CORAL GABLES, FL / ACCESSWIRE / October 6, 2015 / Every year, 15 million people globally suffer strokes, and between 250,000 and 500,000 suffer spinal cord injuries. Many of these patients have an associated mobility issue, with patients subject to becoming wheelchair-bound at worst and extended physical therapy periods at best. A number of companies are currently working to tackle this market through a brand new technology called exoskeletons.
An exoskeleton can attach to the lower body and aid mobility by learning and replicating a patient's walking gait, being the movement patterns of the legs and lower back. The industry is new, and the business model is primarily renting or selling exoskeleton units to physical therapy centers and hospitals for paraplegic patients, or those who have suffered from spinal cord injuries or strokes for use on an inpatient or outpatient basis. Some companies also sell personal exoskeletons for home use. Here is a look at the three leaders in the space.
ReWalk Robotics Ltd. (NASDAQ: RWLK)
ReWalk has two primary products - ReWalk Personal and ReWalk Rehabilitation which are designed for use both outside and inside the clinic. The company recently reported a Q2 2015 net loss revenues have increased 300% since 2012, indicating some traction. The company is currently trading at around $8 a share, close to 75% lower than last year at this time. The main obstacle is that it takes a long time for ReWalk to generate revenues from these products. Patients convert from leads to customers only after an extended training program, and ReWalk must then submit and wait on approval for an insurance application before it can recognize sales.
That's the technical issue, but add to this the fact that the company is essentially spearheading a totally new industry and that most insurance companies don't really know how to treat exoskeletons yet. Nevertheless, sales are being made and the company is well capitalized at $31.2M in cash. ReWalk made a little over $600,000 in revenues for the first half of 2015, translating to a gross profit of $60,000 and a net loss of $5.8 million. At current burn rate then extrapolating from the last six months, ReWalk has close to three years of running room.
The way forward for ReWalk seems to be convincing insurance companies to cover the device for their clients. And the way to do that is to convince those companies that the ReWalk exoskeleton will save on healthcare costs in the long run. The consequences of being wheelchair-bound are certainly expensive, and often lead to depression, insulin resistance, poor bladder and bowel movement function, and most of all decreased productivity. Walking around in an exoskeleton is far from ideal, but it certainly beats a wheelchair for getting to work every day and being a productive member of society. If ReWalk can demonstrate the cost effectiveness of the exoskeleton approach to spinal cord injuries and strokes, it can get the insurance coverage it needs to expand its cash flow.
Bionik Laboratories Corp. (OTCQX: BNKL)
Bionik has one lead product in development, a lower body exoskeleton called ARKE. At first glance, Bionik may seem a little behind the curve that ReWalk is spearheading, with ARKE currently still in clinical development and not yet generating revenues for the company. However, the ARKE has some advantages over ReWalk, in addition to the fact that Bionik's being behind in clinical development may actually work to its advantage.
As ReWalk is demonstrating, it is a drawn out and costly process to forge a new industry. ReWalk is bearing the brunt of this cost with its current revenue generation efforts, and Bionik may benefit from a slightly later entry into a somewhat more established space. The company reported a net loss of $2.4 million last quarter, but raised $13 million earlier this year and as a result, shouldn't have any issues carrying through to production, which just began in mid September.
Bionik's advantages over ReWalk are, first and foremost, its technology. The ReWalk system is based on 2001 technology, while the ARKE operates on modern software. Second, the ARKE has a targeted price point 33% lower than the ReWalk. The ReWalk retails for about $75,000 while the ARKE is targeting $50,000. A third advantage may be its executive staff. Bionik's CEO Peter Bloch was the CFO and once the Co-CEO of Sanofi Canada, with extensive knowledge of the connection between healthcare and the medical insurance industry. Cultivating relationships with insurers will be key for any company in this space, and Bionik's top executive comes from that very background.
The further ReWalk gets in the next 18 months, the better it will be for Bionik. The key once again is to hook insurance companies by demonstrating cost savings. The more ReWalk succeeds in this, the easier time Bionik will have in making sales from a logistical standpoint when it is ready. If the ARKE does end up costing less than the ReWalk, the argument will be that much more persuasive.
Ekso Bionics Holdings, Inc. (OTCQB: EKSO)
Ekso is the third company in this brand new industry, obviously named for the exoskeleton. This company is little different from the other two in that, while it does focus on lower body rehab exoskeletons, it also produces products for use commercially and as military aides. In the commercial and military spaces the company's technology aims to increase worker/soldier productivity through helping with heavy lifting and long wheelbase transportation. Think of the closing scene with Sigourney Weaver from the movie Aliens and you'll have a good idea of the concept here.
Ekso has sold or rented more than 125 units to date, more than ReWalk, and has around $14 million impending bookings from the medical space alone. It's the same long sales process so this revenue has not been realized yet. Additionally, its products link to computer software that allows therapy session monitors to view feedback in real time. This is another one that has a large amount of its valuation rooted in intellectual property, with the company reporting more than 150 international patent applications and 42 patents in the US.
Ekso generated $985,000 revenues from the medical space and $704,000 from the commercial engineering space during the first quarter of 2015, and total gross profit of $403,000. Net loss for the period came in at a little over $4.1 million and $5.6M last uarter, but the top line is headed in the right direction, with over $2M in revenue last quarter. One essential near-term upside driver is a pending uplisting, which the company first noted in its July corporate presentation and has since suggested it expects to complete before the end of 2015. If it can gain a listing status on the major exchange like ReWalk, Ekso would become more attractive to institutional investors.
Conclusion
While the leader in the exoskeleton market is ReWalk for now, the industry is really too young to pick a clear undisputed leader at this point. ReWalk is first to market, but will clear much of the weeds on the way for Bionik, which just began production of its ARKE. Technologically, the ARKE looks superior to its competitors and aims to be much cheaper, but this will have to be confirmed once it actually comes to market. As for Ekso, this company is tackling both medical and industrial applications, an advantage in its own right.
All three seem to be decently capitalized for now, so there is no imminent danger of running out of runway.
The most important thing though for this industry right now is being recognized by insurance companies for reimbursement. Rather than follow the top or bottom lines, it is more important to keep an eye on insurance recognition for claims. This is what will drive sales going forward for all there companies, and if exoskeletons really are cost efficient long term, then the insurance industry will eventually crunch the numbers and make its move.
CONTACT:
Company: BiotechStocks.com
Contact Name: Adam Heimann
Contact Email: adam@egmfirm.com
SOURCE: BiotechStocks.com
