Lodge Partners sees 430% upside for Blinklab, developer of smartphone autism test

Lodge Partners values Blinklab at $1.30 in its initiation report, implying a 430% upside for the developer of an app to diagnose autism and ADHD

Lodge Partners sees strong growth potential for Blinklab. Pic: Getty Images.

• Lodge Partners values Blinklab as a speculative buy with a $1.30 price target in its initiation coverage

• Blinklab has developed a smartphone app to diagnose autism and ADHD in children

• Company due to start enrolment this year of a 500-person trial with forecasted readout mid-2025

  

Special Report: Lodge Partners has initiated research on Blinklab (ASX:BB1) with a $1.30 price target and spec buy recommendation, implying 430% upside for shares in the developer of a smartphone and tablet app to diagnose autism and attention deficit hyperactivity disorder.

In a commissioned research note, Lodge Partners senior research analyst Sven Restel said he had valued BB1 with the lofty PT using a future and probability-weighted discounted cash flow model.

“How many diagnostic tests caregivers will be able to perform using BB1’s app is difficult to answer and all we can do is make conservative assumptions,” he said.

“The USA had 3.596m births in 2023 and it is recommended to have ASD screening at 18 and 24 months.

“We assume BB1’s app has a better than even chance to be commercialised due to having a predicate device on the market and the data on hand.”

Restel said he further assumed a minimal penetration rate in the first few years before rising to 10% of the diagnostic market by 2031 and pricing of US$250/test.

“Similarly, we assume BB1 will penetrate 10% of the ADHD diagnostic market by 2031,” he said.

“Using a 15% discount rate we find BB1 with a valuation of $1.30/share.

“This valuation is only based on the US market and has significant upside should we include the rest of world.”

Origins at Princeton University

With its origins at Princeton University, the BB1 platform was developed by a team of neuroscientists, medical doctors and software engineers.

The platform uses advanced smartphone sensors to measure subtle changes in sensory responses, focusing on the brain’s reaction to unexpected sounds.

The approach leverages the known phenomenon that individuals with ADHD and autism often exhibit different responses to unexpected sounds, such as blinking more frequently or differently compared to neurotypical individuals.

The app can be downloaded from the app store for patients, caregivers and/or parents, taking about 15 to 20 minutes to administer with results available only a few minutes after.

“The app is not intended to be used as a standalone but as an adjuvant to the diagnostic process,” Restel noted.

The app includes a secure database and CMS system as well as a portal where the caregiver can customise the neurometric tests.

“The advantage of BlinkLab being an app available to download on the app store as opposed to needing additional devices can’t be understated,” Restel said.

Targeting early diagnosis

Restel said the economic burden of dealing with children who have ASD was far greater and estimated north of US$450bn which is mainly driven by special education needs and loss in parental productivity.

“This cost can only be reduced through diagnosing ASD at an earlier age so that treatments can start earlier and mitigate the greater cost at an advanced age,” he said.

BB1 is targeting early diagnosis of ASD in children 18 to 72 months of age.

“It does not depend on any verbal or social interaction hence can be used at a very early age,” Restel said.

Performing better than peers

Before listing on the ASX in April 2024 Restel said BB1 had conducted several trials to test the app and would focus on ASD diagnostics.

He said the app had much better precision in diagnosing ASD compared to currently approved FDA medical devices that require significant use of hardware, cannot be used remotely and require clinical visits.

BB1 has conducted a large 280-person ASD trial in Morocco which showed sensitivity of 85% and specificity of 84%.

“Closest competitors, Cognoa and EarliTec Diagnostics, have measured lower sensitivity and specificity of 52%/19% and 71%/81%, respectively,” Restel said.

BB1 recently announced it had formed a partnership with Netherlands company INTER-PSY to run a clinical trial for its smartphone-based AI app that aids in diagnosing autism and ADHD.

Under the partnership, INTER-PSY will run a prospective study on the ability of the BB1 app to aid in diagnosis of autism in children between 2-6 years of age that are referred to INTER-PSY.

Restel said BB1 would also start enrolment this year of a 500-person trial with forecasted readout mid-2025 and a decision by the US FDA expected in H1 CY26.

First revenue forecast for 2026

Potential first revenue is forecast for H2 CY26 with BB1 initially looking to launch the test in two US states, New Jersey and Pennsylvania.

“This will be a very small test market before a nationwide rollout which we anticipate occurring in 2027,” Restel said.

He said the ASD diagnostic market is estimated to grow at a CAGR of 8% annually and potentially grow to US$5.4bn by 2036.

He said BB1 aimed to enter into agreements with various Health CarePractitioners (HCP’s) whereby the company will charge them a fee per diagnosis using the BlinkLab device.

“The actual reimbursement fee per diagnosis will depend on the reimbursement code,” he said.

To review the report click here.

This article was developed in collaboration with Blinklab, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Lodge Partners sees 430% upside for Blinklab, developer of smartphone autism test