Issue #4: Betting on AI & 5G, detecting melanomas and beating diabetes 🚨
Ticker Nerd Platinum Report

Issue #4: Betting on AI & 5G, detecting melanomas and beating diabetes 🚨

Sam Renotte

March 8, 2021

April 2, 2021
5 min read

Issue #4 | 02/17/21

Thank you to everyone that commented and upvoted our Product Hunt launch last week. Also welcome to all 196 new members who have joined since we sent our last report :)

Let's get into this week’s report. Here’s what we found:

  • A biotech company that could help win the war against skin cancer
  • A pharmaceutical company that is changing how the world manages diabetes
  • A semiconductor company that’s ready to ride the wave of massive tech trends over the next decade

DermTech Inc. ($DMTK)

$75.65 - Share price at time of writing

Source: MarketStream.io

Summary:

  • DermTech offer a pain-free solution to detect melanomas that's cheaper and more accurate than existing options
  • Recently announced an agreement with Blue Cross Blue Shield of Texas making their product available to their 6 million members
  • 1 in 5 Americans will develop skin cancer by age 70. Market size is worth around $10 billion, DermTech is well positioned to capture the majority of the market.

What they do:

DermTech has developed a simple and pain-free adhesive sticker used to detect melanomas.

According to their site it’s over 99% effective at accurately identifying melanomas plus it's cheaper too, costing about $760 versus $1,000 for a biopsy.

Why they’re spiking in interest:

Total social mentions increased by more than 700% on 02/11/21 (compared to the previous month) after DermTech announced an agreement with a major health insurer, Blue Cross Blue Shield of Texas.

The deal will make DermTech’s Melanoma test available to the insurer's 6 million members (approx.) in that state.

Why DMTK could be valuable:

Right now, diagnosing skin cancer is usually more art than science.

A doctor makes a visual assessment of a suspicious mole. To determine a diagnosis, a surgical biopsy is needed plus another visual assessment made of the mole's cells via a microscope. There's a 17% chance that a doctor using this process will miss a melanoma.

DermTech's solution avoids the surgical biopsy. A small adhesive sticker is placed over the skin that removes RNA material from it. That's all they need to conduct an in-depth diagnostic. Instead of subjectively analyzing how the skin cells look, DermTech examines them at a genetic level with an accuracy of 99%.

DermTech has a sizable market opportunity. More people are diagnosed with skin cancer than all other cancers combined: 20% of Americans will develop skin cancer by age 70. And early detection is key. Melanoma has a 98% survival rate if it's detected early.

Despite their share price already being up by over 400% since December - DermTech has only just begun tapping into the $10 billion market for skin cancer detection.

💸 Signal: Over the last three months, insiders have been buying significantly more stock than selling. Source: simplywall.st

What the risks are:

The biggest risk to investors of a biotech company like DermTech is the possibility that a promising product fails during clinical trials. Luckily DermTech is already out of the woods after posting successful results from its long term TRUST study in December last year.

DermTech currently doesn’t face any close competition as they’re the first company to offer a non-invasive skin genomics test. Plus they have a more advanced version of their Pigmented Lesion Assay in the pipeline.

Senseonics Holdings, Inc. ($SENS)

$5.27 - Share price at time of writing

Source: marketstream.io

Summary:

  • Senseonics have developed an implantable continuous glucose monitoring system (CGM)
  • Announced a deal with EmblemHealth a large nonprofit and has been gaining interest from r/wsb
  • Diabetes is one of the leading causes of deaths in US, Senseonics CGM device could be life saving and help prevent countless deaths
  • Their latest device is still being reviewed by the FDA

What they do:

Senseonics is a pharmaceutical company that is known for developing the Eversense CGM system.

So what does that mean exactly?

It’s an implanted sensor for patients with diabetes that is placed under the skin. Patients can use the device for 90 days at a time to monitor their glucose levels. The sensor and transmitter also works with an app that patients can download to track their glucose levels every five minutes.

Why they’re spiking in interest:

Total social mentions increased by 70% as a result of renewed interest from r/WallStreetBets (when compared to the January peak) after Senseonics announced a deal with EmblemHealth one of the largest nonprofit health plans in the country to offer their continuous glucose monitor system.

Why SENS could be valuable:

Having real-time data and alerts about glucose levels can be life saving.

Diabetes is the nation’s seventh-leading cause of death, accounting for more than 79,000 deaths annually. It also contributes to deaths from heart disease and stroke which are the leading and fifth-leading causes of death, respectively.

There are three major types of diabetes: type 1, type 2, and gestational. Type 2 diabetes accounts for 90 to 95 percent of all cases. Their Eversense CGM system aims to keep that safely under control.

Senseonic also landed a partnership with Ascensia in late 2020 which will play a huge role in the roll-out of their Eversense system.

Ascensia is a proven player in the diabetes industry as they distribute products to diabetes patients in over 120 countries. Ascensia knows its market and will be able to hit the ground running in terms of getting the Eversense CGM system out into the marketplace.

They already have FDA approval for their 90 days monitoring sensor and are currently waiting for their new device with 180 days monitoring to be approved sometime in Q1/Q2 2021. Although the process has been delayed by a couple months due to the FDA prioritising emergency reviews of coronavirus related tests and medical devices.

💸 Signal: Billionaire hedge fund manager Ken Griffin increased his position in SENS by 50.3% in Q3 2020 and is still currently holding. Source: cheaperthanguru.com

What the risks are:

Senseonics recently increased the size of its equity offering by 100%.

This means if their 2021 revenue estimates are met, those sales would be not as valuable to the regular shareholder than they would be before the stock offering.

It would be worth watching out for potential continued dilution in the quarters to come.

Micron Technology, Inc. ($MU)

$87.74 - Share price at time of writing

Source: marketstream.io

Summary:

  • MU is a semiconductor company - a core component of nearly all modern technology
  • Considered an “OG” meme stock of r/wsb MU has received attention from the community over recent months with the majority of users favouring a long term position
  • MU is an opportunity to bet on multiple high growth tech trends including 5G, AI and auto tech
  • The trade war between the US and China still poses potential risks to future profitability if tensions continue to rise

What they do:

According to Investopedia, Micro Technology “is a semiconductor company that develops and makes memory and storage solutions. Their products are used in automobiles, consumer electronics, communications products, servers, and computers.”

Semiconductors are central to everything that’s electronic, whether you’re driving a car, or surfing the internet, or using a supercomputer—everything is ultimately based on a semiconductor.

Why they’re spiking in interest:

MU is considered one of the OG meme stocks from WallStreetBets.

Interest has been growing steadily over the past 3 months as reddit users have begun to view the stock more favourably now that its future looks a lot brighter. When compared to 2016 when it took a nosedive early on in the trade war between the US and China.


Why MU could be valuable:

MU is a solid candidate for tapping into multiple tech growth trends like 5G, AI, and auto tech since semiconductors are an essential component of these technologies.

MU's shares are surprisingly undervalued at the moment.

For the full year, analysts expect Micron's revenue and earnings to grow 17% and 45%, respectively. Next year, they expect its revenue and earnings to grow another 26% and 93%, respectively. Those are incredibly high growth rates for a stock that trades at just 19 times forward earnings and less than three times next year's sales.

Micron claimed its core Dynamic Random Access Memory (DRAM) business had passed "the bottom of the industry cycle" and would see "improving trends" throughout 2021.

Micron also expects rising demand to outpace its supply growth in DRAM and NAND chips throughout the rest of the year, which means its prices should stabilize and rise.

At the same time, Micron plans to cut costs at the DRAM and NAND businesses to boost its operating margins - which already expanded year over year from 12% to 17% in the first quarter.

💸 Signal: Legendary investor Ray Dalio increased his position in MU by 1021% in Q3 2020 and is still currently holding. Source: cheaperthanguru.com

What the risks are:

Micron remains an underdog in the memory market. It ranks third in the DRAM market after Samsung and SK Hynix, and fourth in the NAND market after Samsung, Kioxia (Toshiba), and Western Digital.

Micron's loss of trade secrets to a state-backed Chinese chipmaker back in 2018 indicates that China - which openly accused Micron, Samsung, and SK Hynix of fixing memory prices - still wants to flood the market with cheap memory chips.

This worst-case scenario could still become a reality if the tech war between the U.S. and China gets worse.

That's a wrap!

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Disclaimer: This report by Ticker Nerd is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Ticker Nerd has no position in any stocks mentioned.