The Australian Securities Exchange (ASX) hosts a sizeable component of medical device makers; and most investors would be familiar with the likes of Cochlear and ResMed, which are global leaders in their respective spaces, respectively hearing aids and obstructive sleep apnoea (OSA) pumps and masks. Here are three smaller companies on the ASK that are advancing their device products in a very promising manner and hoping to emulate the examples of Cochlear and ResMed.
1. ImpediMed (IPD, 5.3 cents)
Market capitalisation: $107 million
12-month total return: –60.7%
Three-year total return: –32.8%
Profitability: No
Analysts’ consensus price target: 15 cents (Stock Doctor/Refinitiv, four analysts), 16 cents (FN Arena, two analysts)
The Brisbane-based ImpediMed makes and sells medical devices that use bioimpedance spectroscopy (BIS) technology, which is a non-invasive technology that can measure total body water, extracellular and intracellular fluid volumes accurately. The patented technology works by sending a painless electrical current through the body at 256 different frequencies and measuring the resistance. Within the body, muscle, fat and bone all have different levels of conductivity and resistance: this means that when the current passes through each kind of tissue, the BIS technology enables clinicians to accurately detect and monitor the percentage of total body water, extracellular and intra-cellular fluid volumes, tracking fluid retention and loss that are not visible with weight alone. Precise monitoring of fluid status and tissue composition in patients, and detecting change in these, helps doctors manage chronic diseases, and offers individuals valuable insights for personal health management.
ImpediMed produces the SOZO Digital Health Platform, which delivers a comprehensive snapshot of fluid status and tissue composition in under 30 seconds. SOZO is cleared for sale in the United States by the Food & Drug Administration (FDA), the CE (Conformité Européenne) mark in the European Union, and the Therapeutic Goods Administration (TGA) in Australia.
The company’s main focus is cancer-related lymphoedema, a chronic disease mainly caused by damage to lymph nodes because of cancer or treatment for cancer; in which a buildup of lymphatic fluid causes the patient’s limbs (and sometimes, torso) to swell, in a debilitating side effect of their cancer treatment. In particular, ImpediMed is targeting breast cancer-related lymphoedema (BCRL); as the only provider of FDA-cleared BIS technology, IPD’s L-Dex technology is becoming the standard of care for the early detection and management of BCRL (replacing the tape measure.) Up to 20% of breast cancer patients suffer lymphoedema as a consequence of their treatment.
The SOZO platform is also used to measure fluid status in heart failure and with end-stage renal disease (ESRD) patients (HF-Dex); in body composition analysis, measuring total body water (intra-cellular and extra-cellular), muscle mass, fat mass, protein, calorie and minerals composition; and hydration analysis (Hy-Dex). A single SOZO measurement gives doctors quick and accurate analysis of these factors.
SOZO – which can be assessed remotely – allows doctors to easily and accurately assess changes in a patient’s condition, get earlier diagnoses, alert them to the need for intervention, through a non-invasive test. It is a software-as-a-service (SaaS) product, which generates ongoing revenue from subscribers.
The US market is the major initial focus; there are 290,000 diagnoses of breast cancer made in the US every year. After IPD published the data of its PREVENT trial in 2022, BIS for prevention of breast cancer-related lymphoedema was included in the globally referenced National Comprehensive Care Network (NCCN) guidelines and the Multinational Association of Supportive Care in Cancer (MASCC) guidelines in the US. Early detection of lymphoedema, through volume measurement of fluid, is vital for preventing the condition: typically, BIS screening is the only way to detect the condition early, giving doctors the opportunity to reverse it.
In FY24, ImpediMed made a significant breakthrough in the crucial step of reimbursement in the US, which means getting its technology onto the schedule by which it is ‘coded’ for reimbursement from Medicare or private ‘payors’ (health insurers). 16 of the 50 US states have reached “critical mass,” meaning at least 80% of the population in each state is covered in this way for BIS for lymphoedema assessment. From starting the financial year with zero people covered, IPD ended the year with 140 million people covered in the US.
Further out, ImpediMed is eyeing other cancer markets, such as gynaecological, colo-rectal and prostate cancers. The company estimates the market opportunity for all at-risk cancers as up to $2 billion a year, of which, breast cancer-related lymphoedema represents about 35%.
As at the end of the September 2024 quarter (first quarter of FY25), IPD had 1,022 SOZO units operating in the field, with just under half, 508, of those in the US. The company sold 28 units in the quarter, up from 23 units sold in the June quarter, and increased its opportunity pipeline of units by 34% on the June quarter, to 585 units.
ImpediMed currently has no debt on its balance sheet, and analysts expect profitability in FY26 (year ending 30 June 2026) as the base of installed units grows. The company has projected operating cashflow breakeven in FY26. IPD has been a long-standing disappointment to shareholders, but someone investing now does not have that concern. According to Stock Doctor/Refinitiv, the four analysts that follow IPD expect, on consensus, the shares to reach 15 cents: broker Morgans is the most bullish, valuing IPD at 19 cents.
2. Imricor Medical Systems (IMR, 81 cents)
Market capitalisation: $219 million
12-month total return: 32.8%
Three-year total return: –14.6%
Profitability: No
Analysts’ consensus price target: $1.095 (Stock Doctor/Refinitiv, one analyst), $1.08 (FN Arena, one analyst)
US-headquartered, ASX-listed Imricor works in the field of cardiac ablation procedures, which are a treatment for irregular heartbeats, called arrhythmias. Ablations are performed by an electrophysiologist who makes a small incision in the groin, guiding a catheter through a vein to the heart, to use radiofrequency to create a small lesion or scar in the heart; the scars block faulty heart signals and restore a normal heart rhythm.
The procedure is usually done under X-ray fluoroscopy, which shows hard structures like ribs and the catheter, but doesn’t reveal the soft tissue of the heart. Lack of visibility makes it difficult to ensure that the entire area causing the arrhythmia is treated, resulting in a first-time success rate as low as 50%, meaning that patients often require multiple procedures.
Imricor’s breakthrough is to use a magnetic resonance imaging (MRI) scanner to guide the cardiac catheter ablation procedures, generating a superior image to X-rays without needing to use potentially harmful (to both patients and medical staff) radiation, or contrast dyes, which can harm some patients. MRI-guided procedures increase the success rate of ablation procedures, helping to bring down the overall costs.
Imricor develops MRI-compatible medical devices which can be used to carry out real-time iCMR (interventional cardiac magnetic resonance) cardiac ablation procedures (an iCMR lab is an interventional lab that has been fitted with MRI equipment for use in cardiac diagnostic and interventional procedures). Imricor is the first and only company in the world to bring commercially viable and safe iCMR products to the catheter ablation market. The flagship product is the Advantage-MR EP recorder/stimulator, which is an electrophysiology amplifier and recording system with integrated cardiac stimulator: it is cleared for sale in Europe and Saudi Arabia.
In June, Imricor kicked-off a global clinical trial designed to support approval by the US FDA. The trial, called VISABL-AFL, which stands for Vision-MR Ablation of Atrial Flutter, is a multi-centre global investigational study of the safety and efficacy of Type 1 atrial-flutter ablation procedures performed with Imricor’s Vision-MR Ablation Catheter (its second-generation product), Osypka HAT 500 RF generator and irrigation pump and NorthStar 3D Mapping System.
The VISABL-AFL trial for FDA approval is a repeat of the trial the company already conducted in Europe, for CE Mark approval for use in atrial flutter, which showed 100% success at the three-month follow-up. The study will include four sites across the US and Europe, with a sample size of 91 patients and an interim analysis after 76 patients have achieved the seven-day follow-up.
The VISABL-AFL trial commenced at the Cardiovascular Institute of South Paris (ICPS) in June, and in August, the first US site joined the trial, with physicians at The Johns Hopkins Hospital in Baltimore performing the first real-time iCMR-guided cardiac ablations in the US. The company also announced the third site in the trial, with the installation of its iCMR equipment at Lausanne University Hospital (CHUV) in Switzerland.
The company says it is on track to complete enrolment in VISABL-AFL this calendar year; if all goes according to plan, Imricor could receive FDA approval by mid-2025, and making real-time iCMR ablations available to patients and physicians throughout the US. In September, Imricor announced that the FDA had completed a review of its first premarket approval (PMA) module ahead of schedule Imricor will also soon commence its second European clinical trial, the VISABL-VT trial, for its second indication, ventricular tachycardia (VT).
At the same time, Imricor is working with Philips Medical Systems and other companies in the SIGNET (Sensing and Image-Guided Neurological therapies, cardiac Electrophysiology and Tumour treatments) consortium, in which the company and Philips have collaborated to develop the software necessary for Imricor’s NorthStar 3D mapping system to operate with the Philips MRI platform.
Imricor is confident that its product hits a sweet spot of a market growing at more than 8% a year, in a field in which physicians want to do things better and more accurately, but with a minimally invasive product that executes more quickly and cheaply, and more safely. It is a world-first product with no competitors: everything else in the market so far is only compatible with X-ray. Irregular heartbeat affects approximately 2% of the US population, and Imricor says this percentage is expected to double to 4% by 2030. Ventricular arrhythmias are responsible for 75%–85% of sudden cardiac deaths and are a leading cause of strokes: it all adds up to significant tailwinds behind IMR, which looks to be a compelling investment proposition.
3. EBR Systems (EBR, 98 cents)
Market capitalisation: $357 million
12-month total return: 48.5%
Three-year total return: n/a (listed November 2021)
Profitability: No
Analysts’ consensus price target: $1.765 (Stock Doctor/Refinitiv, three analysts), $1.885 (FN Arena, two analysts)
Still on affairs of the heart, the US-headquartered, ASX-listed EBR Systems has developed the world’s first (and only) leadless cardiac resynchronisation therapy (CRT) system, called WiSE (wireless stimulation endocardially): the system eliminates the need for cardiac pacing leads, which historically have been a major source of complications and reliability issues in cardiac rhythm management (CRM).
The WiSE system uses the company’s proprietary wireless technology to pace the left ventricle endocardially and deliver personalised pacing therapy to patients. WiSE was awarded FDA ‘breakthrough device’ designation in 2009; it was first implanted in 2020; and in 2023, EBR’s pivotal SOLVE-CRT trial – which had a patient pool that had all failed conventional CRT – stopped early, after meeting both the primary efficacy endpoint and the primary safety endpoint.
Because ‘traditional’ CRT systems use leads or wires to deliver energy to the heart, a few major problems come into play. Leads can become a pathway for pathogens; they can migrate and sometimes fracture. Coronary sinus limits left ventricle (LV) lead placement locations: other wireless pacemakers are too big for LV pacing, as the LV leads must be placed outside the heart to avoid blood clots, meaning they are restricted to right ventricle (RV) and right atrium (RA) pacing only. The WiSE system fills the gap: it is the only leadless solution for LV pacing and can easily be used in conjunction with other wireless RV and RA pacemakers to deliver CRT.
Like Imricor, EBR Systems is on the pathway to expected FDA approval and commercialisation. The company says it is targeting an initial addressable market of US$3.6 billion ($5.5 billion), and in time, combining its CRT and implantable cardioverter defibrillation (ICD) development program, it can address a global cardiac rhythm management (CRM) market of US$12 billion ($18.3 billion).
The positive trial results and a strong relationship with the FDA provide a clear pathway to approval and commercialisation, and the company is in the final stages: EBR has submitted the five required pre-market approval (PMA) modules for the WiSE approval submission, and feedback on a FDA substantive review is expected in late November. There is always risk with the FDA approval process, but holding ‘breakthrough device’ designation, as well as having met all efficacy and safety endpoints in the pivotal SOLVE-CRT study, enables the company to favourably receive prioritised review and interactive communication with the FDA throughout the PMA process. EBR Systems anticipates approval in the first quarter of calendar-year 2025 and says it “remains on track for commercial launch in CY25.”
EBR has also submitted a New Technology Add-On Payment (NTAP) application to the US Centers for Medicare & Medicaid Services (CMS), which would allow for additional payment to hospitals above the standard Medicare reimbursement for in-patient procedures and would last for three years. Broker Morgans says that would represent a key commercial milestone, significantly improving patient access to the device by reducing the financial barriers.
Analysts see a healthy commercial future for the WiSE intellectual property, and on the back of that, substantial scope for share price growth. Bell Potter is the most bullish on EBR, with a price target of $2.01.
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