State of Israel | | | 3844 | | | Not Applicable |
(State or Other Jurisdiction of Incorporation or Organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification No. ) |
Andrea L. Nicolás Yossi Vebman Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, New York 10001 Tel: +1-212-735-3000 Fax: +1-212-735-2000 | | | Ian Rostowsky Amit, Pollak, Matalon & Co. APM House, 18 Raoul Wallenberg St. Building D. Ramat Hachayal Tel Aviv 6971915, Israel Tel: +972-3-568-9000 Fax: +972-73-297-8645 | | | Peter N. Handrinos Wesley C. Holmes Latham & Watkins LLP 200 Clarendon Street Boston, Massachusetts 02116 Tel: +1-617-948-6000 Fax: +1-617-948-6001 | | | Ehud (Udi) Arad Agmon & Co., Rosenberg Hacohen & Co. Electra Tower Yigal Alon St 98 Tel Aviv 6789141, Israel Tel. +972-3-607-8607 Fax: +972-3- 607-8666 |
Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller reporting company | | | ☐ |
(Do not check if a smaller reporting company) | | | Emerging Growth company | | | ☒ |
Title of each Class of Securities to be Registered | | | Amount to be Registered | | | Proposed Maximum Offering Price Per Share(1) | | | Proposed Maximum Aggregate Offering Price(1) | | | Amount of Registration Fee |
Ordinary shares, par value NIS 0.01 per share | | | 2,891,322 | | | $68.88 | | | $199,154,259.36 | | | $21,727.73 |
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the “Securities Act”). The price shown is the average of the high and low selling price of the ordinary shares on February 5, 2021, as reported on the Nasdaq Global Market. |
| | Per share | | | Total | |
Public offering price | | | $ | | | $ |
Underwriting discounts and commissions(1) | | | $ | | | $ |
Proceeds to the selling shareholders (before expenses) | | | $ | | | $ |
(1) | Refer to “Underwriting” for additional information regarding underwriting compensation. |
Cantor | | | Oppenheimer & Co. |
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BTIG | | | Berenberg |
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Ladenburg Thalmann | | | LifeSci Capital |
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• | Digital X-ray source with the potential to significantly reduce the costs of medical imaging systems. We believe our digital X-ray source technology will allow us to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source without sacrificing imaging quality. A lower cost device has the potential to substantially increase medical imaging availability and improve accessibility of early-detection services broadly across the globe. |
• | Technology designed to improve upon the industry standard with integrated radiology diagnostics via a cloud-based MSaaS platform. The Nanox.ARC employs our novel digital X-ray source that is designed to be energy-efficient, smaller and can be more precisely controlled compared to existing X-ray source. By integrating the Nanox.CLOUD, we believe the Nanox System could provide a streamlined process where each scanned image is uploaded automatically to the cloud system and |
• | Business model designed to increase the availability of medical imaging. Our primary business model is based on a pay-per-scan pricing structure as opposed to the capital expenditure-based business model currently used by medical imaging manufacturing companies. We believe our business model will significantly reduce the price per scan compared to the current global average cost of $300 per scan, and has the potential to commoditize medical imaging services at prices that are affordable to a greater number of people. We believe our MSaaS business model has the potential to expand the total size of the X-ray-based medical imaging market. |
• | Secure regulatory clearance for our medical imaging system. We are taking a multi-step approach to the regulatory clearance process. As a first step, we submitted a 510(k) premarket notification for a single-source version of the Nanox.ARC to an accredited Review Organization under the Third Party Review Program in January 2020. As part of the review process, in March 2020, we received an information request, referred to as a major deficiency letter, from the Review Organization which, among other things, required us to provide additional data and other information to complete the application and to address certain deficiencies highlighted by the reviewer, including the results of certain performance tests. On September 3, 2020, we submitted our response to the Review Organization. The response included additional data and other information to complete the application and to address certain deficiencies identified by the reviewer, including the results of certain performance tests. On September 10, 2020, the Review Organization requested that we include a second predicate device in our 510(k) premarket notification. On September 26, 2020, we submitted our revised 510(k) premarket notification to the Review Organization, which the Review Organization subsequently recommended to the FDA for clearance on December 28, 2020. On January 1, 2021, we received an information request from the FDA through the Review Organization regarding our submission, which we responded to on January 4, 2021. On January 30, 2021, we received additional information requests from the FDA which, among other things, require us to address certain deficiencies and questions, including requests that we provide additional support regarding the intended use of the Nanox.ARC and the comparability of the Nanox.ARC to the predicate device. We plan to respond to these requests promptly. In addition, we will continue to work to address further information requests, if any. In addition, we will continue to optimize and develop features of the Nanox.ARC, and plan to submit an additional 510(k) premarket notification to the FDA with respect to the multi-source Nanox.ARC and the Nanox.CLOUD during 2021. If cleared by the FDA, we expect to commercialize the multi-source Nanox.ARC and we may seek alternatives for commercialization of our single-source Nanox.ARC. |
• | Jumpstart the MSaaS-based medical imaging market with strategic partnerships. We plan to produce and deploy an initial wave of approximately 15,000 Nanox.ARC units over the next three to four years to jumpstart the MSaaS-based medical imaging market. We have entered into a contract manufacturing agreement with a subsidiary of Foxconn for the commercial production and assembly of the Nanox.ARC and we have entered into commercial agreements with strategic regional partners for the deployment, operation and marketing of the Nanox System broadly across the globe, including in the United States and certain countries in Asia, Europe, Africa, Latin America and Australia. We plan to work with these partners to achieve local integrations into health maintenance organizations, electronic health record systems, payment methods and insurance coverage companies. In addition, we have entered into collaboration agreements with AI partners and image-transfer partners and are actively seeking collaboration opportunities, as we anticipate an industry shift to a digital and cloud-based subscription model will bring more digital healthcare disruptors into the market. |
• | Maximize the commercial potential of our technology with simultaneous business models. We plan to commercialize our novel X-ray source technology by pursuing three simultaneous business models, which we believe will provide us the flexibility and long-term sustainability to monetize our technology. |
• | Subscription Model: In certain countries, if permitted by the laws in the applicable jurisdiction, our primary sales strategy will be based on a pay-per-scan pricing structure, where we expect to sell the Nanox System at low cost or at no cost, with a suggested retail price per scan that is substantially lower than the current global average charge, and receive a portion of the proceeds from each scan as the right-to-use licensing fee and fees for usage of the Nanox.CLOUD, artificial intelligence capability and maintenance support. |
• | Sales Model: In certain countries, to accommodate specific local regulatory requirements, we expect to sell the Nanox.ARC for a one-time charge at a price that is substantially less than current market offerings. |
• | Licensing Model: For certain medical imaging market participants, we plan to tailor our X-ray source technology to their specific imaging systems to replace the legacy X-ray source or to license our X-ray source technology to them to develop new types of imaging systems. We expect to charge a one-time licensing fee upfront and receive recurring royalty payments for each system sold. |
• | Leverage the Nanox System to bring added value to our collaborators. We expect that the Nanox System will enable us to accumulate a significant number of medical images, which have the potential to be used by collaborators, such as medical AI-analytics companies, through machine learning algorithms to increase the probability of early disease detection. |
• | we are a development-stage company with limited operating history. We may never be able to effectuate our business plan or achieve any revenue or profitability. Therefore, at this stage of our business, potential investors have a high probability of losing their entire investment; |
• | our efforts may never demonstrate the feasibility of our X-ray source technology for commercial applications; |
• | we are highly dependent on the successful development, marketing and sale of our X-ray source technology and the related products and services; |
• | our planned deployment schedule to meet our target minimum installed base of 1,000 Nanox Systems and final deployment of 15,000 Nanox Systems is subject to numerous risks and uncertainties, including obtaining regulatory clearance, the continuing development of our technology, including the Nanox.Cloud, the ability to successfully scale up production of the Nanox System and its components and other factors outside of our control; |
• | business interruptions resulting from the COVID-19 pandemic or similar public health crises could cause a disruption of the development, deployment or regulatory clearance of the Nanox System and adversely impact our business; |
• | products utilizing our technology may need to be approved or cleared by the FDA and similar regulatory agencies worldwide. We may not receive, or may be delayed in receiving, the necessary approval or clearance for our future products, which would adversely affect business, financial condition, results of operations and products; |
• | we may not be successful in implementing our business models; |
• | our industry is highly competitive and is subject to technological change, which may result in new products or solutions that are superior to our technology or other future products we may bring to market from time to time; |
• | we expect to depend on third parties to manufacture the Nanox.ARC and to supply certain component parts; |
• | we may experience development or manufacturing problems and higher costs, or delays that could limit our revenue, if any, or increase our losses; |
• | it is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection; |
• | patent terms may be inadequate to protect our competitive position on our future products for an adequate amount of time; |
• | our product candidates and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business; |
• | under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees; |
• | we plan to do business globally, including in certain countries where we might have limited resources and would be subject to additional regulatory burdens and other risks and uncertainties; |
• | we are currently subject to securities class-action litigation and may be subject to similar or other claims and litigation in the future, all of which will require significant management attention, could result in significant legal expenses and may result in unfavorable outcomes, all or any of which could have a material adverse impact on our financial condition and results of operations, harm our reputation or otherwise negatively impact our business; |
• | conditions in Israel could materially and adversely affect our business; and |
• | the other factors discussed under “Risk Factors” beginning on page 13. |
• | reduced executive compensation disclosure; and |
• | an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in the assessment of our internal control over financial reporting. |
• | the last day of our fiscal year during which we have total annual revenue of at least $1.07 billion; |
• | December 31, 2025; |
• | the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or |
• | the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which, among other things, would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; |
• | the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission (the “SEC”) of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and |
• | Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers. |
• | the majority of our executive officers or directors are U.S. citizens or residents; |
• | more than 50% of our assets are located in the United States; or |
• | our business is administered principally in the United States. |
• | 4,689,800 ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding under the NANO-X Imaging Ltd 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”) as of December 31, 2020, at a weighted average exercise price of $5.73 per share; |
• | 2,978,247 additional ordinary shares reserved for future issuance under our 2019 Equity Incentive Plan as of December 31, 2020; and |
• | 3,156,490 ordinary shares issuable upon the exercise of warrants to purchase ordinary shares as of December 31, 2020, at a weighted average exercise price of $16.74 per share. |
| | Nine months ended September 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands, except per share data) | ||||||||||
Consolidated Statement of Operations Data: | | | | | | | | | ||||
Research and development expenses | | | $6,258 | | | $708 | | | $2,717 | | | $672 |
Marketing expenses | | | 4,409 | | | 699 | | | 1,556 | | | 209 |
General and administrative expenses | | | 14,195 | | | 2,124 | | | 18,298 | | | 1,023 |
Operating loss | | | (24,862) | | | (3,531) | | | (22,571) | | | (1,904) |
Financial (income) expenses, net | | | (20) | | | 12 | | | (8) | | | 5 |
Net loss for the year | | | $(24,842) | | | $(3,543) | | | $(22,563) | | | $(1,909) |
Basic and diluted loss per ordinary share(1) | | | $(0.77) | | | $(0.14) | | | $(0.90) | | | $(0.09) |
Weighted average number of ordinary shares outstanding – basic and diluted(1) | | | 32,209 | | | 24,563 | | | 25,181 | | | 20,793 |
(1) | See Note 7 to our unaudited condensed consolidated financial statements and Note 11 to our audited consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share. |
| | Actual | |
| | As of September 30, 2020 | |
| | ($ in thousands) | |
Consolidated Balance Sheet Data: | | | |
Cash and cash equivalents | | | $239,978 |
Working capital(1) | | | 235,731 |
Total assets | | | 245,632 |
Total liabilities | | | 6,563 |
Accumulated deficit | | | (65,443) |
Total shareholders’ equity | | | 239,069 |
(1) | We define working capital as current assets less current liabilities. |
• | the Nanox.CLOUD requires a considerable investment of technical, financial, and legal resources, which may not be available to us; |
• | it may require separate regulatory clearances or approvals; |
• | it may not be technically viable to integrate the Nanox.CLOUD with the businesses of our potential customers and collaborators, such as local operators, radiologists, cloud storage providers, medical AI software providers and others; |
• | market acceptance of the MSaaS model is affected by a variety of factors, including security, reliability, scalability, customization, performance, customer preference, patients’ concerns with entrusting a third party to store and manage their health data, public concerns regarding privacy and compliance with restrictive laws or regulations; |
• | our cloud-based service may raise concerns among our customer base, including concerns regarding changes to pricing over time, service availability, information security of a cloud-based solution and access to medical images while offline; |
• | the Nanox.CLOUD may be subject to computer system failures, cyber-attacks or other security breaches; |
• | incorrect or improper implementation or use of the Nanox.CLOUD by third-party cloud-service providers under our Sales Model could result in customer dissatisfaction and harm our business and reputation; |
• | undetected software errors or flaws in the Nanox.CLOUD could harm our reputation or decrease market acceptance of the MSaaS model; and |
• | we may incur higher costs than we expected as we expand our cloud-based services. |
• | our ability to achieve sufficient market acceptance by hospitals and clinics, providers of medical imaging services, medical professionals such as radiologists, third-party payors and others in the medical community; |
• | our ability to compete with existing medical imaging technology companies; |
• | our ability to establish, maintain and expand our sales, marketing and distribution networks; |
• | our ability to obtain and/or maintain necessary regulatory approvals; and |
• | our ability to effectively protect our intellectual property. |
• | the process of manufacturing and deploying the Nanox System is a complex, multi-step process that depends on factors outside our control, and could cause us to expend significant time and resources prior to earning associated revenues; |
• | the manufacturing cost of the Nanox.ARC may be higher than we expect, may increase significantly, or may increase at a higher rate than anticipated, and we may not be able to set or timely adjust our pay-per-scan pricing to compensate for any increased costs; |
• | the manufacturing of the Nanox.ARC may take longer than we expected, and we may have insufficient manufacturing capacity and experience delays in the manufacturing and deployment of the Nanox System, which would have a negative impact on the timing of our revenues; |
• | deployment and full utilization of the Nanox System may not be achieved or may take substantially longer than we expect, and we may not be able to deploy a sufficient number of units of the Nanox System to support our business or to effectively stimulate market interest; |
• | a Nanox System may perform fewer scans per day than our estimates due to a number of factors, including low market acceptance rate, technical failures and downtime, service disruptions, outages or other performance problems, which would have a negative impact on our revenues and our ability to recover costs; |
• | the implementation, integration and testing of the Nanox.CLOUD with our potential customers and collaborators can be complex, time-consuming and expensive for them, which may have a negative impact on the timing of our revenues; |
• | the inability or unwillingness of potential customers to invest in the required safety infrastructure, including customary X-ray shielding, to allow the Nanox.ARC to be safety operated; |
• | as part of the Subscription Model, we will be responsible for maintenance of the Nanox System units we deploy, which may be more costly and time-consuming than we expect; |
• | our customers may not be able to find or retain a sufficient number of radiologists to review the images generated by the Nanox System, especially as we deploy additional Nanox Systems and the volume of scans increases; |
• | the portion of our pay-per-scan pricing allocated to our collaborators may not be acceptable to them, either now or in the future, and pricing negotiations with such collaborators may be a complex and time-consuming process; |
• | our pay-per-scan pricing may not be sufficient to recover our costs and may not be adjusted in a timely manner, which could negatively affect our revenues or cause our revenues and results of operations to vary significantly from period to period; |
• | we may be unsuccessful in maintaining our target price per scan because we do not control the price charged by local operators and higher prices may adversely affect market acceptance of the Nanox System; and |
• | regulatory authorities may challenge our Subscription Model altogether, and impose significant civil, criminal, and administrative penalties, damages, fines, and/or exclusion from government funded healthcare programs, which could adversely affect our revenues and results of operations. |
• | generate widespread awareness, acceptance and adoption of our technology and future products or services; |
• | develop new or enhanced technologies or features that improve the convenience, efficiency, safety or perceived safety, and productivity of our technology and future products or services; |
• | properly identify customer needs and deliver new products or services or product enhancements to address those needs; |
• | limit the time required from prototype development to commercial production; |
• | limit the timing and cost of regulatory approvals; |
• | attract and retain qualified personnel and collaborators; |
• | protect our inventions with patents or otherwise develop proprietary products and processes; and |
• | secure sufficient capital resources to expand both our continued research and development, and sales and marketing efforts. |
• | insufficient capacity or delays in meeting our demand; |
• | inadequate manufacturing yields, inferior quality and excessive costs; |
• | inability to manufacture products that meet the agreed upon specifications; |
• | inability to obtain an adequate supply of materials; |
• | inability to comply with the relevant regulatory requirements for the manufacturing process; |
• | limited warranties on products supplied to us; |
• | inability or failure to comply with our contractual obligations; |
• | potential increases in prices; and |
• | increased exposure to potential misappropriation of our intellectual property. |
• | effectiveness of the sales and marketing efforts of us, and our partners such as the local partners; |
• | perception by medical professionals and patients of the convenience, safety, efficiency and benefits of the Nanox.ARC, the Nanox.CLOUD or products using our technology, compared to competing methods of medical imaging, such as the time and skill required to read the tomographic images produced by the Nanox.ARC and our X-ray source; |
• | opposition from certain industry leaders, which may limit our ability to promote the Nanox.ARC or the Nanox.CLOUD and to penetrate into the medical imaging market in certain geographical areas; |
• | the existence of established medical imaging technology; |
• | willingness of market participants to accept the MSaaS model; |
• | the changing and volatile U.S. and global economic environments, including as a result of the COVID-19 pandemic; |
• | timing of market introduction of competing products, and the sales and marketing initiatives of such products; |
• | press and blog coverage, social media coverage, and other publicity and public relations factors by others; |
• | lack of financing or other resources to successfully develop and commercialize our technology and implement our business plan; |
• | the level of commitment and support that we receive from our partners, such as local operators, cloud storage providers and medical AI software providers, as well as medical professionals such as radiologists; and |
• | coverage determinations and reimbursement levels of third party payors. |
• | reimbursement and insurance coverage; |
• | our inability to find agencies, dealers or distributors in specific countries or regions; |
• | our inability to directly control commercial activities of third parties; |
• | limited resources to be deployed to a specific jurisdiction; |
• | the burden of complying with complex and changing regulatory, tax, accounting and legal requirements; |
• | different medical imaging practice and customs in foreign countries affecting acceptance in the marketplace; |
• | import or export licensing and other requirements; |
• | longer accounts receivable collection times; |
• | longer lead times for shipping; |
• | language barriers for technical training; |
• | reduced protection of intellectual property rights in some foreign countries; |
• | foreign currency exchange rate fluctuations; and |
• | interpretations of contractual provisions governed by foreign laws in the event of a contract dispute. |
• | limiting payments for imaging services in physician offices and free-standing imaging facility settings based upon rates paid to hospital outpatient departments; |
• | reducing payments for certain imaging procedures when performed together with other imaging procedures in the same family of procedures on the same patient on the same day in the physician office and free-standing imaging facility setting; |
• | making significant revisions to the methodology for determining the practice expense component of the Medicare payment applicable to the physician office and free-standing imaging facility setting which results in a reduction in payment; and |
• | revising payment policies and reducing payment amounts for imaging procedures performed in the hospital outpatient setting. |
• | disputes among payors as to which party is responsible for payment; |
• | disparity in coverage among various payors; |
• | disparity in information and billing requirements among payors; and |
• | incorrect or missing billing information, which is required to be provided by the ordering physician. |
• | we may not be able to control the amount and timing of resources that our collaborators may devote to our technology; |
• | should a collaborator fail to comply with applicable laws, rules or regulations when performing services for us, we could be held liable for such violations; |
• | our collaborators may have a shortage of qualified personnel, particularly radiologists who can review the medical images generated by the Nanox System, especially as we deploy additional Nanox Systems and the volume of scans increases; |
• | we may be required to relinquish important rights, such as marketing and distribution rights; |
• | business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; |
• | our collaborators may default on their payments to us or fail to deliver standby letters of credit or financial guarantees, and it may be time consuming and difficult to enforce such payment obligations and obligations to provide standby letters of credit and financial guarantees in various jurisdictions, and we may be unsuccessful in enforcing such obligations; |
• | our collaborative arrangements are subject to conditionality, including receipt of regulatory clearance and material compliance with acceptance test protocol, among other things, for the Nanox.ARC; |
• | under certain circumstances, a collaborator could move forward with a competing product developed either independently or in collaboration with others, including our competitors; |
• | our current or future collaborators may utilize our proprietary information in a way that could expose us to competitive harm; |
• | our collaborators could obtain ownership or other control over intellectual property that is material to our business; and |
• | collaborative arrangements are often terminated or allowed to expire or remain unformalized by a written agreement, which could delay the ability to commercialize our technology. |
• | decreased demand for the Nanox System; |
• | injury to our reputation; |
• | costs of related litigation; |
• | substantial monetary awards to patients and others; |
• | loss of revenue; and |
• | the inability to commercialize future products. |
• | our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our product candidates are safe or effective for their intended uses or are substantially equivalent to a predicate device; |
• | the disagreement of the FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials or the interpretation of data from pre-clinical studies or clinical trials; |
• | serious and unexpected adverse effects experienced by participants in our clinical trials; |
• | the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required; |
• | our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; |
• | the manufacturing process or facilities we use may not meet applicable requirements; and |
• | the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval. |
• | untitled letters or warning letters; |
• | fines, injunctions, consent decrees and civil penalties; |
• | recalls, termination of distribution, administrative detention, or seizure of our products; |
• | customer notifications or repair, replacement or refunds; |
• | operating restrictions or partial suspension or total shutdown of production; |
• | delays in or refusal to grant our requests for future clearances or approvals or foreign marketing authorizations of new products, new intended uses, or modifications to existing products; |
• | withdrawals or suspensions of product clearances or approvals, resulting in prohibitions on sales of our products; |
• | FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and |
• | criminal prosecution. |
• | The U.S. federal healthcare program Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly and practices that involve remuneration to those who prescribe, purchase, or recommend medical devices, including certain discounts, or engaging consultants as speakers or consultants, may be subject to scrutiny if they do not fit squarely within the exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability. Moreover, there are no safe harbors for many common practices, such as educational and research grants. Liability may be established without a person or entity having actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws, including, without limitation, our proposed Subscription Model, and our advisory, consulting and royalty agreements with certain physicians who receive compensation, in part, in the form of stock or stock options. |
• | The federal civil False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made or used, a false record or statement material to an |
• | The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), imposes criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. In addition, HIPAA, as amended by HITECH, and their respective implementing regulations impose obligations, including mandatory contractual terms, on covered healthcare providers, health plans, as well as their business associates, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. |
• | The Physician Payment Sunshine Act, implemented as the Open Payments program, requires manufacturers of certain products reimbursed by Medicare, Medicaid, or the Children’s Health Insurance Program to track and report to the federal government payments and transfers of value that they make to physicians and teaching hospitals, certain other healthcare professionals beginning in 2022, group purchasing organizations, and ownership interests held by physicians and their families, and provides for public disclosures of these data. Manufacturers are required to submit annual reports to the government and failure to do so may result in civil monetary penalties for all payments, transfers of value and ownership or investment interests not reported in an annual submission, and may result in liability under other federal laws and regulations. |
• | Many states have adopted laws and regulations analogous to the federal laws cited above, including state anti-kickback and false claims laws, which may apply to items or services reimbursed under Medicaid and other state programs or, in several states, regardless of the payer. Several states have enacted legislation requiring medical device companies to, among other things, establish marketing compliance programs; file periodic reports with the state, including reports on gifts and payments to individual health care providers; make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities; and/or register their sales representatives. Some states prohibit specified sales and marketing practices, including the provision of gifts, meals, or other items to certain health care providers. |
• | strengthen the rules on placing devices on the market and reinforce surveillance once they are available; |
• | establish explicit provisions on manufacturers’ responsibilities for follow-up regarding the quality, performance and safety of devices placed on the market; |
• | improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; |
• | set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and |
• | strengthened rules for the assessment of certain high-risk devices, which may have to undergo an additional check by experts before they are placed on the market. |
• | Imposes an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States, which, through a series of legislative amendments, was suspended, effective January 1, 2016 and subsequently repealed altogether on December 20, 2019; |
• | Establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; and |
• | Implements Medicare payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. |
• | actual or anticipated fluctuations in results of operations; |
• | actual or anticipated changes in our growth rate relative to our competitors, as well as announcements by us or our competitors of significant business developments, changes in relationships with our target customers, manufacturers or suppliers, acquisitions or expansion plans; |
• | failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public, as well as variance in our financial performance from the expectations of market analysts; |
• | issuance of new or updated research or reports by securities analysts; |
• | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
• | additions or departures of key management or other personnel; |
• | our involvement in litigation, including the securities class-action; |
• | disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technology; |
• | announcement or expectation of additional debt or equity financing efforts; |
• | sales of our ordinary shares or other securities by us, our insiders or our other shareholders, including this offering, or the perception that these sales may occur in the future; |
• | the trading volume of our ordinary shares; |
• | market conditions in our industry; |
• | changes in the estimation of the future size and growth rate of our markets; and |
• | general economic, market or political conditions in the United States or elsewhere. |
• | our ability to develop and commercialize our technology and future products or services; |
• | developments or disputes concerning our product’s intellectual property rights; |
• | our or our competitors’ technological innovations; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new technologies or patents; |
• | failure to complete significant transactions or collaborate with vendors in manufacturing our product; and |
• | proposals for legislation that would place restrictions on the price of medical therapies. |
• | we have hired a corporate controller with U.S. GAAP and SEC reporting experience, an internal auditor (part-time) and a financial planning and analysis professional and are continuing to seek additional financial professionals to increase the number of qualified financial reporting personnel and to strengthen our finance department; |
• | we are selecting and implementing a new enterprise resource planning system; |
• | we are developing, communicating and implementing an accounting policy manual for our financial reporting personnel for recurring transactions and period-end closing processes; and |
• | we are establishing monitoring and oversight controls for non-recurring and complex transactions to ensure the accuracy and completeness of our consolidated financial statements and related disclosures. |
• | The initiation, timing, progress and results of our research and development, manufacturing and commercialization activities with respect to our X-ray source technology, the Nanox.ARC, the Nanox.CLOUD and the Nanox System; |
• | our ability to successfully demonstrate the feasibility of our technology for commercial applications; |
• | our expectations regarding the necessity of, timing of filing for, and receipt of, regulatory clearances or approvals regarding our technology, the Nanox.ARC and the Nanox.CLOUD; |
• | our ability to secure and maintain required FDA clearance and similar approvals from regulatory agencies worldwide and comply with applicable quality standards and regulatory requirements; |
• | our ability to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source; |
• | our expectations regarding the planned deployment schedule to meet our target minimum installed base of 1,000 Nanox Systems and final deployment of 15,000 Nanox Systems; |
• | the pricing structure of our products and services, if such products and services receive regulatory clearance or approval; |
• | the implementation of our business models; |
• | our expectations regarding collaborations with third-parties and their potential benefits; |
• | our ability to enter into and maintain our arrangements with third-party manufacturers and suppliers; |
• | our ability to conduct business globally; |
• | our expectations regarding when certain patents may be issued and the protection and enforcement of our intellectual property rights; |
• | our ability to operate our business without infringing the intellectual property rights and propriety technology of third parties; |
• | regulatory developments in the United States and other jurisdictions; |
• | estimates of our expenses, future revenues, capital requirements and our needs for additional financing; |
• | the rate and degree of market acceptance of our technology and our products; |
• | development relating to our competitors and the medical imaging industry; |
• | our estimates of the adoption of the MSaaS-based model by market participants; |
• | our estimates regarding the market opportunities for our technology and our products; |
• | our ability to attract, motivate and retain key executive managers; |
• | our ability to comply with data protection laws, regulations and similar rules and to establish and maintain adequate cyber-security and data protection; |
• | our ability to obtain third-party payor coverage or reimbursement of our Nanox System; |
• | our expectation regarding the maintenance of our foreign private issuer and emerging growth company status; |
• | the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to the development, deployment and regulatory clearance of the Nanox Systems; |
• | the costs incurred with respect to and the outcome of the securities class-action litigation we are currently subject to and any similar or other claims and litigation we may be subject to in the future; and |
• | our success at managing other risks and uncertainties, including those listed under “Risk Factors.” |
| | As of September 30, 2020 | |
($ in thousands, except share and per share amounts) | | | Actual |
Cash and cash equivalents | | | $239,978 |
Shareholders’ equity: | | | |
Ordinary Shares, par value NIS 0.01 per share, 100,000,000 shares authorized, actual; 45,567,848 shares issued and outstanding, actual issued | | | 129 |
Additional paid-in capital | | | 304,383 |
Accumulated deficit | | | (65,443) |
Total shareholders’ equity | | | 239,069 |
Total capitalization | | | $245,632 |
• | 5,001,825 ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding under the 2019 Equity Incentive Plan as of September 30, 2020, at a weighted average exercise price of $4.95 per share; |
• | 3,040,111 additional ordinary shares reserved for future issuance under our 2019 Equity Incentive Plan as of September 30, 2020; and |
• | 2,957,866 ordinary shares issuable upon the exercise of warrants to purchase ordinary shares as of September 30, 2020, at a weighted average exercise price of $16.33 per share. |
| | Nine months ended September 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands, except per share data) | ||||||||||
Consolidated Statement of Operations Data: | | | | | | | | | ||||
Research and development expenses | | | $6,258 | | | $708 | | | $2,717 | | | $672 |
Marketing expenses | | | 4,409 | | | 699 | | | 1,556 | | | 209 |
General and administrative expenses | | | 14,195 | | | 2,124 | | | 18,298 | | | 1,023 |
Operating loss | | | (24,862) | | | (3,531) | | | (22,571) | | | (1,904) |
Financial (income) expenses, net | | | (20) | | | 12 | | | (8) | | | 5 |
Net loss for the year | | | $(24,842) | | | $(3,543) | | | $(22,563) | | | $(1,909) |
Basic and diluted loss per ordinary share(1) | | | $(0.77) | | | $(0.14) | | | $(0.90) | | | $(0.09) |
Weighted average number of ordinary shares outstanding – basic and diluted(1) | | | 32,209 | | | 24,563 | | | 25,181 | | | 20,793 |
(1) | Basic loss per share and diluted loss per share are the same because outstanding options would be anti-dilutive due to our net losses in these periods. See Note 7 to our unaudited condensed consolidated financial statements and Note 11 to our audited consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share attributable to our ordinary shareholders. |
| | As of September 30, | | | As of December 31, | ||||
| | 2020 | | | 2019 | | | 2018 | |
| | ($ in thousands) | |||||||
Consolidated Balance Sheet Data: | | | | | | | |||
Cash and cash equivalents | | | $239,978 | | | $8,072 | | | $5 |
Working capital(1) | | | 235,731 | | | (10,627) | | | (6,540) |
Total assets | | | 245,632 | | | 11,871 | | | 1,855 |
Total liabilities | | | 6,563 | | | 20,649 | | | 8,239 |
Accumulated deficit | | | (65,443) | | | (40,601) | | | (18,038) |
Total shareholders’ equity (deficit) | | | 239,069 | | | (8,778) | | | (6,384) |
(1) | We define working capital as current assets less current liabilities. |
• | expenses incurred in connection with the development of our products, including payments made pursuant to agreements with third parties, such as outside consultants related to process development and manufacturing activities, as well as patent registrations; |
• | costs of components and materials, including payments made pursuant to agreements with third parties; |
• | costs of laboratory supplies incurred for each program; |
• | facilities, depreciation and other expenses, including direct or allocated expenses for rent and maintenance of facilities, as well as insurance costs; |
• | costs related to compliance with regulatory requirements; and |
• | employee-related expenses, including salaries, related benefits and share-based compensation expenses for employees engaged in research and development activities. |
• | the timing and progress of development activities; |
• | our ability to maintain our current research and development programs and to establish new ones; |
• | the receipt of regulatory approvals from applicable regulatory authorities without the need for independent clinical trials or validation; |
• | the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; |
• | our ability to establish new licensing or collaboration arrangements; |
• | the performance of our future collaborators, if any; |
• | establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; |
• | obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; |
• | launching commercial sales of our products, including the Nanox.ARC hardware and Nanox.CLOUD software, whether alone or in collaboration with others; and |
• | maintaining a continued acceptable safety profile of the products following approval. |
| | Nine months ended September 30, | | | |||||
| | 2020 | | | 2019 | | | Change | |
| | ($ in thousands) | |||||||
Operating expenses | | | | | | | |||
Research and development | | | $6,258 | | | $708 | | | $5,550 |
Marketing | | | 4,409 | | | 699 | | | 3,710 |
General and administrative | | | 14,195 | | | 2,124 | | | 12,071 |
Operating loss | | | (24,862) | | | (3,531) | | | (21,331) |
Financial (income) expenses, net | | | (20) | | | 12 | | | (32) |
Net loss | | | $(24,842) | | | $(3,543) | | | $(21,299) |
| | Nine months ended September 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
Research and Development Expenses: | | | | | ||
R&D - salaries and wages | | | $1,239 | | | $249 |
Share-based compensation | | | 2,512 | | | — |
R&D - professional services | | | 2,478 | | | 373 |
Other | | | 29 | | | 86 |
Total | | | $6,258 | | | $708 |
| | Nine months ended September 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
Marketing Expenses: | | | | | ||
Marketing – salaries and wages | | | $401 | | | $26 |
Marketing and business development | | | 1,164 | | | 673 |
Share-based compensation | | | 2,844 | | | — |
Total | | | $4,409 | | | $699 |
| | Nine months ended September 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
General and Administrative Expenses: | | | | | ||
G&A – salaries and wages | | | $2,010 | | | $129 |
Share-based compensation | | | 8,939 | | | — |
Management fee | | | 113 | | | 469 |
G&A – professional services | | | 1,626 | | | 964 |
Legal fees | | | 140 | | | 266 |
Rent and Maintenance | | | 425 | | | 56 |
Other | | | 942 | | | 240 |
Total | | | $14,195 | | | $2,124 |
| | Year ended December 31, | | | |||||
| | 2019 | | | 2018 | | | Change | |
| | ($ in thousands) | |||||||
Operating expenses | | | | | | | |||
Research and development | | | $2,717 | | | $672 | | | $2,045 |
Marketing | | | 1,556 | | | 209 | | | 1,347 |
General and administrative | | | 18,298 | | | 1,023 | | | 17,275 |
Operating loss | | | (22,571) | | | (1,904) | | | (20,667) |
Financial (income) expenses, net | | | (8) | | | 5 | | | (13) |
Net loss | | | $(22,563) | | | $(1,909) | | | $(20,654) |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
Research and Development Expenses: | | | | | ||
R&D - salaries and wages | | | $437 | | | $131 |
Share-based compensation | | | 661 | | | — |
R&D - professional services | | | 1,450 | | | 519 |
Other | | | 169 | | | 22 |
Total | | | $2,717 | | | $672 |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
Marketing Expenses: | | | | | ||
Marketing – salaries and wages | | | $200 | | | $— |
Marketing and business development | | | $439 | | | $59 |
Share-based compensation | | | 617 | | | — |
Other | | | 300 | | | 150 |
Total | | | $1,556 | | | $209 |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
General and Administrative Expenses: | | | | | ||
G&A – salaries and wages | | | $461 | | | $88 |
Share-based compensation | | | 14,967 | | | 115 |
Management fee | | | 534 | | | 429 |
G&A – professional services | | | 1,470 | | | 84 |
Legal fees | | | 417 | | | 165 |
Other | | | 449 | | | 142 |
Total | | | $18,298 | | | $1,023 |
| | Nine months ended September 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands) | ||||||||||
Net cash used in operating activities | | | $(8,178) | | | $(1,979) | | | $(5,524) | | | $(3,671) |
Net cash used in investing activities | | | (1,524) | | | (109) | | | (125) | | | (73) |
Net cash provided by financing activities | | | 241,656 | | | 9,300 | | | 13,861 | | | 3,684 |
Net change in cash and cash equivalents and restricted cash | | | $231,954 | | | $7,212 | | | $8,212 | | | $(60) |
• | seek regulatory approvals for any additional products; |
• | seek to discover and develop additional products; |
• | establish a manufacturing, sales, marketing, medical affairs and distribution infrastructure to commercialize the Nanox System for which we may obtain marketing approval and intend to commercialize on our own or jointly; |
• | hire additional quality control and scientific personnel; |
• | expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; |
• | maintain, expand and protect our intellectual property portfolio; and |
• | acquire or in-license other products and technologies. |
• | the scope, progress, results and costs of researching and developing the Nanox System; |
• | the costs, timing and outcome of regulatory review of the Nanox.ARC; |
• | the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for the Nanox System for which we receive marketing approval; |
• | commercial manufacturing, shipping, installation and deployment of the Nanox System and sufficient inventory to support commercial launch; |
• | the revenue, if any, received from commercial sale of the Nanox System, should the Nanox.ARC receive marketing approval; |
• | the cost and timing of hiring new employees to support our continued growth; |
• | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
• | the ability to establish and maintain collaborations on favorable terms, if at all; |
• | the costs incurred with respect to and the outcome of the securities class-action litigation we are currently subject to and any similar or other claims and litigation we may be subject to in the future; and |
• | the timing, receipt and amount of sales of the Nanox System, if any. |
| | Payment due by period | |||||||||||||
| | ($ in thousands) | |||||||||||||
Contractual Obligations | | | Total | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | More than 5 years |
Capital (Finance) Lease Obligations | | | — | | | — | | | — | | | — | | | — |
Operating Lease Obligations | | | $526 | | | $140 | | | $386 | | | — | | | — |
Purchase Obligations | | | — | | | — | | | — | | | — | | | — |
Total | | | $526 | | | $140 | | | $386 | | | — | | | — |
| | % | |
Computers | | | 10–33 |
Office furniture and lab equipment | | | 10–20 |
• | Estimated Fair Value of Share Price. Because our shares were not publicly traded prior to our initial public offering, we estimated the fair value of options granted to non-employees, employees, officers and directors at the date of grant using a number of objective and subjective factors consistent with the methodologies outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Companies Equity Securities Issued as Compensation, and based on independent third-party valuations that we obtained on a periodic basis. Following our initial public offering, our ordinary shares are publicly traded, and therefore we currently base the value of our ordinary shares on their market price. |
• | Risk-Free Interest Rate. We base the risk-free interest rate on the implied yield on currently available U.S. treasury bonds with a remaining term equal to the expected life of our options. |
• | Dividend Yield. We base dividend yield on our historical experience and expectation of no future dividend payouts. We have historically not paid cash dividends and have no foreseeable plans to pay cash dividends in the future. |
• | Expected Volatility. We base expected share price volatility on the historical volatility of the ordinary shares of comparable companies that are publicly traded. |
• | Expected Term. The expected term of options granted represents the period of time that options granted are expected to be outstanding. As we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, the expected term was determined using the simplified method, which takes into consideration the option’s contractual life and the vesting periods. |
Level 1: | Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. |
Level 2: | Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. |
Level 3: | Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
• | Digital X-ray source with the potential to significantly reduce the costs of medical imaging systems. We believe our digital X-ray source technology will allow us to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source without sacrificing imaging quality. A lower cost device has the potential to substantially increase medical imaging availability and improve accessibility of early-detection services broadly across the globe. |
• | Technology designed to improve upon the industry standard with integrated radiology diagnostics via a cloud-based MSaaS platform. The Nanox.ARC employs our novel digital X-ray source that is designed to be energy-efficient, smaller and can be more precisely controlled compared to existing X-ray source. By integrating the Nanox.CLOUD, we believe the Nanox System could provide a streamlined process where each scanned image is uploaded automatically to the cloud system and matched to a human radiology expert and decision assistive AI algorithms to provide scan reviews and diagnostics in a significantly shorter time frame than current diagnostics, which could substantially reduce wait-times for imaging results and increase early detection rates compared to currently employed imaging process protocols. |
• | Business model designed to increase the availability of medical imaging. Our primary business model is based on a pay-per-scan pricing structure as opposed to the capital expenditure-based business model currently used by medical imaging manufacturing companies. We believe our business model will significantly reduce the price per scan compared to the current global average cost of $300 per scan, and has the potential to commoditize medical imaging services at prices that are affordable to a greater number of people. We believe our MSaaS business model has the potential to expand the total size of the X-ray-based medical imaging market. |
• | Secure regulatory clearance for our medical imaging system. We are taking a multi-step approach to the regulatory clearance process. As a first step, we submitted a 510(k) premarket notification for a |
• | Jumpstart the MSaaS-based medical imaging market with strategic partnerships. We plan to produce and deploy an initial wave of approximately 15,000 Nanox.ARC units over the next three to four years to jumpstart the MSaaS-based medical imaging market. We have entered into a contract manufacturing agreement with FITI, a subsidiary of Foxconn for the commercial production and assembly of the Nanox.ARC and we have entered into commercial agreements with strategic regional partners for the deployment, operation and marketing of the Nanox System broadly across the globe, including in the United States and certain countries in Asia, Europe, Africa, Latin America and Australia. Specifically, we have entered into nine multi-year MSaaS agreements with partners for the deployment of Nanox Systems in various regions that obligate the counterparty to obtain standby letters of credit for the amount of the agreed minimum annual fee. See “—Commercial Agreements—MSaaS Agreements” and “Risk Factors—Risk Related to our Business—Any collaborative and MSaaS arrangements that we have established or may establish in the future may not be successful or we may otherwise not realize the anticipated benefits from these collaborations.” In addition, we have entered into a collaboration agreement with USARAD for deploying and operating the Nanox System and establishing connections with the radiologist community in the United States. We plan to work with these partners to achieve local integrations into health maintenance organizations, electronic health record systems, payment methods and insurance coverage companies. In addition, we have entered into collaboration agreements with AI partners and image-transfer partners and are actively seeking collaboration opportunities, as we anticipate an industry shift to a digital and cloud-based subscription model will bring more digital healthcare disruptors into the market. See “—Commercial Agreements—Collaboration Agreements—Collaboration Agreements with our AI Partners” and “—Collaboration Agreement with our Image-Transfer Partner.” |
• | Maximize the commercial potential of our technology with simultaneous business models. We plan to commercialize our novel X-ray source technology by pursuing three simultaneous business models, which we believe will provide us the flexibility and long-term sustainability to monetize our technology. |
• | Subscription Model: In certain countries, if permitted by the laws in the applicable jurisdiction, our primary sales strategy will be based on a pay-per-scan pricing structure, where we expect to sell |
• | Sales Model: In certain countries, to accommodate specific local regulatory requirements, we expect to sell the Nanox.ARC for a one-time charge at a price that is substantially less than current market offerings. |
• | Licensing Model: For certain medical imaging market participants, we plan to tailor our X-ray source technology to their specific imaging systems to replace the legacy X-ray source or to license our X-ray source technology to them to develop new types of imaging systems. We expect to charge a one-time licensing fee upfront and receive recurring royalty payments for each system sold. |
• | Leverage the Nanox System to bring added value to our collaborators. We expect that the Nanox System will enable us to accumulate a significant number of medical images, which have the potential to be used by collaborators, such as medical AI-analytics companies, through machine learning algorithms to increase the probability of early disease detection. |