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Published to the market and investors on 31^st August 2018 @ 8.47am (London time).

MDxHealth (MDXH-BR): Building Momentum
Recommendation: OUTPERFORM
Target Price: EUR9.00
Current Price: EUR3.52 (COB on 30^th August 2018)

KEY TAKEAWAY

With H1/2018A numbers much in line with our expectations, MDxH is building momentum with sustained growth of its Confirm- and SelectMDx prostrate cancer diagnostics. While ConfirmMDx will continue to be the main driver in the shorter term, SelectMDx looks increasingly like the major value driver. Increasing evidence should supports the clinical and economic benefits of SelectMDx throughout prostate cancer therapy from early diagnosis through longer term treatment management and monitoring; a potential multi-billion-dollar market. The company remains attractive at current levels. We maintain and reiterate both our OUTPERFORM recommendation and EUR9 target price per share.

Drivers for ConfirmMDx growth - Nationwide access through Medicare following the positive LCD (local coverage decision) in July as well as increasing implementation of ConfirmMDx in private healthcare clinical protocols should sustain physician ConfirmMDx adoption. With the company expected to increase the over 70 signed up payers it should extend access to the 1m men that are referred for biopsy every year.

SelectMDx a major opportunity - A cost-effective convenient urine test, SelectMDx is showing growing potential in early prostate cancer diagnosis of the c.10m men with elevated PSA. Already part of the European urological guidelines and experiencing volume growth approaching 70%, evidence increasingly supports the clinical and economic benefits of the SelectMDx test in disease diagnosis and stratification. Anticipated submission of the data package for inclusion in key US clinical guidelines and Medicare coverage should provide an additional impetus for inclusion by US payers. Anticipated future use in monitoring of men with slow growing or potentially indolent disease in primary care could at least double or triple the addressable market in the US with a similar impact in Europe. Expansion should be facilitated by the increasing roll out of the SelectMDx IVD on sample-to-result platforms and on-line direct to consumer marketing.

Extended pipeline - New pipeline products include a prognostic prostate cancer test recently licensed from Royal Philips InformMDx and MonitorMDx a liquid biopsy for therapy guidance in late stage prostate cancer.

A substantial opportunity at current levels - Although MDxH has yet to issue explicit guidance, we are confident that accelerating volume growth will translate into substantial revenue growth in 2018E and 2019E. Well financed and with data supporting the increasing opportunity for the SelectMDx liquid biopsy, this should drive the share price over the next 12 months and longer term. Our estimates suggest a fair value of EUR6.50 rising towards EUR12 with data supporting wider use of SelectMDx. We maintain and reiterate both our EUR9 target price per share and OUTPERFORM recommendation.

Kind regards,

Chris Redhead | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

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