Adherium, a New Zealand medical devices company, wants to raise as much as A$35 million from Australian and Kiwi investors in an initial public offering on the ASX, to help fund the commercial roll out of its product and continue research and development.
The Auckland-based company, formerly known as Nexus6, develops and manufacturers digital health technologies that improve medical adherence and patient health outcomes for those with chronic diseases. Its first product platform Smartinhaler has a number of approved inhalers for asthma sufferers, which also collect and report data on usage.
The 14-year-old company is seeking to issue up to 70 million shares at 50 Australian cents per share. Based on the maximum subscription, the market capitalisation of Adherium upon listing would be A$70 million.
When the company lodged its prospectus this week, it already had A$25.85 million committed, including a cornerstone investment of US$3 million from key client Astra Zeneca. It signed a long-time partnership with Astra Zeneca last month that will see the big pharmaceutical company incorporate Adherium devices within its global patient support programmes for patients with asthma and chronic obstructive pulmonary disease (COPD).
The company’s board said Adherium was not expected to be profitable or in a position to pay dividends in the immediate future and it has incurred losses of around NZ$6 million up until March 31. There were no revenue, profit or cashflow forecasts in the prospectus. It earned revenue of NZ$3 million in the March financial year and its products have been used in over 40 medical-related projects in 29 countries.
Adherium chief executive Garth Sutherland, an experienced engineer who has chronic asthma, said it chose a listing in Australia because there is a life sciences and healthcare index on the ASX, good analyst coverage of the sector, and a larger pool of capital to tap into and investors with expertise in the sector.
If the offer is fully subscribed, about A$2.2 million of the IPO proceeds will go towards supplying commercial quantities of Smartinhalers to key customers via its business to business distribution model, while A$6.4 million has been earmarked to speed up its international sales and marketing, and a further A$11.7 million allocated for more research and development
Sutherland said it takes a long time to build a digital healthcare company but it has now passed the two major milestones, proving the technology has a clinical benefit to patients through independent trials, and getting regulatory approval that the technology is safe for patients to use.
The company had enjoyed fantastic backing from investors who had stuck with the company while it continued to make slow but steady progress though those key milestones, he said.
Under the conditions of the IPO, investors holding stakes of more than 2 percent are locked into maintaining their shareholding for the next year.
Early investors include Stephen Tindall’s K1WI fund which has a 10 percent stake currently and Ice Angels which collectively holds around 15 percent and business incubator the Icehouse (0.44 percent) whose chief executive Andy Hamilton said the listing was only an event, not the end.
“This is a great opportunity for a Kiwi company to get a significant amount of revenue and go after a fantastic market opportunity,” Hamilton said.
Adherium’s prospectus says in 2014 global sales revenues of US$22 billion were directly attributable to asthma and a further US$14.4 billion to COPD, its two initial target diseases.
Bell Potter Securities is the lead manager of the IPO which closes on Aug. 14 and trading is expected to commence on the ASX on Aug. 26.