Disposable insulin device maker Valeritas files to raise up to $90M in an IPO

The V-Go device--Courtesy of Valeritas

Valeritas hasn't had much luck so far building a market for its V-Go disposable insulin delivery adhesive device. It was cleared by the FDA in 2010, launched in the U.S. in 2012 and is broadly reimbursable, yet Valeritas only had $9.5 million in revenues during the first 9 months of 2014.

The company hopes to remedy that situation with the marketing boost that an IPO could provide; the company has filed to raise up to $90 million. The startup already has lost $295 million since its 2006 inception and experienced a recapitalization last year with its $27.4 million Series D.

The slow revenue ramp has hurt the company with investors. In 2013, Valeritas secured $100 million in debt from Capital Royalty Partners. It drew down $50 million of that in August 2013, but was unable to meet the 2014 revenue milestones in order to gain access to the remaining half of the money.

Valeritas believes that its V-Go could be marketed in the near term to any of the roughly 5.8 million Type 2 diabetics, including about 4.6 million patients who have been unable to achieve their target blood glucose goal. Thus far, however, only about 12,000 patients were using V-Go at Sept. 30, with about 58,000 V-Go prescriptions filled in the 9 months prior.

The startup said that more than 70% of commercially insured lives in the U.S., including more than 60% of lives covered by Medicare, are covered for V-Go. The device is covered under Medicare Part D, which has a lower out-of-pocket expense than Medicare Part B. Over 90% of V-Go prescriptions were filled at pharmacies in 2013 and the last 9 months of 2014. The device's supply goes almost entirely through three main wholesale distributors McKesson, Cardinal Health and AmerisourceBergen ($ABC), which accounted for 37%, 30% and 23%, respectively, of product shipments.

V-Go is a small, disposable insulin delivery device that adheres to the skin for 24 hours. During that period, it is set for preset background, basal insulin dosing and can be used for bolus dosing around mealtime. This eliminates the use of syringes, pens or insulin pumps to deliver insulin.

The device is available in three different dosages, depending on patient need. A patient requires two separate prescriptions from a physician to use the V-Go, one for the device itself and the other for fast-acting insulin in vials such as Humalog or Novolog. The insulin vials are used by the patient to fill the V-Go. The V-Go is 2.4 x 1.3 x 0.5 inches and weighs about one ounce when filled with insulin. It is attached via adhesive to tissue on the abdomen or the back of the arm.

Investors in the Series D round included Welsh, Carson, Anderson & Stowe, MPM Asset Management, Pitango Venture Capital and Onset Ventures.

Insulin device makers haven't exactly been welcome on Wall Street. Last week, insulin pump maker Asante Solutions postponed its $49 million IPO, meanwhile another insulin pump company Tandem Diabetes Care ($TNDM) that had its market debut in November 2013 has shed almost half its share price in the last year.

- here is the SEC filing

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