The shockwave technology sector got a boost last week when AbbVie (NYSE: ABBV) announced its planned acquisition of Soliton (NASDAQ: SOLY) for $550 million. It's an extraordinary amount of money for a pre-revenue generating company with a single FDA-approved product. But don't second guess ABBV's knowledge of the market...or the impact it can have on SANUWAVE (OTC: SNWV) valuations.
In fact, undoubtedly, AbbVie surely thinks it got the better of the deal. And no matter what the outcome between those two, AbbVie set the starting bid for additional consolidation in the sector. For SANUWAVE, ABBV's interest validates the reasons why SNWV could be worth double the purchase price of Soliton. After all, SNWV has TWO FDA-cleared shockwave technology devices in the market, generated record-setting revenue in its latest report, and just announced an additional 11 patents added to its IP portfolio. Considering those advantages compared to a non-revenue generating SOLY, SANUWAVE's value could soar once investors recognize that as good as the deal is for Soliton, SANUWAVE has much more to offer.
Indeed, SNWV shares have been consolidating ahead of its latest quarterly results, currently under a routine audit. The excellent news is that its prior quarter and its year-end results are expected to deliver another set of record-setting revenues. Also in play is the planned uplist to a more senior NASDAQ exchange once the company completes its year-end filings.
But, while the filings may have been delayed, there is no reason to believe that SNWV's impressive growth has slowed. In fact, expectations are for an acceleration in revenues, increased market penetration for UltraMIST and dermaPACE, and an expansion into additional international markets. In other words, these imminent filings could show that SNWV is in the best operating position in its history.
And there's plenty of reasons to be bullish. A quick look at what ABBV was after from Soliton makes the SANUWAVE investment proposition even more compelling.
Half A Billion For Similar Technology
The prize for AbbVie's Allergan Aesthetics is its planned acquisition of Soliton's Rapid Acoustic Pulse device. Interestingly, ABBV is willing to pay a whole lot of money for a device that was only recently approved by the FDA for use in body contouring and tattoo ink removal.
Don't misunderstand; that product might be a great one, but no one truly knows whether it is or not since it never generated any revenues. But, assuming that its ability to help fade unwanted tattoo ink and reduce the appearance of cellulite can create a healthy rate of return to ABBV, the $550 million price tag certainly validates SNWV's assets.
And the better news, from a pure valuation perspective, is that SANUWAVE's shockwave devices are targeting new indications well beyond the focus of treating conditions related to diabetes. While the diabetic ulcer market remains a primary focus that targets a multi-billion dollar market opportunity, SANUWAVE highlighted in its updated investor package that UltraMIST is FDA-cleared to treat additional indications, including facials and other skin-related treatments.
Thus, while Soliton's asset might be good for targeting the relatively narrow tattoo ink removal and cellulite appearance markets, UltraMIST will be tapping into a substantial mainstream skin-treatment market that brings extraordinary near and long-term revenue opportunities. The better news is that those treatment indications meet massive global demand, and it's a market that won't deteriorate over time. In fact, with a substantial sales force already in the market, the prospects for UltraMIST to drive exponential growth are clearly in play for the remainder of 2021.
And there's considerably more to the story. Beyond the indications mentioned, UltraMIST and dermaPACE are combing to deliver a one-two punch in the diabetes sector with a combination therapy that provides treatment across the entire continuum of care. Very few, if any, other shockwave therapeutics companies can make the same claim.
A Better Asset Portfolio That Deserves Value
Be happy for Soliton. Their investors are getting $550 million. However, investors should be parlaying that news as a massive opportunity to purchase SNWV shares at what could be its most undervalued level ever. Indeed, shares are low as investors wait for filings. However, not taking advantage of the value opportunity presented could prove costly from a long-term investment perspective. Remember, SNWV assets are validated as effective. Better still, they are considered best-in-class.
The devices use PACE® technology, a TRUE focused shockwave treatment generating therapeutic shockwaves from the source generator to the targeted area for treatment. The dermaPACE® System is used to repair and regenerate skin, musculoskeletal tissue, and vascular structures. It utilizes a proprietary form of extracorporeal focused shockwave technology to treat chronic wounds, is non-invasive and painless, and best of all, a typical treatment lasts only 5-7 minutes and can be performed using standard wound care procedures at a physician's office. From a therapeutic perspective, dermaPACE stimulates local wound and periwound endogenously and restarts the body's natural wound healing process and can complement Standard of Care or be used independently.
Its other device, UltraMIST, uses a low-frequency, non-contact, and painless ultrasound delivered through a fluid mist that utilizes ultrasound energy to promote wound healing through tissue stimulation. In parallel, it enhances wound cleansing and maintenance debridement. Best of all, from a treatment perspective, UltraMIST never touches the wound surface, is pain-free, and is self-contained, making it easy to set up, operate and store. The device is also portable, using only a generator, treatment wand, and disposable applicator. Notably, more than 65 US and international patents protect its approved applications and cover method of use, device construction, and specific indications related to advanced wound care.
Better yet, the two devices capitalize on a more than $45 billion market opportunity by targeting the diabetic foot ulcer, venous leg ulcer, and pressure ulcer markets. But, with new skin-care indications added, that market potential could at least double.
And it won't be long before investors hear more about these opportunities.
Filings Imminent, Value Could Soar
As noted, SNWV is expected to file its prior quarter and year-end results soon. And while the expectation is for SNWV to deliver another set of record results, management commentary could highlight the call.
Moreover, with ABBV setting the bar high valuing a single-device company, investors will likely be anxious to hear SNWV's CEO discuss the similarities and advantages that his products have in comparison. Those comments could spark a rally, especially if they complement another round of consecutive record revenues.
Indeed, the coming days could be transformative for SNWV. The overhang from its delayed filings should finally dissipate, and its operational performance should again take center stage. Deservedly so.
And with massive premiums paid for shockwave technology now out in the open, expect SNWV to surge, especially after earning its expected uplist to the NASDAQ markets. Trading on the OTC markets is still the wild west of trading, and SNWV's more telling valuation is likely shielded by a lack of an orderly market.
However, if "news trumps all," SNWV may soon have the juice to breach resistance and send shares to a valuation that more appropriately represents its intrinsic value. The great news is that, more likely than not, SNWV will get the premium it deserves once it gets current in its filings.
Indeed, ABBV's interest in the sector could spark valuations for the small number of shockwave technology companies to soar. Make no mistake, SNWV's turn could be next.
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