𝛼SK or SearchTotal Brain Limited: Renewed Focus on Clinical Care Support
Total Brain Limited
Renewed focus on clinical care support
Total Brain Ltd (ASX:TTB) is the developer of a neuroscience-based mental health and fitness platform powered by the largest standardised neuroscientific database in the world formed over almost two decades and with >$50m of R&D funding. In a recent operational update TTB noted it would invoice affinity partner IBM $0.15m in revenue before the end of the calendar year for work in relation to preparation for the official launch of the GRIT (Get Results In Transition) digital mobile support platform for US veterans in transition on December 2. GRIT is the first product generated by Total Brain’s collaboration with IBM on its Health & Wellness 360 platform. Total Brain powers the Mind Gym module of the GRIT app. TTB’s update also noted that the previously announced deal with Hamptons Life for a direct-to-consumer version of the Total Brain platform is unlikely to proceed on the terms entered into in the non-binding Heads of Agreement due to a deteriorating operating environment from COVID-19. Discussions are ongoing for a smaller, non-exclusive partnership. At the company’s annual general meeting yesterday, new Interim CEO Matt Mund highlighted a renewed focus on clinical care support both from a branded Total Brain app and white-labelled Total Brain services. Mr Mund also noted that Total Brain remained focused on developing its population health vertical, well represented by the IBM GRIT programme for US veterans. He noted that TTB expects to end CY2021 with a 39% increase in annual recurring revenues of $4.8m and that based on current cash balances of $2.6m and near-term inflows, the expected cash runway was until the end of June 2022.
Business model
Total Brain operates a subscription-as-a-service (SaaS) model for its mental health and fitness platform. The science behind the platform has been developed over almost two decades with input from the leading academic institutions in the field. This has generated a proprietary neuroscientific database of scale which underpins the scientific validation that differentiates Total Brain from other brain training and wellness applications. The app, promoted by affinity partners, assesses the four core brain capacities (emotion, feeling, cognition, self-control), pre-screens seven common mental health conditions, and delivers personalised brain and mind/body training.
Refocused priorities in go-to-market plans
Total Brain’s new Interim CEO has announced that TTB will refocus on expanding its presence in the clinical market, going direct to addiction and behavioural health clinics, licensing data to pharma companies and seeking out opportunities with large clinical platform providers. TTB also plans to pursue existing and additional population health opportunities, including those within the IBM pipeline, and will focus on maintaining its existing 35 corporate clients while pursuing new channel and platform partnership deals. As we have previously outlined in our research (Total Brain RaaS Update 3 February 2020 and Total Brain RaaS Update 2 November 2020), we anticipate that the IBM affinity partnership will be rolled out to large populations (federal agencies, civil agencies, employer groups and consumer groups), with this addressable market conservatively estimated at 29m in the US and Total Brain securing 4.1% market share by 2030. This underpins $0.23/share in our $0.77/share valuationTTB also noted it had a cash runway until 30 June 2022 with $2.6m cash at 30 September, $2.3m from an R&D receivable, anticipated data licensing deals, and the proceeds from existing and new client contracts
Base-case valuation is $0.77/share (previously $0.80/share)
Our base-case DCF valuation is $0.77/share after our earnings adjustments to remove forecasts for the Hamptons Life deal. Near-term share price catalysts include the IBM Health & Wellness 360 rollout and additional contracts in the affinity and clinical segments.
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- Total Brain Limited: Renewed Focus on Clinical Care Support01 Dec 2021