MIDAS SHARE TIPS: The diagnosis? Renalytix is a healthy investment free from Woodford Disease
Neil Woodford’s interest in early-stage healthcare firms was once widely praised.
Now he faces fierce criticism for his selection, not least because many of them are not even quoted businesses.
But Woodford’s troubles should not infect sentiment towards the entire industry. Some stocks are going from strength to strength and should continue doing so.
AIM-listed Renalytix AI is a case in point. Priced at £2.40, the company focuses on kidney disease, which has become an epidemic, affecting more than 850 million people around the world.
Some stocks in the healthcare industry are going from strength to strength and should continue doing so
In many cases, however, sufferers do not find out they have the disease until it is at an advanced stage. This is deeply unpleasant for those affected, often resulting in dialysis or transplants. But kidney disease affects different people in different ways. Some can live with it for decades. Others suffer from a progressive version, which becomes chronic within a few years.
If doctors could diagnose kidney issues earlier – and assess who is most likely to develop aggressive symptoms – they could begin treating the most vulnerable patients straight away and prevent them developing life-affecting complications.
Renalytix intends to do just that. The company has pioneered a way of combining blood tests with artificial intelligence (AI) to assess whether kidney disease sufferers can live with their condition reasonably happily or will go on to develop chronic problems.
AIM-listed Renalytix AI focuses on kidney disease, which has become an epidemic, affecting more than 850 million people around the world
The group joined AIM last November and has already made strides. But the company has real potential and the stock should rise as chief executive James McCullough delivers on his promises.
Renalytix is based in New York, because more than 40 million Americans have chronic kidney disease and the US spends almost $115 billion (£91 billion) a year treating it. Numbers are also increasing, as kidney disease is closely linked to diabetes, one of the fastest growing illnesses in the world.
McCullough and his colleagues have designed a product called KidneyIntelX, focused initially on diabetics, to calculate which of them are most at risk of ending up with advanced kidney problems.
Doctors simply take a blood test and send it to the Renalytix lab. The company assesses the blood test, alongside data gleaned from hundreds of thousands of health records. The results produce a prognosis for individual patients and those most at risk can begin preventative treatment.
Progress has been impressive. The company was founded by McCullough and Julian Baines, chief executive of Cardiff-based diagnostics firm EKF Diagnostics (recommended by Midas in 2012 at 22p, now 33p). Baines began with an idea and a promising blood test. He shared his thoughts with McCullough, a former colleague with more than 20 years’ experience in the medical sector. McCullough was enthusiastic and Renalytix was born.
Last year, the duo began collaborating with Mount Sinai, an American hospital group, with eight hospitals, millions of patients and a worldwide reputation for medical research.
Other partnerships have been signed since then and last month, KidneyIntelX received ‘Breakthrough Device’ designation from the US health regulator, the Food and Drug Administration. This was a major boost, as it means the device will be fast-tracked through regulatory hurdles and is expected to be launched later this year.
City brokers have high hopes for Renalytix. The company is forecast to deliver revenues of $3.7 million in the year to June 2020, soaring to $19 million in 2021. Currently loss-making, the firm is expected to become profitable from 2021 if not earlier.
Although KidneyIntelX will start out in America, Baines and McCullough have the UK and Continental Europe in their sights. They have also started work on another diagnostic product, to improve kidney transplant results.