It is not only in new drug candidates that the Australian biotech industry has a glowing reputation worldwide: medical device companies also have a very good name. That is not surprising, given the global success of heavyweights such as ‘bionic ear’ maker Cochlear and sleep-apnoea breathing mask maker ResMed. And there is an interesting group on the stock market trying to be the next Cochlear.

Australia is also at the forefront of developing mHealth, or mobile health, which is medicine and public health supported by mobile devices. mHealth is considered a subset of eHealth, the use of digital technology such as computers, the Internet, mobile phone applications, satellite and wireless communication networks for transmitting health services and information.

Here are four interesting stories from the Australian medical technology industry, all targeting different but potentially very lucrative applications.

Analytica (ALT, market cap. $31 million)

Analytica’s lead product is the PeriCoach system, an mHealth treatment system for women who suffer Stress Urinary Incontinence. This condition affects one in three women worldwide and is mostly caused by trauma to the pelvic floor muscles as a result of pregnancy, childbirth and menopause.

Analytica (ALT)

Source: Yahoo!7 Finance, 3 November 2014

PeriCoach comprises a device, web portal and smartphone app. The device evaluates activity in pelvic floor muscles. This information is transmitted to a smartphone app and can be loaded to PeriCloud where physicians can monitor patient progress via web portal. The system enables physicians to remotely determine if a woman is correctly performing pelvic floor exercises and if these are improving her condition; otherwise physicians are guided on the need for surgery.

PeriCoach has been approved in Australia and Europe, with product launches expected in 2015, and in the US also next year. The system is about to enter clinical trials in Australia, but these are not required for any regulatory approvals: they are being done to provide formal evidence of the system’s efficacy.

Analytica is also commercialising the AutoStart Infusion System, a system for the regular monitoring and controlled refilling of burettes in intravenous fluid infusion. The company says it is targeting a $3 billion global market with AutoStart, which has been approved by the FDA, and Analytica has struck distribution agreements.

For the year to 30 June 2014, Analytica received $565,174 in grant, royalty and investment revenue, up 9%, but all of its expenses – mostly wages, marketing and research and development – pushed it to a net loss of $3.2 million. That can be expected to improve once it starts selling its products.

Nanosonics (NAN, market cap. $258 million)

Nanosonics has developed innovative disinfection technology, with its lead product Trophon, a point-of-care ultrasound probe disinfection unit, already on the global market. The Trophon technology was a world-first for medical devices that cannot be sterilised by conventional means because of heat sensitivity.

Nanosonics (NAN)

Source: Yahoo!7 Finance, 3 November 2014

Until Trophon, ultrasound probes were disinfected with corrosive chemicals that are only about 80% efficient. Nanosonics’ biocide technology is much more efficient and environmentally friendly. The technology has no competitor and stands every chance of being accepted as the global standard of care.

Trophon achieved US Food & Drug Administration (FDA) approval in 2011 and shortly afterward, Nanosonics appointed GE as its North American distributor. Trophon has also been granted a product licence by the South Korean regulator, and has filed for regulatory approval in Mexico and Japan. Trophon is also cleared for sale in the UK and Europe (Toshiba is its sales partner in the UK, while Miele does the job in Germany.)

In FY14, Nanosonics lifted sales by 44%, to $21.5 million, and made major strides toward profitability, making a gross profit of $13.9 million (up 65%) and cutting its net loss by more than half, to $2.6 million. North American sales were up 34%, with 40 of the top 50 hospitals in the US (as rated by the US News & World Report rankings) using Trophon.

Osprey Medical, Inc. (OSP, market cap. $68 million)

Although it is incorporated in the USA, Osprey Medical’s core technology was developed at the Baker IDI Heart and Diabetes Institute in Melbourne and funded by Australian venture capital. The technology is used against contrast-induced nephropathy (CIN), a form of kidney injury caused by the X-ray-visible dye that cardiologists inject during common heart procedures such as stenting and angioplasty. The dye is used as a contrast medium to help the doctors see what’s happening inside certain organs, by tracing the blood flow, and thus interpret the X-rays better.

Osprey Medical, Inc. (OSP)

Source: Yahoo!7 Finance, 3 November 2014

Patients with normal kidney function don’t usually have a problem with the dye. But about 25% of all patients undergoing heart operations and stenting procedures have pre-existing kidney disease, and can suffer problems ranging from reduced kidney function all the way to kidney shutdown and the risk of death. Osprey’s technology was the first time cardiologists had an effective way to prevent dye from reaching the kidneys.

The company’s AVERT device regulates the amount of toxic contrast dye injected into patients undergoing heart surgery: it can reduce the amount of dye used by 40%, for the same imaging quality. Because AVERT is not inserted in the body, it was quickly approved by US and European regulators, and is on sale in Texas. In August, Osprey said US physicians had identified a second potential market, peripheral artery disease, which results in narrowing of the arteries in the pelvis or legs and is also treated through an angiogram using dye.

Osprey’s new product is AVERT PLUS, a ‘smart’ syringe and LCD display system that accurately records contrast (dye) dosing volumes. AVERT PLUS was approved in August 2014 and submitted to the FDA in the same month. The company says it expects clearance this month or next. But it’s important to remember that Osprey has no revenue yet (as at the June 2014 half-year.)

Pro Medicus (PME, market cap. $88 million)

Pro Medicus is not an actual device maker, but a Melbourne-based medical IT stock that owns an image-storage and distribution technology called Visage. The Visage system allows doctors to instantly upload and manipulate radiology images (including onto iPads and iPhones) to give instant diagnoses. Some of these files are four gigabytes in size (the size of a movie), so they cannot be uploaded to mobile devices using standard technology.

Pro Medicus (PME)

Source: Yahoo!7 Finance, 3 November 2014

In April, Pro Medicus signed the biggest deal in its history, a $20 million contract with a large US health network that will utilise Pro Medicus’ Visage 7 technology for diagnosis and distribution of medical images, over a six-year period commencing in FY2015. Pro Medicus won this contract against big competition, including global heavyweights Siemens, GE and Phillips.

Pro Medicus says data sizes in radiology are exploding, with the advent of new processes such as Digital Breast Tomosynthesis (DBT) and it is not uncommon for a single examination to produce up to 8 Gigabytes of data: Visage can handle that.

In the recent financial year, Pro Medicus lifted revenue by 27%, to $14.4 million, and made a profit from underlying operations of $1.6 million, compared to a loss of $650,000 in the previous year. Most notable in the context of this group of stocks, though, was the 2-cent fully franked dividend Pro Medicus paid for the year.

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