Renalytix on the brink of real revenue

Renalytix (RENX) is a kidney health bioprognosis business that operates in the US. It has created a product that identities early-stage chronic kidney issues and diabetes. The leading product, KidneyIntelX, has been granted Breakthrough Designation by the US Food and Drug Administration. 

Financial metrics are still of secondary importance as the company is is yet to fully embark on its commercial phase, although near-term  prospects have been boosted by rising clinical demand. Kidney disease affects an estimated 37m people in the US, or more than one in seven adults. So the company is targeting a huge addressable market through its KidneyIntelX product. As if to bear this out, Renalytix recently expanded its commercial strategy to address early-stage kidney disease in the US Veterans Health Administration patient population. And under a new agreement with Mount Sinai Health System, the company gets paid $950 (£693) per test and Mount Sinai is planning to accelerate its use to 300 weekly tests. In that scenario, it would be generating around $15m a year from Mount Sinai alone.

FactSet consensus is that sales will rise to $20.4m for 2022 and then up to $83.8m in 2024. This would leave it with a 2024 price to sales of 7.5.

It is hoping to expand out of kidney testing and has signed a partnership with AstraZeneca (AZN) to “launch precision medicine strategies for cardiovascular, renal and metabolic diseases to potentially expand Renalytix's portfolio”. This is promising given the prevalence of heart disease in society today, although diabetes is probably where the money is at. According to the CDC, prevalence of diabetes in adults over the age of 18 in the US rose from 9.5 per cent in 1999-2002 to 12 per cent in 2013-2016. That’s a harrowing jump, but if that trend holds, sales of KidneyIntelX – or a variation thereof – could expand rapidly to meet clinical demand. Speculative buy.

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