Valeritas has filed to raise $50 million by listing its stock on Nasdaq. The disposable diabetes device maker made an aborted attempt to IPO two years ago. Since then, it has reversed merged into a company on the OTCQB Marketplace to provide a platform for its latest tilt at Nasdaq.
This time around Valeritas has dialled down its goals—the 2015 IPO filing was for $90 million—in a bid to get the cash it needs to deliver a shot in the arm to its commercialization efforts. The main focus of the company is V-Go, a disposable, mechanical device that delivers a 24-hour continuous subcutaneous infusion of insulin and on-demand bolus dosing for Type 2 diabetics.
Valeritas got FDA clearance to sell V-Go in 2010, since when it has brought the product to market and secured broad reimbursement through Medicare Part D—an outpatient drug benefit with lower out-of-pocket expenses than Part B—and commercial payors.
Despite that, sales of V-Go have grown slowly. When Valeritas filed to IPO in February 2015, it had revenues of $9.5 million for the first nine months of the year. Sales for the first nine months of this year clocked in at $14.8 million, putting Valeritas on course to rack up $19.5 million in 2016.
While sales are moving in the right direction, the numbers are small compared to Valeritas’ losses. The company chalked up a net loss of $67.2 million in 2015, bringing its accumulated deficit up to $377.9 million. Valeritas must now persuade investors to bet a further $50 million on its ability to improve its fortunes and enact a strategy designed to take it to cash flow break even.
The commercial strategy being pursued by Valeritas has undergone an overhaul since it last filed for an IPO. Back then, Valeritas had more than 60 sales reps and plans to use the IPO cash to expand into new territories. With costs continuing to outstrip revenue and no IPO cash to boost its operation, Valeritas slashed its commercial operation one year ago, leaving it with a team of 33 reps. Valeritas looks set to grow sales this year despite the reduction in headcount.
Having stripped back its commercial team, Valeritas is now looking to the IPO money to fund the expansion of its sales and marketing infrastructure. The company is yet to say how much cash it will allocate to each of its priority areas, but the sales and marketing expansion is the first item on its wish list. Valeritas wants to set aside some of the money for development of follow-up devices that add connectivity and support for prefilled insulin cartridges, but expects its funds to fall short of the amount needed to bring the new products to market.
Valeritas is currently traded on the OTCQB Marketplace. The company gained that listing in 2016 through a reverse merger with Cleaner Yoga Mat.