Update (4:15pm AEDT): In an unfortunate day for their first day of trading, Saluda Medical shares opened at $1.90 - down 28 per cent on the prospectus price - while it closed trading down 50 per cent at $1.335. This follows a rough start for another health-tech initial public offering (IPO) this week with Epiminder (ASX: EPI) shares falling by a third since Monday.
Sydney-born medical device company Saluda Medical, Inc. (ASX: SLD) makes its ASX debut this morning following a $231 million public offering that values the company at more than $775 million.
Saluda, a commercial-stage medical device company that focuses on chronic neurological conditions, is the second medical listing on the ASX this week from technology developed in Australia.
While Melbourne-based medtech Epiminder (ASX: EPI), which listed on Monday, was founded through research backed by hearing technology giant Cochlear (ASX: COH), Saluda Medical’s device was developed with the backing of the CSIRO.
Originally incorporated in Australia in 2010 as Implantable Micro Medical Devices, Saluda Medical is commercialising the Evoke Spinal Cord Stimulation (SCS) System, a novel neuromodulation platform designed to measure the unique neural biomarkers of a patient for the treatment of chronic neurological conditions.
The system has been approved by the US Food and Drug Administration with the device able to treat chronic neuropathic pain by providing SCS therapy that senses and measures neural activation to optimise therapy and reduce patient and clinician burden.
Unlike standard SCS devices, which only provide fixed levels of stimulation, Saluda’s system leverages evoked compound action potentials to measure the spinal cord’s response to electrical stimulation and adjust the stimulation accordingly to achieve and continuously maintain a targeted level of neural activation.
The company says this ensures the therapy remains at the patient-specific prescribed level of neural activation, providing consistent and effective outcomes.
“We believe our system is the only spinal cord stimulation system that can adjust therapy in real time with every stimulation pulse to maintain a target level of neural activation,” says Saluda Medical’s chair Douglas Godshall in the company's ASX prospectus.
“The evidence supporting our Evoke System is underpinned by the world’s first and only prospective, multi-centre, parallel-arm, double-blind, randomised controlled pivotal study in SCS, the EVOKE study.
“The EVOKE study demonstrated the clinical superiority of our system over the fixed-output, open-loop therapy, which is a mode of therapy delivery used in most commercially available SCS devices.”
After gaining FDA approval for its system in 2022, Saluda has been targeting an addressable market estimated to be worth more than US$23 billion ($35 billion), affecting about a quarter of American adults suffering from chronic pain.
The company launched commercially into the US market following the FDA approval, with the latest capital raise being applied to scaling revenue growth by expand the sales team, providing marketing and commercial support and product development.
The US is already the company’s largest market even though the Evoke System was launched in some European countries in late 2019 and in Australia in 2021.
After generating revenue of US$70.4 million in FY25, Saluda’s prospectus is forecasting FY26 revenues to hit US$81.9 million, which the company says reflects a targeted 54 per cent compound annual growth rate over the three years from FY23 to FY26.
To hit this target, Saluda plans to boost its US-trained sales representatives by 81 per cent from 63 to 114 over the current financial year.
Despite the sales growth, Saluda is targeting a $145.5 million bottom-line loss for FY26, up from a $128.7 million loss in FY25.
“Saluda has incurred substantial net operating losses since inception and expects to continue to do so for the foreseeable future as we expand our sales force and marketing efforts to increase adoption of the Evoke System, seek additional regulatory approvals, and continue to advance the Evoke System through new technology innovation and further products,” says Godshall.
“As such, no assurance can be given that Saluda will be profitable or cash-flow positive in the future.”
Through the IPO, Saluda raised $231 million from new and existing investors, including Wellington, Fidelity, T Rowe Price, TPG and Redmile, by issuing 87.1 million new CHESS Depositary Interests (CDIs) at $2.65 each. The IPO values Saluda about $775 million ahead of today’s share market listing.
“Our IPO will mark an important milestone for Saluda Medical and the patients whose lives we aim to transform through objective, personalised neuromodulation,” says Saluda Medical CEO Barry Regan.
“The strength of our clinical evidence, the scalability of our commercial model, and the dedication of our team positions the company well to continue to make a significant difference in our large, underpenetrated global market.”
Saluda undertook its first in-human implant in Australia in October 2015 as part of an open-label study between 2015 and 2019.
Although the company is now headquartered in Bloomington, Minnesota, two board members - Catherin Livingstone and Geoffrey Brooke - are based in Australia.
Livingstone, a former chair of Commonwealth Bank of Australia (ASX: CBA), has been a director of Saluda Medical since 2013.
Brooke is chair of both Cynata Therapeutics (ASX: CYP) and Actinogen Medical (ASX: ACW).
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