Osprey Medical to raise $20m in IPO

Medical device maker Osprey Medical has announced plans to raise $20 million through an IPO on the ASX.

Osprey Medical is a US-headquartered company commercialising a product originating from Australian research.

Its lead product, CINCOR System, is a catheter and vacuum system designed to be used in heart procedures to reduce the risk of Contrast Induced Nephrophathy (CIN).

CIN is a form of kidney damage caused by the toxic effect of the dyes used by cardiologists in heart and blood vessel x-rays.

The vacuum in the CINCOR system is designed to extract most of the dye as it leaves the coronary sinus, preventing its spread to the kidneys. According to Osprey Medical, initial data indicates that the system could reduce the risk of CIN by up to 50%.

CINCOR is based on technology developed by Melbourne's Baker IDI Heart and Diabetes Institute.

Osprey Medical plans to launch CINCOR in the European market this year, starting with Germany and the Netherlands, and gain FDA approval and launch in the US by 2014.

The proceeds of the fully underwritten IPO will be put towards the European launch, clinical trials and the FDA application, as well as further development of the CINCOR platform.

The IPO of 60 million CDIs has an offer price of $0.40. The company expects to have a market capitalisation of $40.4 million immediately following the listing.

Osprey Medical will originally target the system for use in patients undergoing angioplasty or stenting, that also have a chronic kidney disease and whose anatomy is suitable for dye capture.

According to the company, this represents an addressable market in the US and Western Europe of around 400,000 patients per year, or a market opportunity of $600 to $800 million annually.

But as required by regulations, the IPO prospectus spells out a series of risk factors associated with a potential investment in the company.

These include the fact that given patient variability and the medical profession's incomplete understanding of CIN, there is no guarantee that CINCOR will be effective in reducing the risk of kidney damage.

The prospectus also speculates that a rival company may independently come out with a competing product, using an approach similar to Osprey Medical's own unpatented method.