Magnetica - Medical Technology
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Magnetica - Medical Technology Magnetica Ltd is an Australian biomedical engineering and technology company specialising in next generation Magnetic Resonance Imaging (MRI) technologies.
  • NZ$1,110,760

    invested

  • 132.2% funded

  • 0

    time left

  • 4.7% - 10.4%

    min - max equity offered

  • NZ$840,000 - NZ$1,999,200

    min - max investment sought

  • NZ$4,200

    min investment parcel

OFFER IS CLOSED
Abhijit

Do these scanners require FDA clearance ? How feasible is it getting clearance in China for these scanners? I am sure there must be some regulatory approvals required to get these approved for use in clinical practise

Abhijit Zantye posted on 19.04.2016
Abhijit

I want to know which companies you will be competing against? Are GE, Siemens, PHilips unaware of this need in the market and do they not have any high field compact speciality head scanner MRI product available in the commercial market or in development to reach market sooner?
How is your technology different than others?

Abhijit Zantye posted on 19.04.2016
  • > Offer Type: Australian Retail (CSF) Offer This offer is open to Retail and Wholesale/Sophisticated investors in Australia. Whilst in New Zealand the offer is open to Wholesale investors.
  • > Company: Magnetica Limited Securities purchased are for direct equity in Magnetica Limited.
  • > Security Type: Ordinary Shares
  • > Fees Paid by Issuer: Undisclosed The fees paid to Equitise by the issuer upon successfully completing the funding round is undisclosed.
  • > Cooling-Off Rights: 5 working days - Retail investors in Australia are able to withdraw their applications for securities with accordance to the Australian Crowd Source Funding (CSF) regulations. For more information please click on the link supplied.
    More Info
  • > Related Parties: None
Note!

Each Recipient acknowledges that notwithstanding the terms of this offer, no offer of Shares is being made in New Zealand other than via the Equitise platform, and that any offer of Shares in New Zealand is only capable of acceptance via the Equitise platform. The currency for the Shares is not New Zealand dollars. The value of the Shares will go up or down according to changes in the exchange rate between the applicable currency and New Zealand dollars. These changes may be significant. If the Shares pay any amounts in a currency that is not New Zealand dollars, a Recipient may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars. Equitise has applied an Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate of 1.12 for investments made in New Zealand.

More detailed information about this offer is contained in this Offer Document

Offer Document
Offer overview

The details of the offer are in Australia Dollars (AUD) below. We have applied an AUD/NZD exchange rate of 1.12 for New Zealand Investors:

  • Minimum funding target - A$750,000 (NZ$840,000)
  • Maximum funding target - A$1,785,000 (NZ$1,999,200)
  • Minimum Equity % - 4.66
  • Maximum Equity % - 10.44
  • Minimum Investment Size - A$3,750 (NZ$4,200)
  • Price per share - A$0.15 (NZ$0.168)
  • Types of shares/share classes - Ordinary Shares
Executive summary

With investments beginning at $4,200 (25,000 shares)

Medical Technology and Equipment Opportunity

  • Magnetica Ltd is an Australian biomedical engineering and technology company specialising in next generation Magnetic Resonance Imaging (MRI) technologies.
  • Magnetica has developed and patented lucrative IP and technology that allows smaller, lighter, faster and cheaper MRI systems to be built. Components of the patented technologies have already been utilised under license by global medical systems integrators.
  • A global medical systems integrator has entered into an agreement to collaborate and commercialise Magnetica’s innovative MRI technologies.
  • The global MRI equipment market was estimated at US$4.6 billion in 2013 and is projected to reach US$6.3 billion by 2018, exhibiting a compound annual growth rate (CAGR) of 6.2%.
  • Attractive valuations have been achieved for companies in the medical technology and equipment sector which similarly provide disruptive products driven by the promise to users to bring down escalating healthcare costs.
  • The patented MRI technologies enable smaller and lighter MRI systems that provide significant cost reductions for dedicated diagnostic imaging.
  • Magnetica is now undertaking a staged capital raising by issuing equity to new and existing shareholders with a view to IPO or trade sale within 36 months.

Key statistics
  • Global MRI market was estimated at US$4.6 billion in 2013 and is projected to reach US$6.3 billion by 2018. 
  • Asia Pacific MRI market growing at a CAGR of 11.9%. 
  • China’s healthcare industry is rapidly expanding, MRI sales reported at $483.9m.  
  • US: 50 MRI per one million people.
  • China: 1 MRI per one million people.

Magnetica currently has 35 patents and 7 patent applications in major international jurisdictions.

Magentica has state of the art and highly advanced technology. Detailed information on Magnetica’s key capabilities and products is outlined in the detailed IM on page 10 & 14 respectively.

Currently there is no very high field (3.0T) compact speciality orthopaedic MRI product available in the commercial market. Magnetica, in collaboration with a global medical systems integrator partner has started commercialisation of this product.

3.0T head scanner that would be approximately 30% of the capital cost of an equivalent whole body system. There is a compelling case for a dedicated 3.0T head scanner.

Investor rewards
Business model

Revenue Model and Future Performance

Magnetica will receive revenues from:

  • Licencing of Magnet and Coil Intellectual Property(IP) to systems integrators
  • Magnetica will be part of the manufacturing supply chain to MRI systems integrators suppling Gradient and Radio Frequency(RF) Coils
  • Third party revenue from design and production of Gradient and RF Coils

Future revenue streams will flow from a variety of sources including:

3.0T extremity product

  • Licencing the use of magnet IP in productised 3.0T extremity product.
  • Revenue and gross profit on the manufacture of Gradient and RF Coils on supply of components of the 3.0T extremity product.

Gradient and RF Coil sales

  • Revenue and gross profit on the design and manufacture of Gradient and RF Coils from existing and new preclinical and research customers.

Head Scanner product

  • Licencing the use of magnet IP in productised head scanner.
  • Revenue and gross profit on the manufacture of Gradient and RF Coils on supply of components to Head Scanner product.

Continuing R&D tax concessions

  • The company receives cash R&D tax concession rebates on all eligible R&D expenditure. The rebate received for the 2015 year was $315,487.

Government Grants

  • The company has been the recipient of various government grants for development of its IP and products. The last government grant, ending in June 2015 totalled $1.1m.
Milestones & history

Magnetica Limited is a publically unlisted company. Since its inception in 2005, through continuing strategic partnerships with the University of Queensland, Magnetica has successfully developed a 3.0T extremity superconducting magnet, together with 3.0T gradient and RF coils, which are the foundation for Magnetica to successfully commercialise its intended product suite as detailed in Section 7 of the Offer Document.

While developing these products, it has already designed and commercialised a 1.5T extremity MRI magnet that is now installed in hundreds of extremity MRI systems sold world-wide.These achievements have been funded to date via a combination of generous Federal and State government grants, income derived from its 1.5T products, R&D tax concessions, in addition to equity raisings.

Key Company Development Milestones

  1. 2016 - Agreements with systems integrator for commercialisation of the 3.0T MSK MRI
  2. 2016 – Raise matching funding for Commercialisation Grant funding of 3.0T extremity
  3. 2016 – Commence collaboration to produce of the 3.0T Extremity pre-production system
  4. 2016 – Commence development of Head Scanner product
  5. 2017 – Product launch of 3.0T extremity product – start of commercial sales revenue
  6. 2017 – Proof of concept of Head Scanner product
  7. 2018 – Commercialisation of the Head Scanner product
  8. 2018 – Product launch of the Head Scanner product

Strategy & vision

Magnetica’s strategy has four key components that the Directors and management team will implement over the next 24 to 36 months.

The strategy focuses on, and is expected to significantly increase, the value of the business and the company’s Intellectual Property (IP), and also position Magnetica for a liquidity event such as trade sale, partial sale or IPO.The following key value generating milestones, as they are implemented, will raise Magnetica’s global MRI industry credibility, and create revenue and further opportunities for the Company:

  • Completing commercialisation in collaboration with a global medical systems integrator of the 3.0T Orthopaedic MRI System.
  • Completing proof of concept for a unique asymmetric MRI Head Scanner, including development of a prototype magnet and gradient coils.
  • Developing ongoing commercial sales of Gradient and RF coils ex Eagle Farm facility.
  • Further developing commercial relationships with key strategic partners in key geographies with the capability to build revenue and take the Company’s products to the world MRI markets.
Use of funds

Notes:

The company intends to apply and believes itself to be eligible for a Commonwealth Government Accelerating Commercialisation Grant of up to A$1.0m on a matched funding basis.

Use of funds table above assumes:

  • The Commonwealth grant application being successful
  • $A0.5m is to be contributed to the 3.0T commercialisation project by the collaborating systems integrator
  • an In-Kind contribution to the project from the collaborating systems integrator for Industrial Engineering and Regulatory approval of costs up to A$0.6m

Investors should appreciate that all uses of funds are subject to change and are highly dependent on the results achieved. As at the date of this IM, the budget planned use of funds is considered by the Directors to be reasonably stated and a fair estimate.

Financial summary

Balance Sheet

The Company has an audited net asset position of A$1,098,811 as at 31 December 2015. A pro forma balance sheet post fund raising under this IM is shown at Appendix B with a net asset position of A$2,523,811. Audited half year financials are available. The Company’s cash position as at 31 January 2016 was A$447,730. Cash burn is approximately A$100,000 per month.  

Note: The large “Other” income amount in 2009 was the result of the divestment of its controlled entity, Nanjing Magnetica Superconductor Technology Company Ltd (NMST), a Joint Venture in China.

Tax Losses Available

Note the company has carry forward tax losses as at 30 June 2015 of $30,861,407, equating to a tax benefit at 30% corporate tax rate of $9,258,422.

Pro Forma Balance Sheet

Balance Sheet as at 31 December 2015 as adjusted by this capital raising

Note: Justin Schaffer (a Magnetica director and shareholder) loaned the business NZ$112,000 earlier this year in the form of a convertible note. This note has been converted to equity and forms part of the NZ$224,000 invested as part of the Equitise capital raise.

Milestones & history

Magnetica Limited is a publically unlisted company. Since its inception in 2005, through continuing strategic partnerships with the University of Queensland, Magnetica has successfully developed a 3.0T extremity superconducting magnet, together with 3.0T gradient and RF coils, which are the foundation for Magnetica to successfully commercialise its intended product suite as detailed in Section 7 of the Offer Document.

While developing these products, it has already designed and commercialised a 1.5T extremity MRI magnet that is now installed in hundreds of extremity MRI systems sold world-wide.These achievements have been funded to date via a combination of generous Federal and State government grants, income derived from its 1.5T products, R&D tax concessions, in addition to equity raisings.

Key Company Development Milestones

  1. 2016 - Agreements with systems integrator for commercialisation of the 3.0T MSK MRI
  2. 2016 – Raise matching funding for Commercialisation Grant funding of 3.0T extremity
  3. 2016 – Commence collaboration to produce of the 3.0T Extremity pre-production system
  4. 2016 – Commence development of Head Scanner product
  5. 2017 – Product launch of 3.0T extremity product – start of commercial sales revenue
  6. 2017 – Proof of concept of Head Scanner product
  7. 2018 – Commercialisation of the Head Scanner product
  8. 2018 – Product launch of the Head Scanner product

Strategy & vision

Magnetica’s strategy has four key components that the Directors and management team will implement over the next 24 to 36 months.

The strategy focuses on, and is expected to significantly increase, the value of the business and the company’s Intellectual Property (IP), and also position Magnetica for a liquidity event such as trade sale, partial sale or IPO.The following key value generating milestones, as they are implemented, will raise Magnetica’s global MRI industry credibility, and create revenue and further opportunities for the Company:

  • Completing commercialisation in collaboration with a global medical systems integrator of the 3.0T Orthopaedic MRI System.
  • Completing proof of concept for a unique asymmetric MRI Head Scanner, including development of a prototype magnet and gradient coils.
  • Developing ongoing commercial sales of Gradient and RF coils ex Eagle Farm facility.
  • Further developing commercial relationships with key strategic partners in key geographies with the capability to build revenue and take the Company’s products to the world MRI markets.
Executive summary
Market overview

The global MRI equipment market was estimated at US$4.6 billion in 2013 and is projected to reach US$6.3 billion by 2018, exhibiting a compound annual growth rate (CAGR) of 6.2%. The USA represents the largest market for MRI equipment with an estimated share of 34.6% in 2013. Asia Pacific represents the fastest growing market, exhibiting a CAGR of 11.9%.

Magnetica is confident that its technologies represent a value proposition for both mature MRI markets such as the US and Europe and the rapidly emerging markets in Asia, and particularly in China.

China is emerging as one of the fastest growing healthcare markets, and presents huge market potential for MRI systems with sales for 2013 reported at USD$483.9m. At present, in China, there exists only one MRI scanner per one million people, where the US has over 50 MRI scanners per one million people.

Developed or mature MRI markets such as the US and Europe have taken up speciality or dedicated MRI systems. Dedicated systems are attractive to both clinicians and administrators. Clinicians can tailor reliable specialised scans versus whole body generalist systems, while administrators can rely on improved asset utilisation and patient throughput with lower capital and running costs.

Currently there is no very high field compact speciality head scanner MRI product available in the commercial market. The concept of smaller, high performance, cost effective systems is expected to be economically and clinically very effective.

The size of the potential markets for dedicated systems is also easily recognisable as a percentage of total scans taken as shown in Figure 3 below.

Figure 3: US MRI Procedures by Type

Target market

US, Europe and the expanding and underprovided Asian market.

Competitive landscape

Na

Potential returns

Magnetica’s has advanced and niche MRI technology. This proprietary knowledge could have significant value in the eyes of other industry players. It is likely that the returns will be driven by a trade sale to another company in the broader healthcare market.

Liquidity Event – Trade Sale/IPO

The company’s goal is to achieve a successful trade sale or IPO liquidity event on successful commercialisation of its 3.0T extremity/head scanner products.

Examples of a comparable company/industry and their deal flow/pricing is as follows:

Micro-X Ltd (ASX: MX1)

This company achieved a successful IPO on the ASX on 21/12/2015 with a market capitalisation of $59.7m. It is focused on the design, development and manufacturing of ultra-lightweight CNT based X-ray products for the global healthcare and counter IED imaging security markets. Audited Accounts show its 2015 revenue at $160,716.

Richard Aird

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Karen Hudson

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Stuart Crozier

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Magnetica Offer document

This document provides a detailed summary of the Magnetica offer

Download

The investors below have committed capital to the business in this funding round.

Hamish Bain

2016-05-12 04:34:20

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Shuiwei Xie

2016-05-12 01:12:47

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Chris

2016-05-11 09:22:40

Garth Lawrence

2016-05-10 22:16:18

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Garry

2016-05-06 21:00:01

Miss Bollinger

2016-05-06 08:41:04

John Muir

2016-05-05 23:29:52

Architect

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Stephen Brown

2016-04-27 23:21:19

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Craig Walter

2016-04-26 21:05:52

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Sherwood

2016-04-19 02:13:52

greg james

2016-04-19 02:13:32

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Bruce Gilbert

2016-04-11 00:31:08

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Siti

2016-04-10 01:46:56

Roger Pemberton

2016-04-08 18:03:30

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Simon Bunn

2016-04-08 13:54:27

Chief Technology Officer

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Dan McVay

2016-04-06 22:28:37

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Ashley Naylor

2016-04-06 01:25:48

General Manager

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PETER HARRISON

2016-04-05 23:22:46

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PATRICK MACKEY

2016-04-05 23:16:43

DIRECTOR

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Howard Stack

2016-04-04 05:50:26

Chairman

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Justin Schaffer

2016-04-01 02:19:43

Anonymous

2016-03-30 07:39:08

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