The massive med tech IPO: ConforMIS, Glaukos and Natera aim for $100M+

Print 03 Июля 2015
Stacy Lawrence / Fierce Medical Devices

Custom knee implant maker ConforMIS has priced the latest major med tech IPO with its $135 million offering on July 1. Investor appetite for large med tech IPOs raising more than $100 million remains whetted, despite the encroachment of the summer doldrums that can slow Wall Street activity to a crawl.

On July 2, prenatal diagnostics player Natera is expected to price its IPO; the company just increased its proposed IPO size to a whopping $175 million. If Natera is able to pull that off, this would be the third med tech IPO to raise in excess of $100 million in less than two weeks--last week, micro eye stent maker Glaukos nabbed $124.2 million.

Glaukos ($GKOS) was also one of the top IPO gainers of last month--with an increase of 61% from its offer price. Continued strong performance by high-profile med tech IPOs will be key to retaining Wall Street interest.

ConforMIS is raising money to back a full launch for its latest total knee replacement system and to help get its first customized hip replacement implant FDA clearance. The company already has substantial revenue, but hasn't been able to shrink its losses in recent years. Founded in 2004, the company had raised a whopping $330 million via equity sales even before the IPO.

ConforMIS' iFit platform--Courtesy of ConforMIS

The company has sold more than 30,000 of its customized knee implants in the U.S. and Europe. It uses 3-D printing to create its implants specifically for an individual patient; the company holds a sizable patent portfolio intended to help it corner the market there. Specifically, it claims 470 patents or patent applications that cover customized implants and patient-specific instrumentation for all major joints, as well as other aspects of its iFit technology platform.

ConforMIS sees its implants as a better alternative to off-the-shelf implants which may involve significant effort by the surgeon to size, fit and to surgically tailor an implant site by removing and shaping bone. The company cites a survey that one in 5 patients with off-the-shelf total knee replacement systems are not satisfied with the results.

The company already markets four total knee replacement systems, including the iTotal PS that it says is the only posterior cruciate ligament substituting, customized total knee replacement product on the market. It started a limited launch of the iTotal PS in the United States in February and expects to use some of its IPO cash to expand that launch next year.

In addition, the IPO funds could help ConforMIS get its first hip replacement, iTotal Hip, through FDA. The company expects to submit an application to FDA this year for regulatory clearance of the implant.

Last year, ConforMIS had $48.2 million in revenue from product sales. And while that was an improvement of 39% over the prior year, its annual operating loss has continued to hover around $45 million for each of the last three years. It has an 86-person sales and marketing staff for the U.S., U.K. and Germany.

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