IsoRay, Inc. (NYSEAMERICAN: ISR) is a stock that we’ve followed for some time now, and every time we look into it, it seems to be more and more impressive. Recently, we decided to dig into the most recent quarterly report and other news that has been released. Here’s what we found…
ISR Quarterly Results Highlights
Recently, IsoRay released its financial results for the third fiscal quarter of 2018. The results proved to be overwhelmingly positive. Here’s what we saw:
- Revenue – In terms of revenue, ISR generated $1.57 million in the third quarter. That figure proved to be a 23% increase on a year-over-year basis, and the fifth consecutive quarter of year-over-year growth. The sustained growth appears to be the result of an increasing impact of the new sales team put in place about a year and a half ago as well as investments in providing support and raising awareness among customers.
- Revenue Sources – In the report, ISR said that 83% of revenue came from prostate brachytherapy. This compares to the 88% of revenue the source generated in the same quarter of fiscal year 2017. The difference results from growing use of the company’s Cesium-131 in other cancers.
- Gross Profit – In terms of gross profit, IsoRay generated $0.61 million, representing a 110% year-over-year increase. The company said that the increase here was the result of cost-saving initiatives throughout the company.
- Profit Margins – Finally, the company reported gross profit margins at 39%, representing strong growth over the 23% gross profit margin in the same quarter the year prior and 35% in the second quarter of fiscal 2018.
A Quick Look At Cesium-131
Cesium-131 is IsoRay’s flagship product. The proprietary treatment was designed to provide a highly targeted dose of intense radiation therapy for patients in need. In fact, the dose is so highly targeted that it limits radiation exposure to tissue surrounding the cancer it is fighting. As a result, ISR and many of their followers believe that the treatment may be well suited for a wide range of aggressive cancers.
Radiation is a massive industry too, providing an extreme potential for earnings, should all go well in studies and throughout the commercialization process. In fact, if this treatment is the pivotal option that many are hoping it will be, it could take a decent share of the radiation market, which is expected to reach $9.3 billion by the year 2024.
GammaTile – A Catalyst In The Making
Soon, ISR is expecting the FDA to make a decision with regard to GammaTile. The product, put together in partnership with GT Medical Technologies, uses FDA-approved collagen tiles and embeds them with the FDA-approved Cesium-131 seeds. In studies, this has proven to be a strong option to treat aggressive and incredibly difficult to treat brain tumors. In fact, it is expected that the 510(k) clearance and reimbursement approval surrounding the GammaTile product will come down the line in mid-2018, a range we are already sitting pretty comfortably in.
A Recent Announcement Suggests Even More Growth In Revenue To Come
Recently, ISR made an announcement surrounding the first disposable delivery system for Custom Intra-Operative Strands for the treatment of prostate cancer. In the release, the company announced that the new system and proprietary design will offer brachytherapists a new and affordable option with regard to personalized Cesium-131 treatment.
The product is known as the Build-Blu™ delivery system and is made for real-time prostate brachytherapy. The product is a disposable, next-generation, seed stranding device that will allow brachytherapists to affordably build custom-configured strands of Cesium-131, being called Cesium Blu™, right in the operating room at the time of the procedure.
This is a massive breakthrough for ISR. After all, Build-Blu is the first disposable device designed for building strands in the operating room. The device is expected to be launched this summer and positions IsoRay to enter the intra-operative segment of the prostate brachytherapy market, estimated to account for approximately $25 million (25%) of the $100 million total prostate brachytherapy market. The device is also the first new delivery system that has been designed specifically for prostate brachytherapy in years.
While this is a breakthrough for ISR, it’s also a breakthrough for the market. After all, it offers an affordable solution with regard to loaders, as capital requirements for other loader options can be a significant challenge. As a result, this solution expands IsoRay’s addressable market and is likely to help solidify IsoRay’s position as a leader in prostate brachytherapy.
ISR is not a company without risks. After all, any investment comes with them. However, the company’s position in the prostate brachytherapy space, combined with new products and other catalysts coming down the line, suggests to the CNA Finance team that the stock may be highly undervalued. However, we know that undervaluation will not last forever in any area of the market. Therefore, now may be the perfect time to dig into ISR.
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