Medical imaging startup Nanox raises $165 million on Nasdaq

Shares surge 21% on first day of trading, bringing valuation of startup that is developing an alternative to X-ray machines to almost $1 billion; tech has not yet got FDA nod

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

The Neve Ilan, Israel-based firm Nanox, founded in 2018, is developing nano-technology based new kind of X-ray source (Courtesy).
The Neve Ilan, Israel-based firm Nanox, founded in 2018, is developing nano-technology based new kind of X-ray source (Courtesy).

Israeli medical imaging startup Nano-X Imaging Ltd. (Nanox) raised $165.2 million in an initial public offering on the Nasdaq, and its shares closed up 21% on their first day of trading on Friday, bringing the company valuation to almost $1 billion, even though the firm has not yet received regulatory clearance for its product.

The $18 per share price of the IPO on the Nasdaq Global Market, the mid-cap market tier of the exchange, was at the higher end of the price range the startup had targeted, of between $16 to $18 per share. The shares closed at $21.70 on Friday, bringing the company valuation to $963.3 million.

The Israeli company, based in Neve Ilan, was founded in 2018, and is developing a nano-technology based new type of X-ray. The idea is to create a new digital X-ray device that will replace the standard X-ray machines that have been around since the end of the 1800s.

The X-ray source developed by the firm is based on a new digital microelectromechanical system (“MEMs”) semiconductor cathode, that the firm believes can achieve the same functionalities as traditional X-ray analog cathodes, while allowing for lower-cost production than existing medical imaging systems, the company said in a prospectus filed with the US Securities and Exchange Commission on July 30.

Israeli entrepreneur Ran Poliakin (Courtesy)

The system is made up of the Nanox.ARC, the digital X-ray device that is matched with the Nanox.Cloud, the company’s cloud-based software to provide end to end imaging services. Subject to receiving regulatory clearances, the first version of the Nanox.ARC that the firm expects to introduce to the market will be a three-dimensional (“3D”) tomosynthesis imaging system, the prospectus said.

The firm has submitted its technology for review to the US Food and Drug Administration for review and is conducting tests as requested. Results are expected to be submitted in the third quarter of 2020.

The firm launched a working prototype of the Nanox.ARC in February 2020 and, if cleared by regulators, it plans to deploy the first Nanox.ARC in the first quarter of 2021. The firm hopes to install at least 1,000 Nanox Systems in the second half of 2021 with the goal to finalize deployment of the initial 15,000 Nanox Systems by 2024, the prospectus said.

Nanox believes its technology can “significantly reduce” the costs of medical imaging systems without sacrificing quality, the prospectus said. The cheaper technology has the potential to increase availability of screening and improve accessibility to early detection of diseases. The integration of the technology with the cloud system will give professionals a “streamlined process” where scanned images are uploaded automatically to the cloud and seen by a human radiology expert who is also assisted by AI algorithms that help review and reach a diagnosis in a “significantly shorter time frame than current diagnostics,” the prospectus said.

The business model envisages a pay-per-scan pricing structure as opposed to hospitals and medical centers buying the machines. The business model “will significantly reduce the price per scan compared to the current global average cost of $300 per scan, and has the potential to commoditize medical imaging services at prices that are affordable to a greater number of people,” the prospectus said.

The company has raised $110 million to date from investors including photography firm Fujifilm, South Korea’s SK Telecom, a wireless telecom operator, according to the database of Start-Up Nation Central, which tracks the industry.

The main shareholders are Ran Poliakine, the founder of the firm, Moshe Moalem and SK Telecom TMT Investment Corp and Affiliates, the prospectus said. Poliakine is a tech entrepreneur and the maker of the Powermat wireless charging solution, as well as the person behind the startup Illumigyn, which uses advanced imaging technology to develop a device to help gynecologists better identify and treat cervical cancer.

(This updated version of the story corrects amount raised by company in the headline and in the lead paragraph to $165.2 million)

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