Given the rise of exciting new therapeutic modalities ranging from mRNA to gene editing, investors would be forgiven for overlooking opportunities in medical devices. They might be worth a closer look though.

In this episode of the 7investing podcast, the team's health-care trio provide a high-level overview of the regulatory environment for medical devices, describe why and how genetic tests are regulated as medical devices, and provide three examples of companies in the space and how they fit within the regulatory landscape.

Medical devices are regulated by the U.S. Food and Drug Administration (FDA) within three categories:

Although Class I and Class II medical devices can be submitted through the 510(k) process and only need to show equivalence to a predicate ("existing") device, Class III medical devices must be submitted through the more rigorous premarket approval (PMA) process that often requires a clinical trial. Unlike a drug candidate that requires at least three separate clinical trials (phase 1, phase 2, and phase 3), a Class III medical device often only requires a single clinical trial.

It seems odd, but genetic tests and liquid biopsies are also regulated as medical devices. These product candidates are categorized into one of the classes above, which typically impacts how and where they can be used. The three designations of genetic tests include:

Finally, the podcast concludes with three different examples of medical device companies: