Good morning, Armchair Army,
Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
Alright, so the worst fears have been confirmed.
The FDA has issued a Not Substantially Equivalent determination on EchoSolv HF’s initial 510(k) application.
(Source, EIQ)
Plain English…
EchoSolv's heart failure detection algorithm is not cleared for sale in the US.
… Under its current application.
So, what is the pathway from here?
Diplomacy?
Appeal?
Submit a new 510(k)?
Or pursue a different pathway?
Today, I’m breaking down the different FDA pathways for medical devices and where EIQ could go next.
But first…
The Pulse Check
I watched Emyria's (ASX: EMD) full end-of-year earnings call. (Watch here)
🪑 This slide shows how far Emyria has come in just 12 months.
Big FY27 ahead.
Nice job, team.
OncoSil Medical’s (ASX: OSL) contract manufacturer in Australia has achieved ISO 13485 certification. (OSL)
🪑 Full commercial production of the OncoSil device at Macquarie Park by the end of 2Q FY27.
EchoIQ (ASX: EIQ) confirms that the FDA has issued a Not Substantially Equivalent determination for their 510(k) application. (EIQ)
🪑 Not good.
Radiopharm Theranostics (ASX: RAD) announces that its Phase 1 trial of RAD301 demonstrated safety and biodistribution, with significant tumour uptake in pancreatic cancer. (RAD)
🪑 Nice result.
Not sure why this one wasn’t marked as price sensitive.
Biome Australia (ASX: BIO) announces launch of two new probiotic products in H1 FY27. (BIO)
REPORT: Novartis’ US$12B Avidity acquisition hits Phase 3 speed bump as dystrophy drug disappoints. (BioSpace)
🪑 Imagine spending US$12 billion on an acquisition only for the company’s lead asset to fail its Phase 3 trial 12-months later.
… and I get annoyed when I lose $20 at Keno.
Cash Injection
Neurizon Therapeutics (ASX: NUZ) receives a multimillion-dollar US National Institutes of Health grant to fund an Expanded Access Program for its ALS product. (NUZ)
🪑 Very strong validation of NUZ’s product. I’m meeting with the NUZ team today and will share the full story later as part of my Biotech 165 Challenge.
Under the Microscope
So… how does a company get a medical device approved?
The FDA sorts every device into one of three risk classes.
Class I is low risk: bandages, tongue depressors, manual stethoscopes.
Most of these don't need FDA clearance to be sold.
They still follow basic rules for manufacturing, labelling, and registration, but most are exempt from premarket review.
Class II is moderate risk: this is where EchoSolv HF was trying to sit, alongside things like infusion pumps and diagnostic software.
Class III is high risk: pacemakers, heart valves, anything implanted or life-sustaining.
There are essentially 5 pathways to get a medical device onto the market.
Class I: Exempt
Most Class I devices don't need to submit an application before they can be sold.
The FDA considers the risk low enough that its general manufacturing, registration and labelling controls are sufficient.
Think bandages, examination gloves and manual surgical instruments.
Class II: 510(k) Clearence
For a 510(k), you need to show that your device is substantially equivalent to something already on the market.
That existing product is called a predicate device.
Predicate = the device you're claiming to be equivalent to.
The new device must have the same intended use and either the same underlying technology or different technology that doesn't raise new questions around safety and effectiveness.
This was the approval pathway the EIQ followed, and the FDA said “No”.
The Not Substantially Equivalent ruling essentially is the FDA saying:
“The device isn't equivalent to what EIQ compared it against”
There are several possible reasons.
Wrong or mismatched predicate.
A new intended use that the predicate doesn't cover.
New technology that raises safety or effectiveness questions the predicate never had to answer.
Or, simply, not enough data to back the equivalence claim.
I’ve listened to the full investor call this morning, and without seeing the FDA decision, it will be hard to determine the actual reason.
The devil’s in the details when determining whether a resubmission has a good chance of clearance.
Class II: De Novo
De Novo exists specifically for genuinely novel devices that don't have a clean predicate to compare against.
This is the pathway EMVision (ASX: EMV) is pursuing with its emu brain scanner for stroke.
I wrote about EMV last month:
A De Novo application asks the FDA to approve a completely new type of device.
There is no predicate to lean on.
So the company must generate clinical evidence showing the device is safe and effective for its intended use.
A 510(k) asks:
“Is this device substantially equivalent to something the FDA has already cleared?”
De Novo asks:
“Does this device work from scratch?”
That makes the comparison to an existing predicate the central risk in a 510(k).
For De Novo, the clinical evidence (the Pivotal Study in the case of EMV) carries more of the risk.
If approved, that device can then become the predicate for future 510(k) applications.
Class II/III: Humanitarian Device Exemption
A Humanitarian Device Exemption, or HDE, is for devices that treat or diagnose conditions affecting no more than 8,000 people per year in the US.
It’s the medical device equivalent of “orphan drugs”.
Because the population is so small, proving effectiveness through a conventional clinical trial may not be practical.
Instead, the company must show the device is safe and that its probable benefit outweighs its risks.
Class III: Premarket Approval
Premarket Approval, or PMA, is the closest thing to a drug approval in the device world.
A company must provide rigorous evidence that the device is safe and effective for its intended use.
This is generally reserved for higher-risk devices that are implanted, life-sustaining or capable of causing serious harm if they fail.
Think EBR Systems (ASX: EBR) and its WiSE leadless pacemaker technology.
EBR received FDA approval through the PMA pathway in April 2025.
What are the options for EIQ?
Essentially, there are four options.
(These were discussed in the investor call. Note: CEO Dustin Hains did NOT mention the De Novo pathway… but I want to include it anyway)
Resolve this through diplomacy
Before launching a formal appeal, EIQ can sit down with the FDA and try to resolve the disagreement directly.
That may involve meetings with the original review team, discussions with senior FDA staff or mediation through the CDRH Ombudsman.
The Ombudsman doesn't overturn the decision.
Its role is to clarify the issues, mediate disagreements and help the company and FDA find a pathway forward before things escalate into a formal appeal.
Formally Appeal
EIQ can challenge the determination through the FDA's supervisory-review process if it believes the FDA got parts of the decision wrong.
Management's comment that its "view differs on certain aspects" suggests this option is at least being considered.
Go again with a 510(k)
EIQ could submit another application with a different predicate, additional data, narrower claims, or software changes that answer the FDA's questions.
Go for De Novo.
If EchoSolv HF is genuinely novel and there isn't an appropriate predicate, EIQ could ask the FDA to create a new device category through the De Novo pathway.
This will be the biggest setback, as it would require the most new data - it wasn’t discussed in the investor call, however.
The Armchair Take
One point the CEO mentioned was that this was a setback, not a failure.
The 510(k) application failed. But this is not like a Phase 3 drug failure.
Medical devices can be changed…
The claims can be narrowed…
The algorithm can be adjusted…
More data can be generated…
… And the application can be resubmitted.
But there will be delays.
Potentially significant ones.
Additional studies may also need to be completed before EIQ can return to the FDA.
The questions are now…
WHAT pathway forward will EIQ take?
HOW MUCH TIME and CAPITAL will this require?
… and then finally.
WILL IT BE ENOUGH to get it cleared by the FDA?
Interesting times ahead.
See you all tomorrow,
The Armchair Analyst
