Initiating Coverage of FluoroPharma Medical (FPMI)

Initiating Coverage of FluoroPharma Medical

Brian Marckx, CFA

We are initiating coverage of FluoroPharma Medical, Inc. (FPMI) with an Outperform rating and $2.00 price target. See below for free access to our 18-page report on the company which details FPMI's novel radiopharmaceutical candidates, target markets, and competition and includes our outlook for the company, valuation methodology, risk factors and financial model.

FluoroPharma Medical, Inc. (“FluoroPharma”) seeks to develop breakthrough molecular imaging agents for positron emission tomography (PET) to fulfill critical medical needs. The company’s products are designed to improve patient diagnosis and management by evaluating various forms of cardiac disease at the cellular and molecular level. Each year, millions of patients undergo molecular imaging studies in the U.S. The main reason for these studies is to detect and evaluate ischemic heart disease and myocardial infarction (MI) in patients with acute and chronic forms of coronary artery disease (CAD). These images provide benefit in the initial evaluation of patients with suspected but unproven CAD, and in those patients in whom a diagnosis of CAD has been established and information on prognosis or risk is required.

FluoroPharma's current focus is on three separate cardiac molecular imaging pharmaceuticals, two of which are in clinical-stage and about to enter phase II clinical trials. The third candidate is still in early development stage with initial clinical testing still likely to be years away. If all goes to plan, the first of the three products could be on the U.S. market within the next five years. FluoroPharma's products are aimed at improving overall patient care via improved disease detection and are expected to; provide significantly greater diagnostic accuracy compared to currently employed nuclear imaging agents and modalities, increase the use of PET in cardiac imaging, and help reduce the number of unnecessary diagnostic and therapeutic procedures.

In the U.S., there are an estimated 12 million PET imaging procedures done per year – however, the vast majority of these scans are for the diagnosis of cancer. While PET is becoming more established in the cardiac setting, this segment continues to be dominated by lower cost competing modalities. By all accounts, this is quickly changing as several factors have led to a shift in favor of PET for the diagnosis of cardiac disease. FluoroPharma expects to capitalize on this growth through the introduction of novel cardiac PET tracing agents, the market for which is expected to grow by at least 14% annually over the next five years to approximately $900 million (or more). Aside from one currently marketed branded cardiac PET tracer (which suffers from certain issues), the market is largely is wide open.

FluoroPharma was founded in 2003 by Dr. David Elmaleh and is led by management and directors with extensive experience in the radiopharmaceutical and medical technology industries. Dr. Elmaleh, FluoroPharma's acting Chief Scientific Officer, has created radiopharmaceuticals that are in use today and is credited with the invention over 40 patents including those related to novel molecular imaging compounds in the diagnosis of cardiovascular disease.

The company went public through a May 16, 2011 reverse merger. The financial information included in SEC filings prior to the merger relate to Commercial E-Waste Management, Inc, an electronics waste management solution provider, specializing in the collection, retirement, storage and remarketing of excess, damaged or obsolete electronic assets, such as computer, telecommunications and other electronic office equipment. Concurrent with and shortly following the merger, FluoroPharma raised approximately $4.6 million (net proceeds) in capital. FluoroPharma raised another $1.0 million (gross) from the additional sale of common stock in December 2011. The current cash balance may possibly be enough to fully fund completion of phase II clinical trials for the two products furthest along in development. Phase III trials would require substantially more capital and will necessitate either additional financing or support via partnership / licensing agreements.

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