Renalytix Plc

What they do

Renalytix develops and sells a laboratory test, kidneyintelX.dkd, that uses an AI algorithm to predict risk of progressive kidney function decline in patients with Type 2 diabetes and Stage 1-3b chronic kidney disease. The test is performed in its New York City laboratory, and revenue comes from testing services and pharmaceutical services. The company has a license agreement with Mount Sinai Health System and other collaborators for the underlying technology.

Revenue drivers

• kidneyintelX.dkd testing services — Primary revenue source; $2.1 million in FY2024 testing services revenue. Medicare established a $950 per-test price, with coverage for Type 2 diabetes and Stage 1-3b CKD effective August 1, 2024.
• Pharmaceutical services revenue — Contributed $0.2 million in FY2024, related to pharma collaborations; much smaller than testing revenue.

Recent performance

FY2024 (ended June 30, 2024) revenue was $2.3 million, up from $100,000 in FY2023, with testing services at $2.1 million and pharma services at $0.2 million. Net loss widened to $-33.5 million from $-45.6 million in FY2023, and diluted EPS improved to $-0.31 from $-0.55. Quarterly revenue declined from $709,000 (Dec-2023 quarter) to $522,000 (Sep-2024 quarter). As of September 30, 2024, cash was $909,000, total assets $4.8 million, and shareholder equity was negative at $-11.3 million.

Strategy

The company is deploying kidneyintelX.dkd regionally through partnerships with healthcare systems and insurance payors. It secured a Medicare Local Coverage Determination from National Government Services, effective August 2024, which is expected to drive adoption. Management focuses on integrating the test into clinical workflows and expanding partnerships to increase test volume. They also plan to maintain regulatory approval and pursue additional approvals for the KidneyIntelX platform.

Risks

• Going concern risk — Negative shareholder equity of $-11.3 million and cash of $909,000 raise substantial doubt about the ability to continue operations without additional financing.
• Reimbursement uncertainty — Revenue depends on Medicare and private payor coverage decisions; changes in the LCD or other reimbursement policies could materially reduce test volume and revenue.
• Commercial adoption slower than expected — Quarterly revenue declined in the most recent quarter, and the company has not demonstrated sustained growth in test volumes despite the new LCD.
• Dependence on third-party partners — Technology is licensed from Mount Sinai and other institutions; any disruption in these agreements could impair the company's ability to offer its tests.

Outlook

Management expects the Medicare LCD effective August 2024 to be a key driver for expanded test adoption and revenue growth. They plan to continue regional deployment through partnerships with health systems and payors. However, the company's outlook is constrained by its limited cash position and need for additional capital to fund operations.