Shares in Medibio surged more than 30% on Monday, increasing from the previous day’s close of 25 cents to 33 cents. This followed the company’s announcement that it had successfully completed the first commercial pilot study of group’s workplace stress product after the study independently validated its commercial and technical aspects.
When there are strong share price reratings particularly in microcap stocks there is inevitably a degree of profit-taking at some point and in Medibio’s case, given the extent of the share price increase that could occur sooner rather than later.
A retracement in the share price could provide a useful entry point as this is a stock that ticks plenty of boxes for investors looking to target niche IT plays with impressive intellectual property operating in growth industries.
As a backdrop, Medibio is a medical technology company that has developed an objective test to assist in the diagnosis of depression, chronic stress and other mental health disorders. The test utilises patented (and patent pending) circadian heart rate variability and cloud-based proprietary algorithms delivering a quantifiable measure to assist in clinical diagnosis.
The end game for Medibio is to have the first FDA approved technology that provides objective evidenced-based diagnosis of mental health disorders. A target market for the application of this technology is the workplace where early identification of mental disorders is crucial in terms of managing a safe and productive working environment, while providing appropriate personal assistance.
One of the key developments emerging from the pilot study was that within the high risk mental health cohort Medibio’s technology successfully demonstrated the ability to identify at risk employees where traditional subjective measures often fail due to misleading self-reports.
Management highlighted that a number of participants were accurately identified to be in the severe or at risk category which was on one occasion in conflict with their self-report. Associated interviews with workers uncovered the fact that there had been situations where they hadn’t fully disclosed their symptoms.
Medibio’s partner in the trial, Vital Conversations, reported that two participants who returned severe stress results regarded their participation in the trial as life changing.
Vital Communications was the intermediary between Medibio and a corporate client with more than 5000 employees. The next step for Medibio is to complete two additional pilot studies of its workplace stress product, both of which are in progress.
One is with a major Australian corporation with more than 10,000 employees, while the second is with a potential wellness channel partner.
Given that the broader issue of mental health has become such a priority politically and socially, as well as at a corporate level, there is now substantially more investment being directed at the issue from a government and enterprise perspective.
This sees Medibio in the right spot at the right time. For IT companies to succeed it is more often than not the case that they need to be able to add value to a business or provide an essential service. The ability to monitor, identify and manage mental health problems in the workplace assists productivity and helps corporate organisations in maintaining a safe and healthy working environment, suggesting there could be strong demand for Medibio’s technology should it be commercialised.