I came across this commentary from Mark Carnegie, the Head of Carnegie Investments. It is very much dated (pre-listing Nov 2021), but it's an interesting commentary. Since the Listing time much more news and developments have occurred, and despite a much-reduced share price now, my view remains similar to that of Carnegie's commentary, that it could potentially become the next Cochlear. The commentary follows:
"CARNEGIE PROJECT ‘THIS COULD BE AS BIG AS COCHLEAR’: CARNEGIE November 22, 2021Australian Financial ReviewBy Carrie LaFrenzNov 22 , 2021Investor Mark Carnegie believes cardiovascular medical device company EBR Systems, which hits the big board on Wednesday, will be the next Cochlear and change lives around the world.
Silicon Valley-based EBR was founded in 2003 and developed the WiSE Cardiac resynchronisation therapy system, which uses proprietary wireless technology to deliver pacing stimulation directly to the inside of the left ventricle of the heart.
The WiSE system is the world’s first and only inside-the-heart pacing system for heart failure.
Mr Carnegie told The Australian Financial Review the investment has been “close to his heart and chequebook” since he initially invested three years ago in the pioneering leadless pace-making technology.
“My daughter is profoundly deaf, and has a Cochlear implant. So, I’ve seen the life outcome impact, that is absolutely extraordinary,” said the venture capitalist. “This could be as big as Cochlear. I genuinely think that. They’ve got a few things on the horizon to sort out, but you could take 10 times the addressable market.
These leads kill people – this leadless solution is a big deal.” Mr Carnegie said he had been stalking this company for three or four years before making his initial $40 million investment. M.H. Carnegie’s medical device partner, Trevor Moody, first knew of EBR a decade ago while working at Frazier Healthcare Ventures and introduced it to Mr Carnegie.
SIZE OF A RICE GRAIN EBR will have a market value of about $344 million based on its $1.08 a share IPO price.
The business is backed by M.H. Carnegie & Co, Brandon Capital and big super funds AustralianSuper, Hesta and Hostplus.
In October, EBR raised $110 million, with present investors chipping in more than $30 million of the funds raised.
New investors supporting the latest capital raise include TelstraSuper, private investment manager Mason Stevens and pioneer of the Australian venture capital sector, Bill Ferris.
The new funds will be used to complete the company’s pivotal Phase III clinical trial and US regulatory application, and to support the commercialisation of its WiSE technology in the US and select markets, including Australia.
Chris Nave, founding partner of Brandon Capital, manager of the Medical Research Commercialisation Fund, said the cardiology technology is one of the most exciting in development.
“EBR’s early clinical data is very promising, and for those heart failure patients not able to receive traditional cardiac resynchronisation therapy [CRT], it is life changing: the difference between living a normal life as opposed to being constantly short of breath, often housebound and unable to perform simple daily tasks,”
Dr Nave said.“EBR’s highly experienced management team come with significant commercialisation success in medical devices and cardiology. This listing is great news for Australian heart failure patients and investors alike.
”EBR’s chairman is Allan Will, a former chairman of Ardian, which was acquired by US-listed giant, Medtronic, for more than $US800 million in 2020.
More than 350 people have been implanted with this device that is the size of a cooked grain of rice, has no battery in the heart and is powered with transmitters just below the skin.
Northern California-based chief executive John McCutcheon believes the initial CRT market opportunity is $US2.1 billion ($2.9 billion), but longer term is eyeing the $US8 billion-plus general pacemaker market dominated by $US157 billion Medtronic.
“There’s enough market potential that we’ll be growing for quite some time,” he said. “We will be a very rapid growth medtech company. We have got an opportunity to expand indications into the CRM market [cardiac rhythm management] longer term.
”The WiSE system is approved for use in Europe, and for research procedures in the US and Australia.
Mr McCutcheon said since EBR has breakthrough device designation in the US, the regulator will fast-track the process to full approval.
EBR is halfway through its Phase III study and is targeting US regulatory approval and a US commercial launch in the second half of 2023.
Australia has a strong history in the evolution of pacemaker technology, with Dr Mark Lidwell building the world’s first pacemaker and successfully using it to resuscitate a newborn infant in 1929.
In 1963, an Australian pacemaker company, Telectronics, designed many of the features of transvenous leads and pulse generators.
Mr Carnegie said after more than a decade of developing the complex technology, and dealing with regulatory submissions, the group is now on the cusp of bringing the device into the mainstream."
Since Listing the SOLVE trial has run its course for each of 183 patients implanted with the device, with the results now being assessed wrt the defined endooints for Safety and Efficacy. The results of the SOLVE trial will become known later this quarter, with the CEO hoping"Headline" results will be released just prior to the AGM (23 May 2023), possibly in sync with the Heart Rhythm Society Conference.
Negatives: 1. The reference in the Carnegie commentary to a commercialisation in H2 2023 has been revised to now a commercialisation in H2 2024. 2. There has been an issue with some of the devices accompanying batteries, reducing battery life (not affecting the pacemaker performance), which has subsequently been resolved by a change in the battery manufacturing process. This issue didn't derail the SOLVE trial which has now been completed for the last of the 183 patients enrolled.
Funding Option Since Listing the Company has negotiated a finance facility with US Capital Funds group Runway Growth Capital. The aim is to ensure sufficient funds are available to the Company, additional to its already available funds (A$79 million), up to and beyond initial phase of commercialisation. US$20 million has been drawn down, of up to a maximum $50 million (subject to preconditions, the next US$20 million being available upon successful completion of the SOLVE trial).
Chris Nave's comment above regarding "it is life changing: the difference between living a normal life as opposed to being constantly short of breath, often housebound and unable to perform simple daily tasks”, shouldn't be lost sight of, which goes to the very heart (sorry!) of the future potential of the WISE leadless pacemaker, and thus to its investment potential. I refer to the Patient Success Story within the Jan 2023 Investor Presentation where a previously physically active former marine developed heart problems leading to the implanting of a conventional pacemaker, with leads. This resulted in a number of lead failures. Post WiSE CRT implant, the patient has been able to enjoy everything he used to do. "I was energised immediately. I could now take out the bins and walk up a flight of stairs.” "I was able to resume daily walks and open water swimming. Got stronger and lost 20 kgs". "I’m happy, extremely happy. It’s given me my life back."
EBR Price at posting:
66.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
