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A quick look at EMulate Therapeutics
EMulate Therapeutics (EMTX) has filed to raise $15.6 million in an initial public offering of its common stock, according to an S-1 registration statement.
The Company develops medical device technology to treat a set of serious health problems.
As we learn more IPO details from management I will provide an update.
EMulate overview
Based in Bellevue, Washington, EMulate was formed to develop its low-to-ultra-low frequency ulRFE radio frequency energy device to “regulate signaling and metabolic pathways at the molecular and genetic levels—without chemicals, radiation, or drugs.”
Management is led by Chairman, CEO and President Chris E. Rivera, who has been with the company since 2014 and was previously Founder, CEO and President of Hyperion Therapeutics and Head of Commercial Operations at Genzyme Therapeutics, “where he built Genzyme’s US and directed renal commercial operation.’
The company says its electromagnetic field technology has produced “essentially similar molecular effects at the cellular level as the drug paclitaxel.”
Below is a table from the company detailing the status of their device studies:
Company development status (SEC Edgar)
Management says it has “pivotal trials ready” for various treatment indications, but isn’t currently conducting trials and it’s unclear to what extent Phase 1 or Phase 2 trials have been conducted and accepted by the US Food and Drug Administration.
The company operates through a number of subsidiaries depending on their specific healthcare focus.
EMulate has booked a fair market value investment of $19.2 million as of June 30, 2022 from investors including The Butters Family Revocable Trust and individuals.
EMulate’ Market & Competition
According to a 2021 market research report by Grand View Research, the Global Pulsed Electromagnetic Field Therapy Market [PEMF] Devices were estimated at $360 million in 2020 and are expected to reach $656 million by 2028.
This equates to a projected compound annual growth rate (CAGR) of 7.8% from 2021 to 2028.
Key elements driving this anticipated growth are improvements in PEMF device technologies, miniaturization, and increases in fractures and diseases associated with aging populations.
The following pie chart also shows the breakdown of PEMF devices by market use:
Global market for PEMF therapy devices (Grand View Research)
Key competing vendors offering or developing related treatments include:
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Novocure
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Bedfont Scientific
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Orthofix Holdings
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Medical department of I-Tech
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CAN
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Medithera
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NiuDeSai
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Nuage Health
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Oxford Medical Instruments Health
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Bemer, LLC
EMulate Therapeutics financial status
The company’s recent financial results are typical of a development-stage life sciences company with modest revenues and significant R&D and G&A expenses associated with its product development efforts.
Below are the Company’s financial results for the last two calendar years:
Operating Invoice (SEC Edgar)
As of June 30, 2022, the Company had approximately $10,000 in cash and $19.9 million in total debt.
EMulate Therapeutics IPO details
EMulate aims to raise $15.6 million in gross proceeds from an initial public offering of its common stock, although the final number may vary.
No existing shareholders have expressed an interest in purchasing shares at the IPO price, although this element could become a feature of the IPO if disclosed in a future filing.
Management says it will use the net proceeds from the IPO for working capital, sales and marketing, research and development, and licensing and banking operations.
Management’s presentation of the company’s roadshow is not available.
Regarding pending litigation: “Following a settlement settled in 2016 with two former employees and founders of the Company regarding the severance payments payable under their respective employment contracts, we are required to pay those individuals severance payments the full amount of which has so far been deferred under a number of agreements , and we remain in compliance with our scheduled payment obligations under these deferral agreements. The total unpaid severance payment as of August 15, 2022 is approximately $6.3 million. [Emphasis mine] We are in talks with the former employees and founders. The ultimate outcome of this matter cannot be predicted at this time.” (Source – SEC)
The sole public bookrunner of the IPO is EF Hutton.
Commentary on the EMulate IPO
EMTX is seeking capital from the US public market to fund its continued product development and corporate plans.
The company’s lead candidate has “brought about essentially similar molecular effects as the paclitaxel drug at the cellular level,” although management is not currently in trials and it’s unclear what approvals the company has received from the FDA for trial use.
The market opportunity for PEMF treatment options for various indications is potentially large but difficult to quantify in terms of applicability to the company’s treatment approach.
Management has not disclosed any collaborative relationships between major pharmaceutical or medical device companies.
The Company’s syndicate of investors does not include any well-known institutional life science venture capital firms or strategic medical device investors.
EF Hutton is the sole underwriter and the IPOs the firm has led over the past 12 months have generated an average negative return (39.4%) since going public. This is a lowest performance for any major underwriter over the period.
Management’s strategy is to seek approvals for treatments across a broad range of diseases, which is why the Company has established subsidiaries in certain areas to better facilitate partnering and financing options.
I tend to prefer a more focused approach as it’s difficult and time-consuming enough to get one device approved and successfully marketed, let alone ten of them.
When we learn more details about the IPO, I’ll give a final opinion.
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