TruSpine Technologies stands up to scrutiny

TruSpine Technologies is a £12m company with ground-breaking disruptive technology and medical devices that could reap mega-profits. 

A couple of weeks ago I featured a profile on Aquis Exchange (LON:AQX), the pan-European exchange services group, which I consider is a company with an extremely good future in front of it as it expands its market operations.

One of the markets it operates is the Aquis Exchange Growth Market, through which a multitude of interesting companies see their shares traded.   

I have recently been researching a number of those companies and, in particular, a little £12m capitalised company that is about to file in the US its FDA application for approval for one of its medical devices.

That company is TruSpine Technologies (AQSE:TSP) and its FDA application should be filed within days.

It has already advanced its device through the FDA channels and has achieved the penultimate blessing for approval ahead of its submission.

Just ninety days away

That FDA process after filing should take no longer than ninety days before success is achieved.

That then opens the gates of real activity at TruSpine as it starts to go into production. Within weeks it will have its devices available for a plethora of US spinal surgeons, who have already shown considerable interest in the time and money saving aid.

The first TruSpine device is classed as being an exciting and disrupting technology and looking at its marketplace it should prove to be an immensely profitable piece of medical kit.

First market attack into the US

The company is attacking the US market first. Some 65m citizens there have suffered recent episodes of back pain. 

Out of the 1.6m spinal fusions carried out globally, it is estimated that 55% are operated in the US.

Overall, it is a $10.5bn per annum market, with healthcare and indirect costs due to back pain taking that figure over $12bn annually. The market is expected to grow at a 3.1% compound annual growth rate between now and 2026.

Minimally invasive screw-free procedure

The first of TruSpine’s three devices is the one at the most advanced stage of development – the Cervi-LOK. 

It is a screw-free spinal stabilisation system used in the cervical spine, it minimises risk of vertebral artery injury which can cause brainstem stroke or nerve root and spinal cord injury.

So, what is so special about the Cervi-LOK? 

It does not invade the vertebrae, unlike the traditional ‘pedicle or lateral mass screw systems’ which have been on the market for 30 years and are by far the most common implant used in spinal surgery. Instead it clamps on to specific landmarks of the vertebrae bones rather than being fixed by screws.

It offers a minimal risk of nerve injury and is capable of being reversed because it does not alter the patient’s bony anatomy, whereas the pedicle method makes a permanent alteration.

Less surgery time, anaesthesia, X-Ray exposure

For surgeons, this method will require less surgery time, less anaesthesia and a lot less X-Ray exposure for patients – it also allows the surgeon to precisely position vertebrae post placement.

It is suggested that the Cervi-LOK could halve all costs, which is why I consider that aiming at the US and attacking that market initially will prove totally right commercially.

Two more devices at advanced development stages

TruSpine also has another two devices at different stages of advancement: 

• the Faci-LOK anchor, which couples together a cranial and a caudal element, that then slide together to provide a firm hold of the vertebrae without penetrating the bone; and 
• the GRASP laminoplasty system, which uses the Cervi-LOK anchor and grasps the lateral masses allowing the system to expand the bony spinal canal, that then relieves pressure on the spinal cord.

These two other devices will be submitted for FDA approval and then marketed in 2022 and 2023 respectively.

How will the market expand?

Some 435 surgery procedures using Cervi-LOK are expected in the next trading year. 

Then, when Faci-LOK and GRASP are out onto the market, that then could see an estimated 1,970 Cervi-LOK procedures, 540 Faci-LOKs and 270 GRASPs. The growth thereafter could be exponential and that is just in the US.

There is a massive market out there for TruSpine’s exciting patented disruptive technology devices and the profits that could tumble down to the bottom line are quite mind-blowing.

Losses this year, profits next year and then mega-profits

The currently loss-making company does not expect to make any sales in this year to end-March 2021, but a good profit is very possible in the following year.

For the year to end-March 2023 aggregated device sales of Cervi-LOK, Faci-LOK and GRASP should see significantly greater profitability.

The company currently has around £1m cash in the bank, which is enough to take it well over the FDA stage, but that figure will be sensibly boosted by capital raisings as the corporate strategy progresses.

Incredible ‘early stage investment’ opportunity

There are 87.78m shares in issue, currently trading at 13.5p valuing the company at only £11.85m on the Aquis Exchange Growth Market (it’s very easy to deal on that market – just ask your broker).

Taking on board the estimates of sales and future profits of TruSpine, these shares look to be an incredible ‘early stage investment’ which could offer very significant upside.

Possibly wide open to be taken by a big predator

However, if you look at the number of mergers and acquisitions in the medical device sector in this year alone, you will soon realise that TruSpine could be wide open to predation, especially at such an advanced stage of its first device getting approval and with its shares at such a giveaway valuation.

I see these shares doubling within months, possibly before March next year when the FDA approval gets granted, then to rise even higher subsequent to next spring.

I now put TruSpine Technology shares out on a one-year target price of 35p.