Transforming health care: 5 medtech innovators shaping the future of patient-centric care

The medtech industry is at a pivotal moment, poised for transformative growth despite recent challenges. The sector has experienced a significant transformation, driven by the Covid-19 pandemic, which catalysed a surge in innovation and investment. While recent years have seen a return to pre-pandemic growth patterns, this reset presents a unique opportunity for the industry to redefine itself. The increasing demand for personalised care, coupled with the rapid advancement of digital technologies, sets the stage for a new era of health care - one that is smarter, more connected, and more patient-centric.

As the industry navigates a complex landscape of geopolitical challenges, regulatory shifts, and economic pressures, it is also positioned to leverage rapidly growing technologies like artificial intelligence, machine learning, robotics, cloud computing, 5G, AR/VR systems, IoT and smart sensors, among many others. These innovations are not merely incremental improvements but collectively a tidal force of change, revolutionising how health care is delivered. Indeed, the medtech sector is experiencing an innovation boom that rivals in scale and value growth potential any other technology-centric field.

Key segments like cardiovascular health, digital healthcare, and robotics are seeing rapid advancements, underpinned by a surge in US FDA approvals and breakthroughs in AI, advanced imaging, microelectronics, and new treatment options:

It is clear the medtech industry is at a value inflection point. Despite recent macro challenges, the sector remains resilient and set to offer life-improving innovations and sustained value creation over the long term, as we move toward a future where seamless data sharing, virtual care, and advanced AI-enhanced diagnostics yield a much more efficient and effective health care system.

The new paradigm promises to enhance patient outcomes and unlock new growth avenues for medtech companies. Small-cap players, in particular, are well-positioned to drive the transformation, as they are often more agile and open to - if not built on - bold innovation. With a focus on strategic investment in R&D and a commitment to evolving business models, these companies can lead the charge in the next generation of medical solutions. In this roundup, we highlight 5 such companies that are at the forefront of medical innovation:

Poolbeg Pharma

Poolbeg Pharma (mktcap £56m) Follow | POLB is a biopharmaceutical company focused on the development of medicines that address critical unmet medical needs, such as cancer immunotherapy-induced CRS, infectious diseases, and metabolic conditions like obesity and diabetes. Poolbeg is a pioneer in AI-accelerated drug development, having partnered with CytoReason and OneThree Biotech for part of its pipeline focused on infectious disease, namely influenza and respiratory syncytial virus (RSV).

Poolbeg's AI-led programmes leverage data from decades of human challenge trials. They have identified drug targets with significant commercial appeal within drastically reduced timelines compared to traditional methods. Both of POLB's AI-led programmes - influenza and RSV - are supported by extensive, high-quality datasets ideal for AI analysis. Both programmes are in the preclinical stage with significant near-term upside.

The global interest in AI-led drug discovery continues to grow, with major pharma players making substantial investments, including some currently in offtake discussions with POLB. Poolbeg's AI programmes have prioritised drug candidates in mere months, up to 10x faster vs traditional methods. The net effect of this is greatly reduced costs and lower risk for clients, while simultaneously providing a higher likelihood of success in bringing the groundbreaking therapies to patients.

POLB shares have rallied 59% in the past year as the company has advanced an ambitious pipeline including POLB 001, which has a $10bn market opportunity as a preventative therapy for cancer immunotherapy-induced CRS, its AI-driven drug discovery programmes, and an oral GLP-1R agonist addressing metabolic disorders, which is advancing toward a proof-of-concept trial.

Poolbeg's flagship asset is POLB 001, a Phase 2-ready anti-inflammatory candidate that has shown promise in treating CRS - a toxicity that occurs frequently following certain cancer immunotherapies, such as T-cell engaging antibodies and CAR T cell therapies. Due to the CRS risk, administration of such immunotherapies is currently restricted to specialist centres, which limits their uptake. As an oral therapy to prevent or treat CRS, POLB 001 has the potential to enable broader use of cancer immunotherapies in an outpatient setting.

Therefore, the market opportunity for POLB 001 is substantial at $10bn, and its successful commercialisation will be a significant value inflection point for Poolbeg. Recent data from POLB 001 has been positive and major pharmas have already expressed interest in the candidate as the field of cancer immunotherapies continues to grow, estimated to reach US$100bn by 2030.

On the corporate side, Poolbeg recently brought in a team from Amryt Pharma, a rare disease specialist sold for €1.48bn last year. The man behind Amryt and other companies including hVIVO, Cathal Friel, also joined Poolbeg as executive Chairman. Thanks to POLB's disciplined capital allocation, it ended FY23 with a robust cash balance of £12.2m, facilitating continued growth this year.

LungLife AI

LungLife AI (mktcap £3.3m) Follow | LLAI is a diagnostic company focused on the early detection of lung cancer - the deadliest type of cancer globally. The company's main asset is the AI-enhanced LungLB blood test, which is designed to deliver key early detection data to clinicians evaluating indeterminate lung nodules.

LungLB is disruptive in that it effectively addresses the limitations of traditional diagnostic methods. While CT scans effectively detect lung nodules, they often struggle to determine if a nodule is cancerous, potentially delaying treatment options. By the time a patient returns for a follow-up, a malignant nodule may have grown, significantly reducing treatment choices. Biopsies - another common diagnostic approach - are invasive and carry a 1 in 5 risk of adverse events like lung collapse, while 40% of biopsies result in no cancer diagnosis.

The LungLB test, on the other hand, uses a simple blood draw and offers clinicians a much more reliable way to confirm whether a biopsy is necessary when suspicious nodules are detected via LDCT scans. By leveraging the power of AI, the test greatly improves early-stage diagnosis and patient outcomes.

LungLB has already successfully passed a pivotal 425 person, 17 site, validation study, achieving an 81% positive predictive value (PPV) identifying smaller nodules (<15mm) vs 60% and 67% respectively for CT (current standard of care) and PET scans. Small nodules are the most problematic area for the early detection of lung cancer and represent the greatest challenge for doctors. Moreover, LungLB outperformed the highly-validated Mayo Risk Model evaluation tool, with an area under the curve (AUC) of 72% compared to 62% for Mayo.

On the financial front, LungLife AI recently released in-line H1 2024 results and positive guidance, as it managed to hit all of its strategic and clinical targets since listing on AIM in 2021. Losses significantly narrowed to $1.77m from $2.78m LY, and the trend is bound to continue as initial orders for LungLB have now commenced via the Early Access Program (EAP), while net cash closed June at $2.62m, providing sufficient funding until at least Q2 2025.

Additionally, LungLife AI plans to submit a Technical Assessment to Medicare in order to obtain US insurance coverage, which will hopefully be granted sometime over the next 6 months. The price has been set at $2,030/unit for the risk-stratification of indeterminate lung nodules.

The Board is seeking a strategic/licensing partner (eg Roche, Thermo Fisher, Natera) to help commercialise the LungLB test first within the US and later worldwide. The deal would represent a major value inflection point for the company as it would provide LungLife AI with accelerated access to a much larger addressable market worth c. $2bn in the US alone.

House broker Investec had a 171p/share target price and forecasting revenues to climb from $0.1m in FY24 to $0.5m and $1.2m over the next two years.

Polarean Imaging

Polarean Imaging (mktcap £21m) Follow | POLX is a medical imaging technology company, best known for its proprietary Xenon MRI technology XENOVIEW, which uses hyperpolarised Xenon Xe 129 to illuminate hidden lung diseases non-invasively. The radiation-free MRI method can enable early intervention and significantly improve patient outcomes. The product is now FDA-approved in the US, as it targets a significant unmet medical need of more than 500 million patients globally suffering from chronic respiratory disease.

Polarean recently reported an excellent set of results for H1 2024, as its Xenon MRI solution continued to gain commercial traction in the US. During the period, POLX saw materially increased revenues while strictly controlling costs as it refocused on its highest-value opportunities. Sales came in at US$1.1m from US$0.1 a year ago, on the back of Xenon MRI orders from 2 world-renowned US hospitals - Cincinnati Children's and the University of Alabama at Birmingham.

Momentum is strong into H2 with additional orders already placed by the University of Virginia Health System, University of Kansas Medical Center, plus an existing University of Missouri Health Care contract, driving significant revenue visibility and prompting POLX to raise its full-year revenue guidance by US$0.5m to US$2.5-$3.0m. In total, the company now has 21 sites that have either installed or ordered hyperpolariser systems.

POLX also advanced the regulatory front with the submission of an NDA supplement to the US FDA to allow the administration of XENOVIEW to patients aged 6 and older, down from the current age limit of 12. If successful, this will significantly expand the product's utility in paediatric care. The FDA has already granted XENOVIEW a New Chemical Entity designation, providing a 5-year market exclusivity period, and issued 510(k) clearance for a specialised MRI chest coil compatible with Philips 3.0T MRI scanners.

POLX's overall loss before tax narrowed to US$4.0m in H1 from US$7.4m a year ago, thanks to abovementioned higher revenues and lower operating expenses. The company successfully raised US$12.6m in June 2024, extending its cash runway until at least Q1 2026, and is now well-positioned to expand its sales efforts. With the proceeds from the fundraise, POLX held a comfortable US$15.2m in net cash or cash eq on June 30, 2024.

Notably, last year's approval of a new C-code from US Medicare, corresponding to a payment range of US$1,201 to US$1,300, was a major milestone for XENOVIEW. The new code, along with additional existing codes, enables hospitals to request a total reimbursement of approx. $2,500, which is a significant incentive.

By end of FY24, POLX should have a total installed clinical base of 5-7 systems with sites performing 3-4 scans/week, enabling it to earn a positive ROI on XENOVIEW. If takeup continues its current trajectory, by end of 2025 POLX's total installed clinical base should be 12-14 systems with scans performing 5-6 scans/week and revenues of US$5-6m. Profitability would then be expected by 2027.

Intelligent Ultrasound

Intelligent Ultrasound (mktcap £34m) Follow | IUG specialises in real-time high-fidelity VR simulation for the ultrasound training market, as well as AI-based clinical image analysis software tools for the diagnostic medical ultrasound market.

The group's vision is to harness the power of the AI to make ultrasound simpler to use and easier to learn. One of IUG's key AI products, ScanNav, is embedded in ultrasound scanners and acts as a virtual assistant, comparing images to standard criteria. This reduces operator variability, and enhances diagnostic accuracy, ultimately improving patient outcomes. IUG's other main asset is NeedleTrainer, a training tool that simulates real-time ultrasound-guided needling by using virtual image overlays.

IUG shares recently soared c. 50% after it announced a conditional agreement to sell its Clinical AI business to GE HealthCare for £40.5m in cash. What will remain is IUG's Simulation business, which will now include NeedleTrainer. Shares soared as the consideration represented an implied value of 12.4p/share on issued share capital and a premium of 70.9% to the share price on July 17, 2024. The proposed transaction also valued IUG's Clinical AI business at 33.8x its full-year FY23 revenues.

IUG's remaining Simulation business generated revenues of £10.0m in FY23, including £0.8m relating to NeedleTrainer. IUG expects to make a significant return of capital following a review of the growth potential and cash requirements of its post-transaction business - an announcement detailing the proposed use of funds and direction of that business is expected in October 2024.

The decision to dispose of the business at a great ROI materially improves the company's chances of reaching profitability on its current cash runway. In a related trading update, IUG said it reduced cash burn significantly in H1 2024 to £2.0m, down from £3.8m in H1 2023, leaving cash on June 30, 2024 of £1.0m. Following the transaction, IUG expects to have c. £39.5m of cash net of transaction-related fees.

IUG is set to benefit from the rapid growth of the medical imaging AI market, projected to grow at a CAGR of 34.7% between 2022 and 2029.

Oncimmune

Oncimmune (mktcap £14m) Follow | ONC is an immunodiagnostics developer, focused on the fields of immuno-oncology, autoimmune disease, and infectious diseases. ONC specialises in immune interactions through the autoantibody profile using its proprietary ImmunoINSIGHTS platform that finds antibody/autoantibody biomarker signatures in patients receiving or about to receive treatment.

In the case of immuno-oncology, Oncimmune profiles the body's immune response to detect evidence of the body's natural response to cancer, which can be detected far earlier than cancerous cells themselves or the cancer's DNA.

ONC markets its technology to global pharma and biotech companies, CROs, start-ups, academic groups, and non-profits that use it to optimise drug development across immune-mediated diseases, leading to more effective, targeted, and safer treatments for patients.

In its most recent interim results for H1 2024, ONC reported in-line trading, including a "step-change" in turnover of £1.19m (38% gross margins) compared to £1.15m for the whole of FY23, with operating losses also narrowing significantly to -£0.76m compared to -£5.0m LY. The positive performance was a result of ONC's effective turnaround plan, rigorous cost control, and the signing of 7 new contracts as its sales team continued to make inroads in the US and Europe.

Looking ahead, the outlook is positive, with FY24 revenues expected at £3m, supported by £2.5m of qualified pipeline deals. Cash continued to be tightly managed, with net debt closing Feb 2024 at -£4.3m, and gross cash of £0.91m, bolstered post-period by the receipt of £1.17m from Freenome. Cavendish had a 50p/share target price, based on FY24 and FY25 sales of £2.8m and £6.9m respectively.

Cavendish's targets were bolstered by 2 significant contracts announced post-period, strengthening ONC's FY25 profit outlook. In August 2024, ONC announced a $1.5m deal with an existing top 10 biopharma, following a successful pilot using ONC's platform to profile Immunoglobulin E (IgE) autoantibodies in blood serum. The contract is one of ImmunoINSIGHTS' largest ever, demonstrating its ability to secure significant follow-on work.

More recently, ONC unveiled another contract with a top 10 biopharma for $0.7m under a master services agreement, which aims to identify biomarkers related to a rare immune disease. The project will use an array of >1,000 antigens run on Oncimmune's platform in order to analyse over 500 blood/tissue samples.

Cavendish's FY25 £6.9m revenue target is impressively 140% higher than estimated FY24 turnover, and another 140% above FY23 levels. It should be noted that at least 75% of ONC's £3m FY24 revenue guidance has already been secured.