Spectral MD to trade on Nasdaq through SPV merger plans

Artificial intelligence (AI) medical diagnostics developer Spectral MD announced plans on Tuesday to combine with Rosecliff Acquisition Corp I - a special purpose acquisition company listed on Nasdaq.

The AIM-traded firm said the combined company, which was expected to operate under the name Spectral AI and listed on Nasdaq under the symbol MDAI, would continue to be led by Spectral MD's founder and chief executive officer Wensheng Fan, with current Spectral MD shareholders rolling 100% of their equity into the transaction.

It said the proposed transaction, which would value Spectral MD at an estimated enterprise value of $170m, was expected to provide the combined company with better access to new sources of capital, enhance company efforts for broad commercialisation opportunities in the US, EU, and UK, and accelerate readiness for material potential US federal procurement contracts.

Spectral MD's FDA breakthrough-designated DeepView AI wound diagnostics platform, which uses proprietary algorithms to predict wound healing, would be the main focus of the combined firm’s efforts.

The net proceeds from the proposed transaction would be used to accelerate the development of additional pipeline clinical applications, and improve readiness for potential federal contracts.

Spectral MD had previously been awarded more than $125m of non-dilutive contracts from the US government to develop DeepView for the healing assessment of burns.

The company said it believed there would be a “significant” federal procurement contract for the commercialisation of DeepView.

It said the proposed transaction was expected to be completed in the third quarter, subject to the approval of both Rosecliff and Spectral MD shareholders, as well as other customary closing conditions.

“This transaction is an excellent strategic move for Spectral MD,” said chief executive officer Wensheng Fan.

“For the past 10 years, the Spectral MD team and our key partners have been developing cutting-edge AI solutions that have demonstrated tremendous promise and are now on the cusp of delivering for healthcare providers and patients.

“Spectral MD solves an unmet need in healthcare that goes far beyond current solutions by leveraging relevant AI technology to enhance the diagnostic accuracy of the healthcare provider, improve patient outcomes and significantly lower costs.”

Fan said the Nasdaq listing would see the company positioned to capitalise on US federal procurement contracts, its planned FDA and CE-mark submissions in 2023 and 2024, and its commercialisation roadmap for burn, DFU, 3D wound size measurement, as well as support the advancement of additional pipeline clinical applications.

“I am excited to be working with the Rosecliff team in executing our vision of transforming patient care and improving clinical outcomes.”

At 1400 BST, shares in Spectral MD Holdings were up 38.57% at 38.8p.

Reporting by Josh White for Sharecast.com.