Mevion Medical Systems had planned to debut on the public markets to raise roughly $70 million. But all that got scrapped last week. Instead, the cancer proton therapy has now disclosed that it snagged what could be a much more lavish investment that keeps the company private. Chinese and U.S. investors joined forces to back a joint venture with up to $200 million for Mevion in China that will produce, sell and service proton therapy systems for that market.
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| Mevion S250--Courtesy of Mevion Medical Systems |
The Littleton, MA, company doesn't have much of a presence in China, but it did say in its SEC filings that it has already filed with Chinese regulators for approval of its Mevion S250 proton system, which it said is the only modular, single-room proton therapy system on the market. The system is already FDA-cleared and has a CE mark. Mevion will use the investment to boost manufacturing and broaden its installations globally.
"Proton therapy is an increasingly significant treatment modality for cancer centers around the world, and we see real value in advancing accessibility to this important therapy in China and elsewhere," Sunny Li, Senior Managing Director and Head of Technology Investments of HOPU Investments which led the JV financing, said in a statement. "We have conducted an extensive industry survey of proton therapy companies. Only one company is commercially proven to have both the best technology and the best economics for healthcare providers and that is Mevion."
In addition to HOPU, YuanMing Capital also led the investment, with participation from other undisclosed Chinese investors as well as high-profile, existing U.S. investors Caxton Alternative Management, ProQuest Investments, Venrock and CHL Medical Partners. HOPU and YuanMing both cite a history of successful healthcare investment in China.
Proton therapy is an alternative to standard cancer radiation therapy, which is based on high-energy X-ray radiation in the vast majority of instances in the U.S. Advocates for proton therapy say that, although it is also an external beam radiation therapy, it can deliver more targeted radiation--better sparing nearby healthy cells but raising the level of radiation delivered to targeted tissue.
Mevion isn't the only proton therapy player to nab big money lately. The startup's much larger competitor Varian ($VAR) said earlier this month that it had nabbed a $115 million deal to build a proton cancer therapy in New York City, while it also disclosed a deal the U.K.'s National Health Service to build a two centers there for $124 million. The latter deal was part of a larger $380 million commitment by the U.K. to Varian that dates back to 2013.
"This investment is a clear endorsement of Mevion's unique leading-edge proton therapy technology. No other system can match the quality, size, cost and efficiency of the Mevion S250, making it a powerful and practical solution for proton centers globally," said the company's President and CEO Joseph Jachinowski.
He continued, "Mevion has more modular proton therapy systems ordered, installed and treating than all other manufacturers combined. And, the compelling clinical and business results from our operational systems, and the momentum we are building, is powerful evidence that the future is bright, both for Mevion and for the cancer patients who will benefit from having wider access to proton therapy."
Even though proton therapy in an outpatient hospital setting has been around for over a decade, in the U.S. it is covered under local coverage determinations under Medicare, rather than a national coverage decision--which can make reimbursement easier.
The current Medicare unadjusted reimbursement rate for proton therapy is "$872 per fraction for simple proton therapy procedures where only a single area of the patient is treated, and $1,205 per fraction for complex proton therapy procedures where one or more areas of the patient are treated," according to a Mevion SEC filing.
Mevion said that the number of patients treated via its one-room system of about 2,000 square feet can be comparable to the number treated in a larger, more expensive four-room legacy system. Last spring, it opened a treatment center at Robert Wood Johnson University Hospital.
The investors see the deal as a foray into bringing innovative U.S. med tech to China. "We are very interested in investing in med tech leaders in the U.S. like Mevion, and truly believe that we can help these U.S. companies grow and maximize value in the Chinese market," YuanMing Capital Partners Yuan Tian and Dr. Tina Yu added in a statement.
- here is the release, the latest SEC S-1 filing and the IPO withdrawal