Regulatory approval is the next major hurdle facing Saluda Medical, the biotech company which is led by Cochlear’s former chief technology officer and was responsible for the biggest domestic life sciences capital raising of the last fiscal year.
Saluda Medical said in June it had raised $US75 million ($106 million) from medical device manufacturing behemoth Boston Scientific and San Francisco based asset manager Redmile Group. With these funds on board the firm – formed in 2013 – is valued at $US475 million ($675 million).
Chief financial officer Greg Plamondon, Cochlear’s former head of global business services, said the next challenge facing the company was getting its spinal cord stimulation device approved by regulators in the US and Australia.
“There’s a fairly arduous process and we’re in that process right now.”
Saluda was granted its European CE mark last month, clearing it for sale in European Economic Area. Meanwhile, it is limited to “investigational use” in the United States and not available for sale. Its device is not approved for commercial use in Australia.
Spinal cord stimulation therapy
Saluda Medical has developed a treatment for chronic back pain called Evoke that uses spinal cord stimulation as therapy.
Spinal cord stimulation is a pain relief technique that sends a low voltage electric current to the spinal cord that masks pain signals before they reach the brain, thus lessening the painful sensation. The electric current is sent by a device implanted into the body.
Devices that use spinal cord stimulation therapy are not new, the therapy has been around for 40 years. However, Saluda’s device differs from others on the market because it is able to measure the pain signals being sent through the spinal cord to the brain.
This allows Saluda’s device to automatically adjust the level of spinal cord stimulation depending on the severity of pain it detects. In contrast, other devices provide one uniform level of spinal cord stimulation all the time, irrespective of patient pain levels.
Saluda’s device can automatically activate therapy when pain is greatest and many pain signals are detected and provide less stimulation during periods when low pulses are detected, like during sleep.
Spinal cord stimulation devices are used to treat conditions like complex regional pain syndrome, chronic back pain and neck pain. The type of pain where medication, exercise or other treatments do not alleviate symptoms.
Steering the company alongside Mr Plamondon is ex-cochlear chief technology officer John Parker, who founded the company after it was spun off from Australia’s national information and communications technology research centre of excellence, NICTA, in 2013. NICTA merged with the CSIRO in 2015.
Bioscience Managers chief investment officer Matt McNamara has put $11 million into Saluda since becoming the first venture capital investor in 2015. Mr Mcnamara became a Saluda board member when he made this initial investment, a position he still holds.
He said he was attracted to the company initially because its was servicing an “unmet clinical need”.
“The current spinal cord simulators were doing a pretty good job but there was definitely room for improvement,” according to Mr McNamara.
The board member said regulatory approval was “absolutely” the main headwind facing Saluda.
“Because if anybody is going to get interested in licensing or acquiring this technology, it’s greatly de-risked if it’s FDA approved.”
However, this approval could spark the interest of potential buyers.
The threat of acquisition
Bioshares founder and analyst David Blake said he expected the company would be bought out if US regulatory approval was granted.
“I’d be very surprised if it would be continuing as a private company in two years if things go well with the FDA because the expectation would be that it would be acquired,” said Mr Blake.
CFO Mr Plamondon said the leadership of the company was aware of the risk of being acquired but said that was not the goal of management.
“We have strong ambitions both at the management, board and shareholder level to create another amazing medical device success story, like the place where we came from, like Cochlear.”