The medical diagnostics company Lucid Diagnostics (LUCD) is receiving positive analyst coverage on its stock after tumbling more than a third from its IPO debut in October at $14 a share. While its IPO enterprise valuation was considered overvalued at $484 million, I am bullish on LUCD as the stock has bullish signals accumulating at consolidated levels that are prime for an event-driven catalyst.
Company Overview
Lucid is a microcap biotech company working to commercialize its EsoCheck and EsoGuard devices for detecting pre-esophageal cancer. Critically, the EsoCheck device is the first and only commercially available diagnostic test capable of serving as a widespread screening tool to prevent cancer and cancer deaths in at-risk GERD patients.
Lucid’s EsoGuard is the esophageal DNA test that tests a panel of markers with over 90% sensitivity and specificity, as demonstrated in a 408 patient case-control study in a landmark paper in Science Translational Medicine. Both devices have been given FDA Breakthrough Device designation.
The company completed its IPO on October 14, 2021, with the pre-IPO parent company PAVmed Inc (PAVM) holding ~75.5% of the combined voting power after the offering. The offering ended with proceeds of $70 million before deductions.
Market Analysis
According to recent market research, the global GERD drug and devices market is at an estimated $5.1 billion in 2019 and is expected to rise to $6.1B by 2027, representing a 2.3% compound annual growth rate.
Lucid claims a 13 million at-risk patient population is recommended for its esophageal cancer marker screening, and it has secured a $1,938 Medicare payment per test. That marks a total immediately addressable market of over $25 billion.
With Lucid claiming over 90% margins in its Q3 earnings call, a 5% penetrance would provide about $1.25 billion in near-term value to investors.
Wall Street’s Take
Over the past three months, five analysts have unanimously agreed to a “Buy” rating on Lucid, projecting a price target of $16.40 that implies 257.3% upside potential.
That includes a recent initiation in coverage by Ascendiant Capital that projects a potential ~250% upside in 2022, based on Lucid’s “large market potential…and high reward on risk given the billion-dollar market opportunity,” according to Ascendiant analyst Edward Woo.
Lucid Diagnostic’s Expansion Plans
Importantly, Lucid’s devices have seen considerable recent industry interest, receiving the “Diagnostics Innovation of the Year” award from Biotech Breakthrough. Lucid is also managing a rapid buildup of its commercial infrastructure, including testing centers and labs to cover a pilot testing area of Phoenix, Denver, Salt Lake City, and Las Vegas.
The company has stated its intentions to expand into the Pacific Northwest as soon as the current buildup is completed. Additionally, Lucid established its EsoGuard Telemedicine Program this December that will provide “direct-to-consumer engagement…accelerate commercialization, and drive long-term growth,” according to Lishan Aklog M.D., Lucid’s Chairman and Chief Executive Officer.
“We believe these Lucid Test Centers will play a vital role in driving EsoGuard referrals, as the vast majority of GERD patients are cared for by PCPs, not gastroenterologists. Our Phoenix experience over the past three months has demonstrated that each test center can be operated with very modest fixed costs and attractive margins. We also learned that the key to driving PCP EsoGuard referrals is matching each test center with experienced, highly-driven sales representatives, most commonly from the diagnostics or pharmaceutical sectors, who exclusively call on PCPs.”
Dr. Aklog, Lucid’s Chairman and Chief Executive Officer
Summarizing Thoughts
While Lucid is trading at a deep discount compared to its IPO valuation, there are signs that the stock is beginning to attract positive market attention. Analysts continue to reiterate ~250% upside, stressing that the addressable market share greatly outweighs the risks of the technology.
Huge readouts are coming in the pivotal trial comparing EsoGuard and the current EGD test currently enrolling ~1000-1400 patients in a multicenter international clinical trial, as well as smaller institutional research. Accordingly, the sentiment behind Lucid in 2022 looks bullish.
Download the TipRanks mobile app now
Disclosure: At the time of publication, Michael Ronzetti did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates. Read full disclaimer >
