www.spheremedical.com
Sphere Medical partners with leading medical equipment companies to develop and commercialise highly innovative monitoring products that provide clinical and economic benefits in the critical care environment.
Sphere Medical flotation marks the start of an exciting period for the medical devices group
A period of relative calm on the markets has allowed Sphere Medical to press the go button on plans for an AIM listing.
The countdown began yesterday with the official announcement of its intention to raise around £15 million as part of next month's float.
The cash will be used to fund the commercial development of a technology that could potentially revolutionise the way patients are monitored.
The tiny device, a micro-chip with sterilised sensors, fits directly to the patient to keep track of oxygen, carbon dioxide and glucose levels in the blood.
It gives instantaneous results, which ought to make it cheaper and far more efficient than the current blood-gas units used by the medical profession.
“(Our devices) produce the same numbers the doctors and nurses have been using for the last 25 years,” says chief executive Stuart Hendry.
“However it is the size of a matchbox, which means we can attach it to the patient. This means in real time you get all of the readings you need.
“You don’t have to send away to the lab. You don’t take blood from the patient and you can take the readings as many times as you want at no extra cost. So it means you can better manage the patient.”
The uses are many-fold from keeping tabs on the health of premature babies to helping perfect the care of renal patients.
Its lead product, Proxima, is designed for use in intensive care units, while Sphere is developing the technology for use in open heart surgery patients for its partner Sorin Group, an Italian firm.
For a pre-IPO company Sphere has an impressive list of early-stage investors. In total there are 180, including City institutions such as Schroders, Artemis and Fidelity as well as a number of high net worth backers.
Also on that list with 7 per cent is Edwards Life Sciences - a US$10 billion American healthcare company specialising in critical care and heart valve technologies.
So already there is industry interest in the business and its progress.
The company, spun out of Siemens, could be tapping into a very lucrative niche.
The intensive care market alone is worth an estimated US$1.3 billion annually with a total of 12 million patients passing through the developed world’s ICUs each year.
Partnerships such as the one with Sorin are the way forward. However the group has eschewed the licensing model in favour of making and supplying the device itself.
This is a major undertaking, but it should ensure it makes 10 or even 20 times more in sales than it would if it followed the royalty-based blue-print deployed by chip designers such as Wolfson and Arm.
“Our strategy from day one has been to partner with world leading market channel players,” says Hendry.
“An example of this is Sorin where we have signed and announced a deal with a company that has around 70 per cent of the heart-lung machine market.
“We are also talking to renal and neo-natal companies.
“And our third largest shareholder is Edwards Life Sciences – a major force in critical care and heart valve technologies.”
The main hurdle for the company has been partially cleared in that it has won what is called ‘510(k) regulatory clearance’ for its Proxima device from the all powerful US Food and Drug Administration.
However this was for use of the chips in a bench-top device.
Sphere’s box is designed to be fitted directly to the patient. It is hoped it will be cleared for this use in the States by the middle of 2012, and earlier in Europe with the award of a CE Mark.
The takeovers of Axis Shield and ClearStream Technologies reveals the world’s leading medical devices firms will pay a healthy price for new technology that has legs.
The point’s not lost on chief executive Hendry. “Medical device M&A is as strong as it has ever been,” he said.
“The ultimate exit being via acquisition most likely by a US company would not be inconceivable.”
However the plan post the IPO is to use the fresh injection of funds to create a cash generative medical devices firm slated to turn its first profit in 2014.
“You can see if we deliver on a good proportion of what we are intending to, the company, two or three years in the future, is going to be significantly more valuable than it is today,” Hendry says.
