The FDA 510(k) clearance process is the most widely used method of obtaining FDA clearance for medical devices in the US. When a company submits a 510(k) notification, it is attempting to show that their product is “substantially equivalent” to a previously cleared product, which is called a predicate device.
Compared to the full PMA process, the 510(k) process is generally faster, less expensive, and more predictable because it does not require large scale clinical trials. While approval does mean that the company will be allowed to commercially distribute and sell their product in the US, and thus gain access to revenue, the approval is not without significance.
- Submission Type: Premarket Notification (510(k))
- Average FDA Review Timeline: ~170–200 days
- Outcome: Eligibility for commercial launch in the U.S.
- Market Impact: Often serves as a major valuation milestone
Historically, FDA clearance has represented a major inflection point for small- and mid-cap healthcare companies moving from a development-stage risk to a commercialization-stage execution — and the markets have historically priced this change aggressively.
Why FDA Decisions Are Important to Investors
FDA clearance is often a binary catalyst for small- and mid-cap healthcare companies. Before the clearance, the companies’ valuation may have included significant amounts of regulatory uncertainty, limiting the participation of institutional investors. After the clearance, the regulatory uncertainty collapses, and the companies’ valuation will be significantly influenced by their revenue potential, partnerships, and scalability.
- Prior to clearance: High uncertainty, low institutional participation
- After clearance: Lower uncertainty, larger pool of investors, better liquidity, and higher multiples
There are many historical examples of how quickly the stocks of medical device and medtech companies have appreciated after FDA clearance. In some instances, the stock price has increased within days of the FDA’s decision.
Company Spotlight: AIML
AIML has filed a 510(k) application with the FDA in May 2025, putting the company in the typical review timeframe through 2026. On average, AIML is now entering the late stage of the regulatory review process and the outcomes of this review will start to materialize and drive changes in the markets expectations.
- FDA filing date: May 2025
- Regulatory pathway: FDA 510(k)
- Review window: ~170–200 days (average)
- Status: Waiting for FDA decision
In recent months, there has been increasing media coverage of AI- and software-enabled medical devices due to several FDA clearances in this area. These clearances were seen as evidence of the FDA’s increasing comfort level with these technologies, and the increased media coverage of the space has placed additional focus on AIML’s late-stage FDA review timeline, with regulatory progress being seen as the primary near-term catalyst for the company.
For AIML, receiving FDA clearance will not only validate the technology that the company has developed but will also allow the company to enter the U.S. market directly — a potential step change in the company’s addressable revenue and strategic relevance.
Two Other Companies Undergoing FDA 510(k) Reviews
Similar to AIML, several other peer companies are currently undergoing the same regulatory timelines as AIML, highlighting the broader sector momentum and investor interest in late-stage FDA catalysts.
GE Healthcare – Revolution Vibe CT (510(k) Pending)
GE Healthcare announced that its Revolution Vibe CT system had been submitted for FDA 510(k) clearance following receipt of CE Marking for the product. The system incorporates advanced automation and AI-based imaging workflows for cardiac and whole body CT.
- Timeline for submission: 2025
- Regulatory pathway: FDA 510(k)
- Geographic context: Expansion of the U.S. market following EU clearance
- Investment thesis: FDA clearance would unlock large-scale commercialization of the Revolution Vibe CT system in the U.S. within GE Healthcare’s imaging ecosystem and would further solidify the use of AI in diagnostic applications.
Leo Cancer Care – Marie Particle Therapy System (510(k) Pending)
Leo Cancer Care announced that its Marie upright particle therapy system is 510(k) pending with the FDA, which is a key regulatory step for the company’s plan to deploy the system clinically in the U.S. The system provides a new way to position patients upright during therapy, which could reduce the required footprint of the system and lower the cost of treatment.
- Timeline for submission: 2025
- Regulatory pathway: FDA 510(k)
- Focus area: Upright particle therapy for oncology
- Investment thesis: Clearance would mark a pivotal event in the development of radiation therapy delivery, and open up the use of Leo’s Marie system to hospitals and cancer centers in the U.S.
These companies provide a realistic example of what AIML’s experience could look like, illustrating how both established multinational companies and emerging innovative companies are using FDA clearance as a means to enter the U.S. commercial marketplace.
Historical Examples: How Stocks React Following FDA Clearance
History has shown that FDA 510(k) clearance can serve as a significant and immediate re-rating event, especially for medical device and medtech companies that have moved from a regulatory risk to a commercial execution risk.
Examples of Documented Post‑Clearance Share‑Price Re‑Ratings
- Outset Medical (NASDAQ: OM): Stock price surged ~56% in a single trading day, rising from ~$1.92 to ~$4.89 after the FDA granted 510(k) clearance for the TabloCart accessory to Outset Medical’s Tablo Hemodialysis System. The increase in stock price reflects renewed confidence in the company’s ability to execute on its commercial plans and expand adoption of the Tablo Hemodialysis System.
- AngioDynamics (NASDAQ: ANGO): AngioDynamics shares rose ~10% to approximately $6.66 immediately following FDA 510(k) clearance of its AlphaVac F18 system. Importantly, the increase in the company’s stock price occurred while regulatory uncertainty was removed; the follow-on increase in the company’s stock price was driven by expanding indications for treatment in pulmonary embolism and greater clarity around the company’s U.S. commercialization plans.
- Becton, Dickinson and Company (NYSE: BDX): Although BDX is a large-cap company, BDX shares rose ~5.7% intraday following FDA 510(k) clearance for enhancements to its Alaris Infusion System. The increase in the company’s stock price to new multi-year highs highlights that even well-established medtech companies can experience significant and rapid re-rating of their stock prices as a result of regulatory wins tied to their large installed bases.
- Ceribell (NASDAQ: CBLL): Ceribell shares rose ~4.9% immediately following clearance of its AI-powered delirium monitoring algorithm. This increase in the company’s stock price demonstrates investor interest in AI/ML-enabled medical devices and represents a rapid re-pricing of regulatory and commercialization risk.
The pattern illustrated above is common: FDA clearance eliminates a major source of uncertainty that impacts investor expectations, and subsequently leads to price discovery. Follow-on re-rating of the stock price occurs over time as the company’s revenue visibility, partnership opportunities, and institutional interest improve.
Key Variables Influencing Post‑FDA Share‑Price Performance
- Size of the company prior to clearance and valuation
- State of commercial readiness at the time of clearance
- Size of the market and clinical importance of the approved device
- Size of the market of the approved device
- Speed of commercial rollout
- Execution of the management team after approval
Conclusion
FDA 510(k) decisions represent one of the clearest regulatory catalysts in healthcare investing. As AIML awaits its decision from the FDA, the company is at a pivotal moment in the regulatory process where the resolution of the FDA’s review could fundamentally change AIML’s valuation.
As demonstrated by history, FDA clearance does not ensure long-term success — however, it often represents the moment that markets begin to price in growth rather than risk.
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website.
