Corline Biomedical Q4: Focus on Kardium’s market launch
Research Update
2025-02-18
07:00
Analyst Q&A
Closed
Gustaf Meyer answered 4 questions.
Redeye provides an update following Corline’s Q4 2024 report. The report itself was relatively undramatic; however, we look forward to an eventful 2025. We make some model changes, but our fair value range remains intact.
Gustaf Meyer
Contents
Investment Thesis
Download article
We argue that Corline’s Q4 2024 report was relatively undramatic. Sales during the quarter amounted to SEK2.0m (SEK6.2m), a 68% decrease y/y and a 14% increase q/q. The sales figure can be compared to our estimate of SEK2.6m. Operating expenses came in at SEK-6.9m (SEK-9.5m), a 27% decrease y/y and a 21% increase q/q. This was in line with our estimated operating expenses of SEK-7.1m. Lastly, EBIT amounted to SEK-14.1m (SEK-0.6m), compared to our projection of SEK-3.1m. The reason for the difference is the company’s one-time amortisation of SEK-10.0m. The one-time adjustment is related to the amortisation of Cytoparin, as the development continues to be postponed. Note that this adjustment does not have an effect on the company’s cash flow.
Kardium submitted its FDA application for the Globe system during the quarter. In our view, this was earlier than expected as the full results from Kardium’s pivotal study have not been released yet (probably around March/April 2025). We argue that this could be a sign of positive data and that Kardium believes data with fewer patients will be enough to receive the clearance. Furthermore, we estimate an FDA approval in late 2025e and a market launch of the Globe system in early 2026e.
Our valuation of Corline is based on a discounted cash flow (DCF) model covering the period from 2025e to 2036e, with a WACC of 15%, derived from the Redeye quality rating model. We make some general model adjustments in this research update; however, it does not impact our fair value range, including a base case of SEK18, a bull case of SEK35, and a bear case of SEK8. Furthermore, we identify several key catalysts related to Corline’s partnership with Kardium (FDA approval and product launch) that could narrow the gap between the current share price and our base case over the next 12-18 months.
| Key Financials | |||||
|---|---|---|---|---|---|
| SEKm | 2023 | 2024 | 2025e | 2026e | 2027e |
| Net Sales | 25.0 | 9.8 | 27.0 | 42.4 | 78.4 |
| Sales Growth | 6.3% | -60.9% | 176% | 56.8% | 85.2% |
| Total Revenue | 35.9 | 17.7 | 30.0 | 46.5 | 78.4 |
| EBITDA | -1.7 | -13.1 | 5.8 | 17.0 | 37.9 |
| EBIT | -1.8 | -23.2 | 5.5 | 16.6 | 37.1 |
| EBIT Margin | -7.1% | -237% | 20.4% | 39.1% | 47.3% |
Case
Focus on medtech
Corline is at a pivotal point, with its strategic focus on medtech positioning the company to capitalise on its partnerships. Despite short-term sales fluctuations from pre-commercial agreements, we see substantial upside potential as key partnerships, particularly with Kardium, approach the commercial stage. The share trading near our bear case valuation reflects cautious market expectations for Corline’s collaborations with Kardium and Imperative Care. We argue these partnerships are poised to deliver substantial sales growth and robust long-term EBIT margins of up to 60%, based on our forecasts. With sales momentum building, profitability on the horizon (2025e), and key near-term triggers like FDA approval for Kardium and its market launch, we see a compelling case for the share to re-rate and reach our base case within 12-18 months.
Evidence
Kardium targets the rapidly growing PFA market
Corline has a non-exclusive licensing agreement with the Canadian company Kardium, granting the right to use Corline’s CHS (Coating Heparin Surface) technology for ablation products across global markets. The CHS surface is utilised on Kardium’s Globe ablation catheter, designed for the treatment of heart arrhythmias. Targeting the rapidly growing pulsed-field ablation (PFA) market, we expect a launch of the catheter in the US in early 2026e. According to GlobalData, approximately 760,000 electrophysiology (EP) ablation catheters were used in 2024 in the US, with 10% being pulsed field ablation (PFA) catheters (most commonly one per procedure). The US PFA market was valued at USD536m in 2024 and is projected to grow at a CAGR of 49%, reaching USD5.8bn by 2030e. PFA catheters are expected to account for an impressive 73% of the total EP market by then.
Kardium has presented superior clinical data, which we see as a decisive factor for capturing market shares in a sector dominated by major players. With Kardium positioned to secure a substantial foothold (we estimate an 8% market penetration by 2036e), we argue Corline will have significant sales growth through reagent sales and royalties. This will be a pivotal driver of profitability and long-term success for the company.
Challenge
Partner dependency
Corline’s business model is centred on partner agreements, a key driver behind our projected high-percentage margins. However, these partnerships are critical to Corline’s growth, and any decline in partner commitment could significantly impact the company. In the long term, we view diversification as essential; expanding the number of commercially active partners would mitigate reliance on a small group, reducing risk and supporting sustainable growth.
Finding a partner for Renaparin
Within kidney transplants, Corline has stated that the phase II trial (RENAPAIR 02) is currently on hold, with the company actively seeking financing for further clinical development. In our bull case, we estimate Corline will secure a licensing deal with a larger player by early 2026e, worth USD180m, including an upfront payment of USD10m (a 50% probability in our model). However, we believe that finding a suitable partner will present a challenge for the company.
Valuation
Significant upside potential and near-term catalysts
Our valuation of Corline is based on a discounted cash flow (DCF) model covering the period from 2024e to 2036e, with a WACC of 15%, derived from the Redeye quality rating model. Our base and bear cases, valued at SEK18 and SEK8, respectively, focus solely on Corline’s medtech segment, while our bull case, valued at SEK35, includes both the medtech and biotech segments. We anticipate rising sales and strong long-term margins, with a terminal EBIT of 48%. We identify several key catalysts related to Corline’s partnership with Kardium (FDA approval and product launch) that could narrow the gap between the current share price and our base case over the next 12-18 months.
Disclosures and disclaimers
Contents
Investment Thesis
Download article