MDxHealth says its products can improve early detection of prostate cancer in a noninvasive manner and reduce the number of false negatives.
To boost commercialization of its products, the Irvine and Belgium-based developer of prostate cancer diagnostics filed a registration statement to raise as much as $58.5 million in an initial public offering with the Securities and Exchange Commission late last month.
The proposed offering would more than triple MDxHealth’s cash on hand; the company reported $24.7 million in cash and equivalents as of Sept. 30.
The commercial-stage company’s stock is currently listed on the Euronext Brussels where its shares have climbed about 41% in the past year to a $136 million market cap.
If approved, MDxHealth also plans to trade its American Depository Shares (ADS) on the Nasdaq Capital Market under the ticker symbol MDXH.
Proceeds from the offerings, expected to be about $50 million, would be used to “increase our financial flexibility in order to fund our growth through business and product development activities and to expand our menu in prostate cancer and other urologic diseases,” the company said in its prospectus.
Irvine Focus
While MDxHealth is domiciled and listed as a public company in Belgium, its primary commercial focus is the United States, where over 95% of its tests are performed and its revenues are generated.
As of Sept. 30, 90% of its 190 total employees were based in Irvine.
It operates out of a 32,000-square-foot facility near the local operations of chipmaker Broadcom Corp. It also has a much smaller facility in the Netherlands.
The company in 2019 hired as CEO Michael McGarrity, a 58-year-old who has more than 30 years of experience in the medical device sector. He was previously CEO of Nanosphere, a nanotechnology-based molecular diagnostics company, where he engineered a strategic turnaround that resulted in its 2016 sale for $83 million to Luminex Corp.
Prior to Nanosphere, McGarrity, who works out of MDxHealth’s Irvine office, spent 13 years at medical device maker Stryker Corp.
The largest shareholders in MDxHealth are British medtech investors, MVM Partners LLP, with 22% before the offering, and Valiance Asset Management Ltd., with 15% pre-offering. McGarrity owns 1 million shares before the offering, according to regulatory filings.
MVM knows OC well. In September, it invested $15 million in Irvine-based InBrace, an orthodontic company that’s created a type of “invisible” braces that are worn on the back of a patient’s teeth. Those funds were part of that Irvine device maker’s $102 million Series D round.
Piper Sandler, Oppenheimer & Co., BTIG and KBC Securities USA are the underwriters for the MDxHealth offering, the latest locally based healthcare company to plot an IPO.
25M Tests
MDxHealth’s two main prostate cancer genomic tests are SelectMDx and ConfirmMDx, which identify clinically significant prostate cancer while minimizing the use of invasive procedures that are prone to complications.
Since their commercial launches, more than 200,000 tests have been ordered by more than 1,000 practicing urologists in the United States, according to MDxHealth.
The tests combine advanced clinical modeling with genomic data to provide each patient with a personalized cancer risk profile, which it says provides more accurate information than prostate specific antigen (PSA) and digital rectal exams used by clinicians.
Prostate cancer is presently the most common, and second deadliest, form of cancer in men. Approximately 25 million PSA tests are performed each year, leading to 3 million men, or 15%, who are informed each year of their heightened risk for prostate cancer.
“Other than repeated invasive needle biopsy procedures, these symptomatic men and their clinicians have limited tools to manage their cancer risk,” the company’s IPO filing said.
Current clinical guidelines suggest that men with an elevated PSA should be considered for a prostate biopsy. However, 60% of biopsies are negative, not revealing any cancer, and as many as a third of these negative biopsies are false negatives.
“The relatively modest sensitivity and specificity of these current standard-of-care tests and procedures has led to increased patient anxiety, potentially unnecessary, invasive and costly interventions, and increased complications and hospitalizations,” the company’s filing said.
$2B TAM
Last month, the company reported third-quarter revenue rose 23% to $5.5 million. McGarrity in a statement said sales are still being affected by the pandemic.
Sales of ConfirmMDx accounted for approximately up to 95% of third-quarter sales.
The ConfirmMDx test, which hit the market in 2012, is in a total addressable market in the U.S. of about $500 million, according to the company.
SelectMDx, which launched in 2016, is in a bigger addressable market that the company estimates as $1.5 billion annually.
