News just hit press that the Food and Drug Administration (FDA) has just approved an asset called the Dermapace System and the company that created it is running on the back of the release.
The company in question is SANUWAVE Health, Inc. (OTCMKTS:SNWV) and it’s a Georgia, US-based shock wave technology company, focuses on the development and commercialization of noninvasive, high-energy, and acoustic pressure shockwaves for regenerative medicine and other applications.
The lead example of this sort of technology in SANUWAVE’s portfolio (and the technology that forms the basis of this discussion) is the above mentioned Dermapace. The idea is relatively simple – it’s designed to induce shock waves over a particular area of the body that’s damaged for whatever reason. These shockwaves, in turn, activate biologic signaling and angiogenic responses, including new vascularization and microcirculatory improvement, which helps to restore the body’s normal healing processes and regeneration.
Basically, then, it stimulates the body’s natural regeneration processes to help speed up reparation in patients that need it.
In this instance, the approval is for the treatment of patients with diabetic foot ulcers. These sorts of foot ulcers are incredibly nasty and – at the same time – incredibly difficult to treat. Patients generally undergo some sort of antibiotic therapy and this works on occasion but, after a period of nonresponse, the standard of care approach is to amputate the foot in question.
In fact, diabetes is the leading cause of foot amputation in the US and the vast majority of these amputations arise because the patient isn’t responding to standard wound closure efforts and infection-fighting treatment for their foot ulcers.
Of the around 30 million people in the US that have been diagnosed with diabetes, 25% will develop foot ulcers.
And that’s why SANUWAVE is running right now – the company has brought to market one of the first new treatments for this condition in the last few years and, as things stand, there’s a large unmet need for alternative approaches. Further, the data on which the approval was based looks strong enough to potentially justify a first or second line grading, which means the company’s sales team could be marketing to more than 6 million US individuals right off the bat.
For a company that’s valued at just $31 million, that’s a very large market.
And that’s after the run we’ve just seen, on the back of which SANUWAVE ran just shy of 60% to trade just shy of $0.30 a share.
So what comes next?
Now it’s all about getting this asset to market as quickly as possible to take advantage of the unmet need that exists in this market. There are a few alternative assets in the works that will be vying to target the same population of patients that SANUWAVE is going after so the quicker that the company can get things moving, the more chance it’s got of capitalizing on the recent approval.
Is there any upside on current levels?
In a word, yes.
We might have seen a nearly 60% run on yesterday’s open but the key fact is that this approval takes SANUWAVE from a development stage company to a company that can start to generate revenues in its primary target market. That’s a key shift for any company in this space and it’s one that could really spark some speculative attention near term.
Keep in mind that we may see an equity raise early next year so as to allow SANUWAVE to raise the capital required to fund commercialization of its device and – as such – there’s a bit of near-term dilution risk on the cards.
Longer term, however, any dilution should be quickly negated as and when the approval starts to filter through to bottom line.
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Disclosure: We have no position in SNWV and have not been compensated for this article.