AirXpanders CEO Scott Dodson says Australia is a good stepping stone to USA

Australia is the perfect place for a medical device maker to launch before entering the key United States market, AirXpanders boss Scott Dodson says.

AirXpanders, which makes tissue expanders used in breast reconstruction after a mastectomy, is rapidly increasing its share of the Australian market and is in the midst of a United States Food and Drug Administration review.

AirXpanders' technology improves the treatment regime for women preparing for breast reconstruction.
AirXpanders' technology improves the treatment regime for women preparing for breast reconstruction. Photo: Sandy Scheltema

The company is based in the US but listed on the Australian Securities Exchange in June 2015, raising $36.5 million in an oversubscribed initial public offer.

Mr Dodson said investor support in Australia has been "phenomenal".

"Medical devices have done exceptionally well in Australia," he said. "It is a good place to get up and going to get into the United States. I would soundly advocate that [setting up in Australia before a US entry]."

Since the company listed its shares have surged more than 100 per cent to $1.05, implying a market value of $220 million.

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Mr Dodson said AirXpanders had already taken almost 20 per cent of the Australian market.

"Quite frankly for a medical technology to be approaching 20 per cent market share normally takes two to three years and we are on our way after six months."

Superior product

He said the alternative treatment is so inferior that women inevitably use an AirXpanders AeroForm device.

After a mastectomy a woman seeking breast reconstruction needs tissue expansion before a permanent implant can be inserted.

A water balloon requiring frequent saline refills via injections at the plastic surgeon's rooms has been the dominant treatment method.

The AeroForm device expands in the patient's chest when the patient uses a wireless device to deliver prescribed doses of carbon dioxide. The device has daily caps and lockouts to prevent patient harm. 

Mr Dodson said his device can do the job without the pain and visits to the surgery required by the balloon. It also takes weeks rather than months.

"When offered the choice, no woman chooses to come back and get stuck with a needle," he said.

US replication

The AirXpanders boss believes the rapid market share growth in Australia will be replicated in the US, where he expects to launch later this year.

This could mean big money for the company and its investors.

In 2014 about 3000 tissue expansion devices were placed in Australia compared with 120,000 in the US.

While the medical funding systems are different, patients using an AeroForm device pay no gap fees in Australia and will not be charged fees in the US either.

Aside from establishing a sales and marketing footprint in the US, AirXpanders has two other key strategic goals: to lower its cost of manufacturing, and to broaden the applications of its technology in areas such as burns, pediatrics and trauma.

Once the device is approved by the FDA, Mr Dodson will file for regulatory approval in South Korea, China, and Japan.

AirXpanders already has its CE Mark, which allows its device to be sold in any European Union country. That market will not be pursued until the US market has been tackled.

In August AirXpanders reported $US47,000 from sales of AeroForm in Australia and a net loss after tax of $US4.6 million.

The company had $US28 million of cash in the bank as at June 30.