the 3Q20 results, the CEO of Koru Medical spoke that they are always attentive to the M&A possibilities offered by the market and that after the June capital increase, they could use the $ 32M they have in the box.
In this article, I wanted to show how we analyze and contrast the DRACO GLOBAL information before investing, especially in small companies. Unfortunately, it is not a common practice in the sector, but in DRACO GLOBAL we try to do it.
PS: I want to publicly thank Dr. Soler for his time, his kindness and encourage people to read this article and go to the PID Foundation website.
Column by Quim Abril, President and Portfolio Manager of Draco Global Sicav at Gesiuris AM.
