Alfred Mann's Second Sight $32M IPO for 'bionic eye' soars on Wall Street

Second Sight's Argus II System--Courtesy of Second Sight

Alfred Mann's ambitions are anything but modest. He aims to transform insulin administration for diabetics with Mannkind ($MNKD) and its inhaled formulation, flying in the face of a host of skeptics who remember the prior market failure of Pfizer's ($PFE) inhaled insulin, Exubera. With one of his latest companies, Second Sight, Mann is aiming even higher--to help the blind see. 

Investors aren't hesitating to buy into the company after the relatively small offering. In its first day of trading on Nov. 19, Second Sight gained a whopping 122% to hit a share price of $19.97 and a market cap of about $723 million. That gives it the eighth biggest one-day IPO pop for a company in any sector in 2014, according to data from Renaissance Capital.

The IPO sold the anticipated 3.5 million shares at the expected $9 price to raise $31.5 million. That price initially valued the company at $326 million.

The startup's retinal prosthesis is the first cleared by any regulatory agency. The FDA approved the device in 2013 for patients who have lost vision due to retinitis pigmentosa (RP); it received a CE mark in 2011 to treat patients who have lost vision due to outer retinal degeneration. The most common causes of the latter are RP and age-related macular degeneration.

The current version of the implant is the Argus II System and it has been implanted in about 90 patients. It uses electrical stimulation to bypass nonfunctioning photoreceptor cells to directly stimulate viable retinal cells. This works by converting video images from a miniature camera housed in a patient's glasses to a series of electrical pulses that are transmitted wirelessly to 60 minuscule electrodes implanted on the surface of the retina. The device enables some functional vision.

About 1.5 million people worldwide have RP with an estimated 100,000 in the U.S., according to the company's filings. But for AMD the figures are much higher--about 20 million to 25 million globally with about 2 million in the U.S.

Second Sight plans to expand its indication into AMD in the U.S. But its ultimate goal is to treat virtually all blind patients.

In AMD, the startup anticipates a feasibility trial starting late this year. It then plans to begin a larger scale efficacy trial in early 2016, aiming for FDA approval in 2019. This clinical research is expected to cost about $4.5 million.

The device implanted around the eye--Courtesy of Second Sight

Up next is an implant to provide stimulation directly to the visual cortex of the brain, which the startup has already dubbed Orion I. This system "we expect will be able to treat nearly all forms of blindness," Second Sight said in the prospectus it filed with the SEC. This bypasses the optic nerve to stimulate the part of the brain responsible to vision.

Orion I is in development and the startup hopes to be in human testing in late 2016. The company expects preclinical development alone for this implant to cost $5 million. The startup estimates a technology like this could be applicable to 5.8 million people worldwide, about 575,000 of them in the U.S. and 1.1 million of them in the EU.

Alfred Mann personally holds the largest stake in Second Sight of 42% ahead of the IPO; Versant Ventures is also a major shareholder with about 18% pre-IPO.

Mann has founded a number of companies including medical device startups such as infusion pump company MiniMed that sold to Medtronic ($MDT) for about $3.3 billion in 2001 and neuromodulation player Advanced Bionics, which Boston Scientific ($BSX) acquired in 2004 for $740 million.

Since its 1998 inception, Second Sight has received more than $29 million in grants from U.S. federal agencies including the National Institutes of Health, National Eye Institute and Department of Energy.

- here is the latest SEC prospectus
- and here is coverage from Bloomberg and the Business Journal