By David Bautz, PhD
NASDAQ:ICU
READ THE FULL ICU RESEARCH REPORT
We are initiating coverage of SeaStar Medical Holding Corp. (NASDAQ:ICU) with a valuation of $12.00. SeaStar is a commercial-stage medical device company that is developing the Selective Cytopheretic Device (SCD) as a first-in-class, disease-modifying device that dampens the cytokine storm deriving from a hyperinflammatory response. Multiple bodily insults, including trauma, surgery, and infection, can trigger the overactivation of inflammatory cells and put the body into shock. The SCD is an extracorporeal synthetic membrane device that is designed to bind activated leukocytes. It is added to the standard continuous renal replacement therapy (CRRT) circuit that uses regional citrate anticoagulation and is placed immediately after the standard hemofilter cartridge. Activated neutrophils and monocytes bind the SCD biomimetic membrane, the bound and activated cells are deactivated by maintaining a specified ionized calcium level, and the proinflammatory cells are shifted to a lower inflammatory profile. The SCD therapy can be applied to treat multiple conditions, including both acute and chronic kidney disease along with cardiovascular disease and other inflammatory diseases. The company’s first commercial product, QUELIMMUNE™, was approved to treat critically ill pediatric patients with life-threatening acute kidney injury (AKI) due to sepsis or a septic condition by the FDA in February 2024 under a Humanitarian Device Exemption (HDE). A pivotal trial in adults, NEUTRALIZE-AKI, is currently underway with enrollment expected to be completed near the end of 2026.
Commercial Stage Company – The company began commercializing the SCD (QUELIMMUNE®) following its approval for use in pediatric AKI patients with sepsis or septic conditions in 2024. The product is the only approved therapy of its kind and is currently being used by multiple children’s hospitals, with expansion into additional children’s hospitals ongoing. The approval has de-risked the regulatory pathway for additional FDA approvals in the future.
Positive Clinical Results with Supporting Case Studies – Following an initial serendipitous observation in an early pilot study, SeaStar has reported successful clinical results from multiple clinical trials involving hundreds of patients using the SCD that are further supported by successful case studies involving patients with life-threatening conditions.
Pivotal Trial in Adult AKI Patients Ongoing – The NEUTRALIZE-AKI trial is currently being conducted in adult AKI patients requiring CRRT. Following a recent interim analysis by the independent Data Safety Monitoring Board (DSMB), a positive signal toward efficacy was noted with no device-related safety issues. The total enrollment for the trial was adjusted from 200 to approximately 339 and we currently anticipate enrollment completing near the end of 2026.
Favorable Economics Opens Up Multi-Billion Dollar Market – An analysis by SeaStar showed that the use of the SCD can save hospitals tens of thousands of dollars per patient based on a decreased length of stay and lower mortality. The total market for treating AKI in the U.S. is valued at approximately $4.5 billion, with the pediatric indication representing approximately $100 million of that total. Additional indications for the SCD therapy that could provide upside for the company include cardiorenal syndrome and hepatorenal syndrome.
Valuation
We value SeaStar using a probability-adjusted discounted cash flow model that takes into account revenues from the sale of the SCD in both the pediatric and adult AKI market. While not currently a part of the model, we note that the company is planning to pursue the use of the SCD therapy for additional indications, including cardiorenal syndrome and hepatorenal syndrome, both of which represent potential upside to our valuation. Our model utilizes a discount rate of 15%.
The device is already approved for sale in the pediatric indication, and the company has reported $814,000 for the first nine months of 2025. We model for approximately $1 million in total revenues for 2025. For future years, we model for approximately $1 million more in sales per year for the next few years for the SCD in the pediatric indication with peak sales of $12 million in 2036.
For the adult AKI population, we estimate for the NEUTRALIZE-AKI trial to complete enrollment before the end of 2026, which would lead to a Premarket Approval application in 2027 and sales to begin in 2028. We model for peak revenues in the adult AKI population of $600 million to occur in 2037. We estimate gross margins of 90%, R&D expenses of 20% and G&A expenses of 27% of net revenues, and a tax rate of 21%. Combining the revenues for the pediatric and adult population and using a 90% probability of approval leads to an NPV for the AKI indication of $155 million.
Combining the net present value for the SCD in AKI with the current cash position ($13 million) and the potential cash from warrant exercises (approximately $33 million) leads to a net present value for SeaStar of $200 million. Dividing by the diluted share count (approximately 6.5 million) plus an additional 10 million shares to account for additional financings leads to a valuation of $12 per share.
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