13 Feb 2021
Singular Health soars 85pc on first day of trade
Medical imaging company Singular Health looks set to follow in the footsteps of fellow medtech stock stars Pro Medicus and 4D Medical, with the small cap company surging 85 per cent on its first day of trade.The business, which sells a subscription-based virtual reality medical imaging tool and is in the process of commercialising a 3D imaging product that can be used on a smartphone or tablet, raised $6 million at 20¢ per share, giving it a market capitalisation of $20 million. On open it leapt as high as 40¢, before sliding back to 37¢ in late trade in Friday.
Speaking to AFR Weekend, Singular Health managing director Thomas Hanly said the raise had been more than three times oversubscribed.
“There’s always been a good market for medtech stories. Gold might come in and out of flavour and lithium is up one day and down the next, but medtech stocks have transcended that,” he said.
”PAC Partners were amazing at helping us build the book … from the ground up. We had to scale down virtually everybody. Not a single company didn’t get scaled.“
Singular’s first day boom comes on the back of fellow medical imaging company 4D Medical also soaring 118 per cent on its first day of trade. Having listed with an issue price of 73¢ last year, 4D Medical was trading at $2.08 on Friday.
The business was founded in mid 2017 by oncologist Dr Jason Tan, after trying to plan a surgery for a particularly difficult tumour.
The experience led him to team up with some software developers to create a way for him to view the tumour, which would give him a better ability to plan the upcoming surgery.
This collaboration led to the creation of MedVR, which went on to become Singular Health and is its first commercial product.
Mr Hanly joined the company as managing director in May 2019, having previously assisted the business in raising capital.
In December 2019 he experienced first hand how valuable its technology was, when he was diagnosed with an aggressive form of adrenal carcinoma. A CT scan discovered a 500g malignant tumour, which was invading his kidney.
“I was able to sit down with my oncologist and review my file using our 3D software … it allayed my anxiety,” Mr Hanly said.
As well as its VR product, the company has been developing a product called 3Dicom Viewer, which lets clinicians view images in 3D via their portable devices as well as the VisualEyes product, which is designed for the optometry sector.
Mr Hanly said this product will be more scalable than its MedVR software because it lets surgeons view the scans in the operating theatre, letting it inform their surgeries. He also sees a market for it among individuals who want to be able to look at their own scans in a format that’s easier to interpret than traditional 2D scans.
“The concept was to make the software available to more people on standard devices,” he said.
“On my Android phone I have the beta application where I can download a dicom file and render it in 30 seconds using my mobile phone’s own capabilities.“
The company generates a modest amount of revenue – $23,000 between July 1 and November 30, 2020 – from its MedVR product, which is used in hospitals in Australia, Brunei, Singapore, South Africa, Hong Kong and Switzerland.
Cyan Investment Management bought into the float, spending $400,000 to acquire a 1.99 per cent stake.
Cyan fund manager Dean Fergie said he was inspired to buy in because even though the company was very early stage, it had a lot of potential.
“With any of these companies you have to look conceptually at what they’re doing, but also at some of the trailblazers in the industry,” he said.
“Thinking of Pro Medicus and 4D Medical, they’re $4.5 billion and $500 million companies respectively. So with a business like this that has a few different arms and products, you think there’s a bit of potential and it only had a market capitalisation of $20 million.”
Cyan was scaled back by 30 per cent compared to what it had requested and on Friday bought up more stock.
Mr Fergie’s biggest concern for the business was that its plans for product commercialisation and market expansion in 2021 were too ambitious and it was at risk of spreading itself too thin.
Singular has set itself the goal of being cashflow break-even in 18 months and Mr Fergie said even if it took the company two or three years, this would be “outstanding”.