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Published to the market and investors on 15^th August 2018 @ 7.04am (London time).

Curetis (CURE-NL): On track to exceed our expectations
Recommendation: OUTPERFORM
Target Price: EUR10.00
Current Price: EUR4.02 (cob on 14th August 2018)

KEY TAKEAWAY

Curetis's H1/2018A statement suggests upsides beyond our current expectations. On track to deliver its 6 - 12 month US installed base guidance, Curetis is already indicating possible US system occupancy and cartridge usage in excess of our current projections. With the Chinese regulatory strategy progressing and an increasingly active global distribution network, we see significant product revenue growth moving forwards. Further deal flow with major global partners is expected near term and could form the basis for strategic investment and / or closer partnership. Given this positive outlook, we are optimistic investors will participate in the anticipated fund-raising. We reiterate our OUTPERFORM recommendation and EUR10 post-financing TP as detailed in our fuller analysis published in May 2018.

US launch on track to exceed expectations - While still early days, with 10 accounts close to agreeing terms and up to 50 firmly in the sights, management remains confident in securing a US installed base of 40 - 60 by YE2018E and 60 - 80 within 12 months of launch. The first 10 accounts are indicating a need 700 - 800 lower respiratory cartridges p.a. and perhaps double that for other accounts targeted. This would significantly exceed the 400 - 500 in our model. The US promises to be a significant value driver; particularly as Curetis rolls out the extended lower respiratory tract and joint infection Unyvero panels in the US over the next 12 - 24 months. The announced change at the top of the US management team looks no more than unhelpful, in our view.

Substantial opportunity in China and the RoW - The company is aggressively driving opportunities in China and RoW. The regulatory strategy on-track with the Chinesse partner. The CFDA frequently follows the lead of the FDA reducing regulatory risk and might even accept data generated for the US FDA and in Europe further streamlining or even abbreviating the process. The Unyvero platform has already been approved in East Asian hub Singapore market. Distributors in North Africa and Latin America have committed to buy at least 45 systems and several thousand cartridges. Direct sales in Europe continue to grow; 257% compared with H1/2017A.

Deal-flow expected - With the deal with Chinese MGI moving forwards, we anticipate significant near term deal flow to follow with other major partners involving the Unyvero platform and Ares Genetics antibiotic resistance platform. Broader interest from multi-national partners could provide additional sources of finance and / or form the basis of a deeper strategic relationship.

Financing opportunity - We estimate that the company will require a further EUR20m on top of the EUR4.1m and $10m equity line secured in April 2018 to achieve its 12 - 18 month objectives. We would see this as an attractive opportunity for investors or indeed strategically focused larger corporates at current levels given the increasingly positive outlook and potential upside post financing. Our analysis suggests a post-financing valuation of EUR9.2 - EUR13.3 / share.

Kind regards,

Dr. Chris Redhead | Analyst
goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

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T +44 (0) 203 859 7725 | chris.redhead@goetzpartners.com / healthcareresearch@goetzpartners.com

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