Mainstay Medical raises €30m from new share placing

Irish medical device firm Mainstay Medical International has raised €30.1 million through a new share placing as it pushes to commercialise its back pain treatment in the key US market.

Mainstay’s implantable ReAvtiv8 device is designed to stimulate nerves to strengthen muscles in the lower back, whose weakness is associated with debilitating chronic lower back pain. ongoing clinical studies have shown that there are no safety issues with the device.

The firm said the funding would help it complete clinical studies in the US to support its application for pre-market approval from the US Food and Drug Administration. It will also advance the commercialisation of its product in Germany, Switzerland and other markets.

The company is still working to agree reimbursement in the UK and Australia.

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However, its key focus for 2018 is completion of an ongoing clinical trial that will underpin its US FDA application. Full data is expected by year end and chief executive Jason Hannon is working towards what he hopes is a commercial launch in the US in early 2020.

One third of the new shares were taken up by the Irish Strategic Investment Fund (Isif), an existing investor in the company. Other investors already on board account for a further third with new investors putting up the remaining €10 million.

Mr Hannon said a decision on the scale of further funding would be made in 2019, based on the commercial traction of the product outside the US at that time. However, the company will need some further funding to get it fully through the FDA review process.

Speaking of the progress in the ongoing trial, Mr Hannon said: “We have a better understanding than six or eight months ago.”

But he warned that it was important not to get overexcited about prospects for the ReActiv8 device despite the very high prevalence of chronic lower back pain.

“We want to define very clearly which patients are a candidate for this procedure and which are not,” he said.

The firm posted revenue of $300,000 (€240,381)in the year, with $27.9 million (€22.3 million) in expenses related to ongoing activities, up from $16.8 million (€13.5 million) a year earlier.

Cash on hand was $10 million (€8 million) at the end of the year, with operating net cash flows for the year of almost $25 million (€20 million), pushed up by the cost of research and development, commercialisation costs and undertaking clinical trials.