Vowing X-ray Revolution, Israeli Medical Device Company Nanox's IPO Is a Hit

With potentially disruptive technology, U.S. offering exceeds expectations and stock soars

Yoram Gabison
Yoram Gabison
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A Nanox X-ray machine.
A Nanox X-ray machine.
Yoram Gabison
Yoram Gabison

Companies promising disruptive technologies have become some of Wall Streets’ biggest success stories over the years. Online merchants, including cloud computing companies and those developing renewable energy technologies trade at generous valuations. Tesla, the electric car company, has a market capitalization of $382 million even though its net profit over the last 12 months was a mere $445 million.

That seems to explain how the Israeli medical device company Nanox’s initial public offering on Thursday and its first day of trading Friday were such an enormous success. The company raised more than $165 million at $18 a share, at the upper end of the $16-18 range underwriters had expected and issued almost twice as much stock as originally planned.

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The shares, trading under the NNOX symbol, closed up 21% at $21.70 on their first day of trading on the Nasdaq, bringing the company valuation to almost $1 billion.

Nanox is developing what it says is the first fundamental change in X-ray technology since its invention in 1895, which promises to change the way a key diagnostic tool is used and make it much more widely available. But the company has not had even initial contracts with the U.S. Food and Drug Administration or any other regulatory agency about approval for its product and has no revenues.

Since it was formed in 2012, Nanox has amassed losses of $54 million and it expects the losses to widen for the foreseeable future as it expands its research and development efforts. However, in its presentation to potential investors, the company predicts that it will eventually shake up the $21 billion global X-ray market, among other ways by making imaging services available to the two thirds of the world’s population now without access.

The company’s Nanox.ARC is more compact and lightweight than conventional X-ray machines. It produces 3-D images, emits less radiation and costs a fraction of the price of conventional imaging devices. Based on technology originally developed at Japan’s Sony for a novel LED screen, the Nanox.ARC uses a proprietary silicon chip embedded with 100 million nanocones that generate X-rays. Alone, each chip produces very little light, but together they produce a stable X-ray source.

Because it has no moving parts and no need for cooling as do conventional CT X-rays, the Nanox.ARC requires a lot less electric power than convention X-ray machines. It also reduces the subject’s exposure time to radiation.

Nanox’s business model is to offer X-rays as a service: Users pay for each scan rather than buying the device outright, saving them a capital outlay that runs to $150,000 on average. The company hopes to cut the cost of medical imaging, which is about $300 per scan today, and turn it into a commodity product with expanded access.

The device looks like a huge ring that moves up and down a scanner table on which the patient lies. It includes software that integrates it with the internet cloud, where the images are stored. The images are sent to radiologists, who can examine them remotely or to companies that use artificial intelligence to analyze them.

A prototype of the Nanox.ARC was unveiled in February and plans are to have the first commercial product on the market in the first quarter of next year, contingent on regulatory approvals.

The company today employs just 27 people (21 in Israel and the rest in Japan), but it aims to be manufacturing 1,000 systems in the second half of 2021 and install 15,000 of them by the end of 2024.

Nanox’s biggest shareholder is Moshe Moalem, with a 9.2% stake, followed by CEO Ran Poliakine with 8.3%, the South Korean company SK Telecom with 7.9% and Asia Beam Limited. The remaining 70.4% is held by the public.

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