Mainstay Medical to seek further funding as full-year losses mount

Dublin-listed medical devices firm recently made its first commercial sale in Germany

Dublin-listed Mainstay Medical, a company that is targeting chronic back pain with an implantable device, is expecting to seek further funding in the near future as it ramps up its commercialisation plans.

The medical devices firm, which recently announced it had passed the mid-point in clinical trials in the US, made its first commercial sale earlier this year in Germany.

Mainstay’s ReActiv8 product is implanted in a surgical procedure and works by using electrical stimulus of nerves in muscles supporting the lower spine. The product won European approval last year after which it raised €30 million in funding to commercialise ReActiv8.

Speaking to The Irish Times, chief executive Peter Crosby said it was looking at various options in terms of additional fundraising.

“We know we will need more capital to complete the US trial and to get pre-market approval. We’ll also need more to drive commercialisation, but we haven’t given any indication yet on how much we’ll be looking for or when,” said Mr Crosby.

Additional capital

“Our existing investor group is very supportive of Mainstay though, and so when we do go out to raise additional capital I’m confident that they will be contributing again.”

Accounts just filed for the company show losses rose to $18.7 million (€15.8m) in 2016 versus $13.2 million (€11.2m) a year earlier. In 2014, it reported an $82.5 million (€69.8m) loss.

In a note included with the accounts, company directors said Mainstay expected to continue to incur losses in the medium term.

Operating expenses for the medical devices firm rose $3.9 million last year to $16.8 million as it kicked off its clinical trial in the US and began commercialising the product in Europe.

The company, which has raised more than $50 million (€42.3m) in funding, ended 2016 with cash of $36.7 million, as against $16.6 million a year earlier.

Earlier this year Mainstay announced a major milestone when it reported it had made its first commercial sale with the first implant being performed in Koblenz, Germany. This comes after the first trial patient in the US had the neurostimulator implanted late last year.

US trial

Mainstay expects to complete the US trial by the end of 2017, with results due next year. The trial has been designed so the company can take an “interim look” to establish how successful it will likely be ahead of time.

Mainstay estimates the market for disabling chronic lower back pain in patients not suitable for surgery is worth up to $30 billion, and, as of now, the company says there are no competing devices.

Research and development costs for the company totalled $3.6 million in 2016 as against $2.7 million for the proceeding year, while clinical and regulatory expenses rose to $5.6 million from $4.4 million.

Mainstay employed 32 people last year, up from 23 in 2015, with staff-related costs rising to €7 million from €5.4 million.

Mainstay, which floated in Paris and Dublin in April 2014 in an IPO that valued it at €90 million, is headquartered locally with subsidiaries operating in Ireland, the US and Australia. The group moved to Dublin in 2012 from the US following a $20 million funding round that was led by Fountain Healthcare Partners.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist