Sensyne Health PLC’s (LON:SENS) COVID-19 testing deal with Excalibur Healthcare Services could be an extremely large commercial opportunity, says stockbroker Liberum Capital, which today repeats a ‘buy’ recommendation for the AIM-quoted share.
The AIM-quoted share advanced 13.7p or 8.84% changing hands at 169.75p in Tuesday morning’s deals following the announcement of its deal with Excalibur.
With a 310p price target Liberum sees around 80% upside to the current price.
Sensyne’s platform uses a cloud-based deep learning algorithm to read and analyse the results of lateral flow tests.
The smartphone and web-based app has proved to be more sensitive than the human eye. It is expected that the platform can improve accuracy for tests conducted outside of clinical settings.
This is a driver for the Excalibur test which is approved by the UK regulator for mass population screening.
Liberum analyst Graham Doyle, in a note, highlighted the potential scale of the opportunity for Sensyne.
“Given it is already approved for mass population screening by the UK regulator and has capacity for 1.1bn tests per year, this could be an extremely large commercial opportunity for Sensyne which will be guaranteed a minimum of £4.8m of royalties over the first two years of the agreement,” the analyst said.
“This deal both de-risks this year’s revenue forecast and validates the investments Sensyne is making to industrialise its dataset which would allow for more rapid development of AI driven applications like MagnifEye.”
Doyle added: “The deal includes a royalty for Sensyne each time its MagnifEye app is used in conjunction with the Exclaibur test.
“There is a guaranteed minimum royalty of £4.8m due over the first two years of the agreement.
“Sensyen’s year-end is April and we would expect a decent portion of the revenue potential to come through as the government attempts to reopen schools over the next month or so.
“That said, the next 6-9 months could offer a substantial opportunity for Sensyne as the economy opens up and the government aims to use surge testing (with convenient rapid antigen tests) to limit the spread of new mutations.”