After a relatively quiet showing this year, three medical device companies are slated for US initial public offerings next week. ev3 will present investors with a $200 million offering, while Micrus Endovascular Corp is slated for a $42.25 million IPO and HemoSense Inc is preparing a $31.5 million IPO. There have been only two US-listed IPOs of medical instrument companies this year, according to data provider Dealogic. In March, Israel-based Shamir Optical Industry Ltd began trading on the Nasdaq, and in April, DexCom Inc held its IPO.
Shares of both companies have risen since their IPOs, with Shamir up 28 percent and DexCom up 26 percent.
ev3 makes catheter-based, or endovascular, medical devices that doctors use to treat vascular diseases and disorders, like coronary artery disease or strokes.
The Plymouth, Minnesota-based company was started in 2000 by private equity firm Warburg Pincus LLC, venture capital firm The Vertical Group LP, and Dale Spencer, former chief executive officer of SCIMED Life Systems Inc, which was acquired by Boston Scientific Corp.
ev3 said it now sells more than 100 products, including stents, wires used to position catheters, and devices for removing blood clots. It also owns a controlling interest in neurovascular device company Micro Therapeutics Inc.
ev3 is competing in a burgeoning field, dominated by giants like Medtronic Inc, Boston Scientific and Guidant Corp, which is being acquired by Johnson & Johnson.
The number of smaller players, like Vascular Solutions Inc, Edwards Lifesciences Corp, C.R. Bard and privately-held Cook Group, is growing as the market for devices for minimally or non-invasive procedures gains acceptance.
In many ways, smaller companies have the edge because they are more flexible, said WPP Securities analyst Steve Brozak.
"More companies popping up is a direct attribute to the fact that large companies are not as flexible or as fast in adopting new technology," he said.
The size of the vascular market is in the billions, he added.
ev3 reported 2004 revenue of $86.3 million, up from $67.6 million in 2003. As is the case with many fledgling medical companies, it has accumulated losses since its inception. Its deficit totalled $479.5 million as of April 3.
ev3 has filed for an 11.77 million share offering in the estimated price of $16 to $18 per share. It will use $75 million of the IPO proceeds to repay notes held by Warburg Pincus and The Vertical Group, as well as to pay accrued and unpaid interest.
After the IPO, Warburg Pincus will beneficially own 66 percent of its outstanding common stock. Piper Jaffray and Banc of America Securities are the lead underwriters on the deal.
Micrus Endovascular Corp makes medical devices used to treat cerebral vascular diseases. It began commercial sales of its microcoil products in 2000, and they are used by surgeons to treat cerebral aneurysms.
It too has posted losses since its inception, with an accumulated deficit of $41 million as of March 31.
Its IPO is set at 3.25 million shares in the estimated range of $12 to $14 per share. Underwriters, A.G. Edwards and Needham & Co, have the right to purchase an additional 487,500 shares to cover excess demand.
HemoSense makes a handheld device, INRatio System, that helps monitors blood coagulation for patients taking the blood thinning drug warfarin. It began selling the system in 2003.
It reported revenue of $3.25 million in fiscal 2004, up from $427,000 in 2003. It had accumulated a deficit of $41.1 million as of March 31.
In May, it raised the size of its planned IPO to 3.5 million common shares from 2.6 million shares. It expects the shares to price between $8 and $10 each. The proceeds will be used for sales and marketing, research and development, and loan repayment.
Lazard, WR Hambrecht & Co and Roth Capital Partners are underwriting the deal.
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