Few things are more important for health small caps seeking to enter the US market than gaining approval from the Food & Drug Administration (FDA).

The key way to obtain approval to market a device for human use is through a 510(k) submission, unless the device is exempt.

This certifies that the device is safe and effective and involves the device being put to the test against an equivalent on market.

A handful of ASX stocks have won FDA approval to market and sell their products in the last 12 months.

Successful candidates include brain scanning device maker Compumedics (ASX:CMP), portable x-ray manufacturer Micro-X (ASX:MX1), and pregnancy-focused telehealth platform HeraMED (ASX:HMD).

 

Why FDA approval is key

Without FDA approval a company may not be able to sell its products in the broader US market. In many markets the US is the biggest opportunity.

And once a company has FDA approval, it is often much easier to seek regulatory approval in other countries.

In some cases, companies are able to re-use the data submitted to gain FDA approval to get regulatory approval in other countries.

However, gaining FDA approval is not necessarily a guarantee of success in the US market, as breast implant maker AirXpanders (ASX:AXP) has proven.

And it can take several months for an application to be approved or rejected.

Either way, it is a necessary step to have a chance of such success in the world’s biggest healthcare market.

These five small cap stocks are currently in line to hopefully get the green light from the American regulator.

 

ORTHOCELL (ASX:OCC)

Orthocell proved last year that its regeneration therapy works. That positive result sent the company’s share price up nearly 400 per cent in a day.

Getting approval in America has been a key company objective for some months. The company completed the relevant FDA regulatory study in March, specifically for dental implants.

Orthocell last updated shareholders on this matter in mid-May, revealing it had made the submission and was actively progressing the US launch strategy.

Orthocell (ASX:OCC) share price chart

 

RESPIRI (ASX:RSH)

The respiratory monitoring device maker has been one of the few companies to gain from the pandemic. As the awareness of respiratory illnesses has increased it has signed multiple distribution deals.

While it already has CE and TGA approval (the European and Australian regulatory bodies respectively) it views FDA approval as a significant next step.

The company made a 510(k) regulatory submission earlier this year and expects to receive it by the end of November.

Respiri (ASX:RSH) share price chart

 

MEDIBIO (ASX:MEB)

Medibio submitted its application for FDA approval at the end of April for its sleep staging software MEBsleep.

MEBsleep uses artificial intelligence and “neural network methodology” to identify changes in the five stages of sleep necessary to diagnose sleep disorders.

The company’s evidence included a solid clinical trial showing 85 per cent agreement with a consensus panel of certified sleep technicians — above the 73 per cent of its chosen predicate device.

Medibio also has a corporate well-being product ilumen, which screens people for symptoms of depression, anxiety, and stress.

Medibio (ASX:MEB) share price chart

 

BPH ENERGY (ASX:BPH)

Despite being named after an oil and gas project, this microcap stock owns some medical device IP.

Namely, 16 per cent of Cortical Dynamics, which is trying to commercialise its Brain Anaesthesia Response Monitor (BARM).

This device monitors the impact of anaesthetics on brain activity, thereby ensuring anaesthetised patients stay sedated during surgery.

BPH told its shareholders last month Cortical had begun the FDA approval process.

BPH Energy (ASX:BPH) share price chart

 

RESONANCE HEALTH (ASX:RHT)

This AI software stock monitors liver health and can aid monitoring and management of several diseases including fatty liver disease and obesity.

The stock submitted its application for FDA approval in early April.

But while waiting for the green light to enter the US market it also plans to seek clearance in Australia and Europe and potentially expand its software to other organs and disease conditions.

 

At Stockhead, we tell it like it is. While Respiri and HeraMED are Stockhead advertisers, they did not sponsor this article. 

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.