Oventus stock jumps to 70¢ on debut, analysts cite trial data as challenge

SHARES in Oventus, a Brisbane maker of sleep disorder treatment, popped on sharemarket launch. But analysts say the firm needs more trial data.

Oventus shares jumped on their stockmarket debut — the device was developed by Chris Hart (above).

SHARES in Oventus, a Brisbane-based maker of a sleep disorder treatment shaped like a mouthguard, popped on its sharemarket launch on Tuesday.

The company had raised $12 million at 50¢ a share, and came on to the boards at 60¢ before closing at 70¢.

“It’s on the back of (the) product itself and the way we’re treating patients, which is totally different to other appliances,” Oventus chief executive Neil Anderson said.

The company is early stage and analysts at Bioshares said Oventus faced several challenges — including creating more trial data to support device sales. So far Oventus has only one self-reviewed study into 29 patients, which showed positive results.

Mr Anderson agreed more clinical evidence was required and said money raised would be used for research and development, including into more trial work.

Oventus’s device looks like a mouthguard with tubes in it, and is designed to help people keep breathing smoothly who would otherwise have interrupted sleep. It is made on a 3D printer with titanium.

Mr Anderson rejected that the price rise on Tuesday meant they should have priced stock higher. “We were very happy with the valuation,” Mr Anderson told The Courier-Mail. Oventus had been valued at $36 million at 50c a share.

So far Oventus is a money-losing operation, like others in the sector, and posted a $657,000 loss in 2016’s first half off $171,000 in revenue. It has delivered over 1100 devices and Mr Anderson said no significant problems had emerged and customers were referring on friends and family.

Oventus’s prospectus warned that the market is “intensely competitive and subject to rapid change”, and one king in the sector is Resmed, which uses a fight-pilot like mask to help people sleep.

But Oventus is also hoping to pick up patients who cannot tolerate masks, arguing there is a large unmet market need.

Oventus was created in 2013 by inventor and dentist Chris Hart, who retains a 36 per cent stake in the company. His 26.1 million shares were worth $18.27 million by Tuesday’s sharemarket close.

REIMBURSEMENT KEY

Patients were willing to spend money treating sleep conditions, Mr Anderson argued. “It’s life changing. Often motivation in the first place is driven by snoring,” he said.

But one hurdle is health insurance reimbursement — Brisbane-based Impedimed, which has a device for detecting swelling ailments, struggled for years before establishing more favourable reimbursement terms.

Mr Anderson said Australian dentists might charge between $1800 and $2500 for Oventus’s device, with some insurers reimbursing between 30 per cent and 60 per cent for high-level cover.

He said it should be similar in the US, which has a dedicated reimbursement code for sleep apnoea. Oventus aims to sell its device there in 2016’s last quarter.

Overseas markets also pose challenges with Bioshares analysts saying one other risk will be any reliance on third party distribution channels there.

Mr Anderson has almost 30 years’ experience in commercialising medical devices, and started working almost three years ago with bringing Oventus’s product to market.

One company he helped list, cardiac catheter manufacturer CathRx eventually went off the stockmarket after seven years. But Mr Anderson said that CathRx’s product was one that took a long-term to develop, was invasive and had difficult manufacturing. “History shows it’s very hard to do those (kind of devices) in Australia,” he said.

“I just wanted to do a less invasive product that … requires less money and you can kick goals a lot faster,” he said.

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