In a Jan 24 research report, Jason Kolbert, a Maxim Group analyst, indicated that IsoRay Inc.'s (ISR:NYSE.MKT) preliminary Q2 FY18 revenues of $1.54 million ($1.54M) were "up 50% year over year, up 27% quarter over quarter and above our forecast of $1.3M." He added, "The company is demonstrating consistent growth as management executes their strategy." For FY 18, the executive team guided to a "revenue target of 20% growth or ~$5.8M."
Kolbert also provided background information on cesium-131 (Cs-131), which IsoRay produces in seed form for use in brachytherapy. He pointed out that "broader adoption is key to market penetration."
Further, he explained that Cs-131 is approved for most solid tumors. It has "more energy and a shorter half-life than iodine-125 or palladium-103, which means Cs-131 could be used in more situations and potentially with better efficacy than other isotopes." Further, physician interest in using Cs-131 in various cancers seems to be increasing. Those include brain (meningiomas, brain metastases and glioblastomas), lung (nonsmall cell lung), gynecological, prostate, and head and neck.
This represents a swing in the other direction from the move a decade ago away from brachytherapy and toward other modalities, such as external beam radiation, robotic surgery and biologics, Kolbert said. However, the "limitations of these therapies are now better understood, setting the stage for [a] market share shift back toward seeds."
About IsoRay's potential with Cs-131, Kolbert concluded, "We see an opportunity for revenues to grow as sales reps' details start to impact usage. We also see the opportunity for margins to climb as fixed costs related to manufacturing are leveraged across greater numbers of patients." For instance, brain cancers, including glioblastoma multiforme and metastasis to brain from breast and lung, "represent up to 70,000 patients." As use of Cs-131 in brain and prostate cancer and other indications develops, "we could see significant revenues in the out-years," he added.
Maxim has a Buy rating and a $3 per share price target on IsoRay, whose stock is currently trading at around $0.48 per share. Kolbert explained, "Our metrics are driven by our assumptions for the market share penetration of Proxcelan (Cs-131 seeds), Cesitrex (liquid Cs-131) and GliaSite (catheter system) in prostate cancer as well as other cancers and gliomas."
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Additional Disclosures
Disclosures from Maxim Group, IsoRay Inc., Jan. 24, 2018
I, Jason Kolbert, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm's total revenues, a portion of which is generated by investment banking activities.
Maxim Group makes a market in IsoRay, Inc.
Maxim Group expects to receive or intends to seek compensation for investment banking services from IsoRay, Inc. in the next 3 months.
