A pair of med tech companies--Intersect ENT and Ocular Therapeutix--are on the road and ready for an IPO this week. Both of these companies have high-profile corporate investors, Medtronic ($MDT) and Baxter ($BAX), respectively. They are trying to cash in on the recently renewed, public investor interest in life science IPOs to raise the money to market FDA-approved products and advance pipelines.
On July 23, Intersect ENT hopes to go public and raise about $60 million through the sale of 5 million shares at a price range of $11 to $13. At the mid-point of that range, the startup would be valued at $291 million.
To set the stage on the company's IPO road show, Intersect ENT President and CEO Lisa Earnhardt likened the disruption and advancement experienced in cardiovascular surgical devices to what she expects to see for sinus surgery. Intersect ENT is a drug/device combo developer with a focus on ear, nose and throat applications.
Its drug-eluting implants Propel and Propel mini were approved in 2011 and 2012, respectively for surgical use in patients with chronic sinusitis. These are the only drug-eluting implants approved for patients with chronic sinusitis, the company said. And it also noted that current treatment is often ineffective, as in the case of nasal steroids, or introduces off-target issues, as in the case of oral steroids. The company argues that sinus surgery without its product can result in inflammation and scar tissue that can ultimately render it ineffective.
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| Intersect's Propel sinus implant, the size of a quarter--Courtesy of Intersect ENT |
The implants are inserted during surgery and are designed to hold open the shape of the surgically enlarged sinus while releasing an anti-inflammatory steroid, only to be fully absorbed into the body within 30 days. Ultimately, Intersect ENT hopes to expand into additional ear, nose and throat indications, particularly implants that can be used in a physician's office rather than the hospital setting.
Intersect ENT had a $34 million annualized revenue run rate at the end of the second quarter. It hopes to address an ENT physician population of about 7,500 who perform sinus surgeries, but is currently reaching only about 1,000 of those.
About 12% of the U.S. adult population, or 29 million people, have chronic sinusitis with an average patient age of 40. The cost of an implant is $695, with the two used per procedure running about $1,400. There were about 540,000 surgeries for chronic sinusitis patients in 2013.
Since it was founded in 2003, Intersect ENT raised $91.4 million in equity from a group that includes A-list venture and corporate investors: U.S. Venture Partners (22.7% pre-IPO stake), Kleiner, Perkins, Caufield & Byers (22.3%), PTV Sciences (14.7%), Norwest Venture Partners (12.9%), and Medtronic (6.8%).
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ReSure Sealant is applied directly to the cornea.--Courtesy of Ocular Therapeutix |
Another med tech IPO up for this week is for Ocular Therapeutix. While Ocular has big pipeline ambitions, it also has a niche product: ReSure Sealant to prevent post-operative leakage after cataract surgery. The sealant was approved by the FDA via a medical device pathway in January.
The startup also is applying its proprietary hydrogel technology to existing off-patent ocular therapeutics in order to improve upon the usual options of eye drops or injections. Several blockbusters have come out of ophthalmology, including, most recently, Regeneron's Eylea to treat wet AMD. In fact, Ocular has an early-stage anti-VEGF candidate for wet AMD that is intended to push out the insertion of a transparent gel into the eye every 6 months, from the one-to-two-month timeframe for Eylea injections.
"We can basically do chemistry on top of living tissue," Ocular President and CEO Amar Sawhney said on the company's road show. "It can be designed to be soft-tissue like, to be absorbed in days, weeks or months and we can specifically design therapies for particular disease states."
The company hopes to raise about $75 million by selling 5 million shares at $14 to $16 each. That would give it a market valuation of $325 million per share.
Existing shareholders have committed to buying about $12.7 million in the IPO. Venture investors in Ocular Therapeutix include Versant Ventures (19% pre-IPO stake), Polaris Ventures (16.2%), SV Life Sciences (15.1%), CHV (12.5%), Sparta Group (6%), Incept (5.4%) and Baxter (5.3%).
Last week, a small med tech IPO got done and has since traded well. That could bode well for this week's offerings. MRI-safe IV pump infusion maker iRadimed priced its IPO slightly above the range, raising $12.5 million. Its shares are up more than 40%.
- here are the IPO road shows and prospectuses, including Intersect ENT's and Ocular Therapeutix's