The U.S. health care market is the largest in the world by market size. Health Access reports that America’s buying power, increasing demand for medical services and medical equipment, and the potential for innovation has lead the country’s edge in the competitive landscape.
Based on this, investors are looking for new ways to take advantage of early growth opportunities. The rapid development of the medical technology sector could be just the opportunity as the larger players in the space continue to undertake larger and larger deals for mergers and acquisitions. Further, new rules in place have allowed certain companies to become more nimble when it comes to navigating the research and development of novel therapies and game changing technologies.
For many, investing in healthcare and medical technology has historically seen a focus specifically on Big Pharma. This leaves numerous companies under the radar. This blind spot has become a strong opportunity for some investors who seek the “ahead of the pack” approach to trading. But with many governments instituting budgetary cuts to contain the spiraling costs of healthcare reports are citing that the market for medical device technologies could reach $674.5 billion by 2022.
Opportunities For Investors Targeting Early Stage Medical Tech Companies
Imagin Medical (IME) for instance has targeted a niche that requires a full overhaul, which could lead to the end result of saving lives. The company has developed the i/Blue Imaging System to establish a new standard of care in detecting cancers and visualizing the surgical field in minimally invasive surgery. Unbeknownst to those who have not gone down the cancer therapy path, endoscopic surgeries have played a vital role in identifying potentially cancerous lesions.
Last year was a positive year for the MedTech space, despite rising interest rates. This year, however, the industry-wide fundamentals "are strong, and sector revenue growth could re-accelerate from 4.4 percent last year to 5.1 percent in the new year," as stated by JPMorgan's Michael Weinstein.
Imagin recently announced an offering for $3.5 million and is expecting this offering to close by April 11. The funds will go toward working capital as well as further advancement of the R&D of the company’s imaging solutions for early detection of cancer. Bladder cancer is the sixth most prevalent cancer in the U.S. and the most costly cancer to treat due to a greater than 50% recurrence rate, which also makes it more expensive to treat . Imagin, has targeted this segment specifically and the application of the i/Blue Imaging System.
Helmed by E. James Hutchens, Imagin could be well positioned to create a foothold within the space. Mr. Hutchens served in senior executive positions at Microvasive Endoscopy, a division of Boston Scientific (BSX), Smith & Nephew, and Millipore, which was sold to Merk (MRK) for over $7 billion. Current endoscopes use “white light” that has been the standard for years and encompasses more than 90% of the market but tumors that are flat may look the same as normal tissue and thus increases the risk of not catching the cancer in time. The company’s i/Blue Imaging System “sees” the cancer in less than 15 minutes with optics that are 100 times more sensitive. This could drastically change the landscape for medical imaging in the future.
New Innovation To Push Margins
Certainly there is no surprise that a increasing amount of major U.S. tech companies are looking at this as the ideal moment for disruption. We’re now seeing involvement in the health sector by companies like Amazon (AMZN), Apple (AAPL), Google (GOOGL) and others. Some are even in partnership with other major U.S. non-health companies, which could result in a real era of innovation in the health sector. This could be especially true when observing the money flow within the industry.
The U.S. spends nearly twice as much on medical care compared to other high-income countries, yet does not yield better health outcomes. By 2020, one-fifth of U.S. GDP will be spent on health. Other companies like Theralase® Technologies Inc. (TLT) and LexaGene (LXG) are also looking to take advantage of this era of innovation.
LexaGene, for instance, recently announced that it has gotten into collaboration with Ethos Veterinary Health, a veterinary health company with hospitals across the U.S. This partnership will provide canine urine samples to LexaGene for testing on the Company’s LX6 prototype for more effective, rapid and on-site pathogen detection. LexaGene is a biotechnology company developing a fully automated pathogen detection platform that is open-access. The open-access feature essentially allows end-users to target any pathogen of interest and they can load their own real-time PCR (Polymerase chain reaction) assays onto the instrument for customized pathogen detection.
LexaGene’s patented microfluidic system was invented by company founder and CEO, Dr. Jack Regan. Dr. Regan was a lead scientist in developing a predecessor instrument designed for bio-warfare surveillance that was adopted by the Department of Homeland Security for the BioWatch Program. The development of these instruments was previously funded by $20 million in government funding according to the company.
On the other end of the spectrum, Theralase targets patented laser technology platforms used in a wide range of bio-stimulative and bio-destructive clinical applications in patients. The Therapeutic Laser Technology division is focused on the development and commercialization of laser-based non-invasive therapeutic devices to eliminate pain, reduce inflammation, and accelerate tissue healing.
In fact, Theralase® has been issued 13 patents for cancer and therapeutic applications, and has an additional 24 patents currently pending. Clinical trials for non-muscle invasive bladder cancer are progressing, and we are investigating commencing another Stage 1b clinical trial for an additional cancer indication.
Theralase® activities in research and development are organized into two principal divisions presented below. One of the strategies in the general healthcare segment is to continue the development of the anti- microbial PDT portfolio for infection control & sterilization. This strategy is based on a strong and comprehensive platform of intellectual property in Photo Dynamic Therapy.
Recent news revealed that its lead PDC, TLD-1433, combined with transferrin to form Rutherrin®, has been demonstrated to effectively destroy human brain cancer stem cells. With some estimated 24,000 new cases of malignant gliomas diagnosed in the US annually, with more than 14,000 deaths, this treatment could become a source of interest for medical tech investors. Most patients do not survive beyond 2 years, post diagnosis.
The Market Ahead
All of these developments in medical technology will potentially benefit countless patients and has the opportunity to see companies actually reduce cost of care. Medical technology advancements as a whole will fuel growth and deliver new diagnostic insights to managing health.
Alongside the development of faster diagnostic testing methods, medical providers have new ways to make rapid treatment adjustments and grant better outcomes, with significant reductions in treatment being a real option. Right now the market for early opportunity in companies within this space is vast and new, cutting edge treatments could continue to drive this trend into the future.
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