TEAR : NASDAQ : US$9.17
TLB : TSX
BUY
Target: US$19.00
COMPANY DESCRIPTION:
TearLab Corporation has commercialized a proprietary tear testing platform, the TearLab Osmolarity System, that enables eye care practitioners to test for highly sensitive and specific biomarkers using nanoliters of tear film at the point of care. Their first product measures tear film osmolarity for the diagnosis of dry eye disease (DED. The company is headquartered in San Diego, California.
All amounts in US$ unless otherwise noted.
Life Sciences — Biomedical Devices and Services
RAISING THE TEAR BRAND AT AAO
Investment recommendation
We reiterate our BUY on TEAR shares following the annual American Academy of Ophthalmology conference where the TearLab brand has increased dramatically.
Investment highlights
“Ask the Experts” was a who’s who of ophthalmologists. The TEAR booth hosted 14 leading eye specialists over 3 days to answer questions and share experiences with the TearLab osmolarity system which impressed their ophthalmology colleagues. As a result, higher quality booth traffic ensued.
TearLab osmolarity enhances eye practices. As ophthalmologists experienced a 13% reduction in cataract fees, performing a dx test on dry eye patients offers increased patient value, schedule follow-ups, and additional revenues.
Masters Accounts provide long-term value. They provide eye practices the potential for high test usage, but can take 3-6 months to get up and running. We believe it’s well worth it.
Adding Seph as President/COO is a strong endorsement. As a 17 yr. industry veteran, Mr. Jensen (formerly of Alcon) recognizes the opportunity ahead for TEAR, with its nano technology, large market in dry-eye, treating baby-boomer population, and improving specialist practices.
Valuation
Our $19 price target uses a 7.5x P/S multiple to our 2015 sales estimate of $90M, discounted at 10% to 2014.
