Penumbra emerges from the shadows

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The $120m New York stock exchange entry by the vascular technology maker Penumbra on Friday is the fifth $100m-plus medtech IPO this year, and the third largest overall (see table). And, of those device companies that floated in the second half of the year, Penumbra is the only one to have both priced at a premium and seen an increase in its share price since.

Having only been trading a day it is a little early to be trumpeting the company’s success, but there are indications that Penumbra is one to watch. It appears to have sustained itself until now without raising venture cash, suggesting that management is either very shrewd or very fortunate at a time when VCs are reluctant to fund medtech.

Instead, over the past few years the company is thought to have raised in excess of $100m through private stock sales to individual investors including friends and family. Last year it accepted investment from the mutual fund Fidelity, which now owns 11.6% of Penumbra.

It is certainly clear that the IPO was not a second-best move after failing to find a buyer. The company is large and has been profitable, and intends to become a permanent fixture of the vascular space. Its technologies are not innovative, as such – it has never had a PMA or de novo clearance granted for one of its devices, EvaluateMedTech data show, meaning that they are not meaningfully different from devices already marketed.

But they are selling: Penumbra had sales of $125.5m last year, up 41.3%, and its 2014 net income was $2.2m. For the first half of 2015, however, the company made a loss of $169,000 on revenues of $81.3m.

The devices are used to treat both ischaemic and haemorrhagic stroke, as well as various peripheral vascular conditions that can be treated through thrombectomy and embolisation. Its most recent approval was 510(k) clearance of an aspiration thrombectomy system called Ace64, which uses a vacuum to remove blockages from blood vessels in patients with acute ischaemic stroke.

Top five

So how does Penumbra’s offering compare with the class of 2015? The first half of the year saw two medtech IPOs worth over $100m – those of Glaukos and Biocartis. Biocartis’s was particularly notable for having taken place on a European exchange (Medtech floats remain steady in 2015, July 2, 2015).

The past two and a half months have seen three more nine-figure device IPOs, the other two being the prenatal foetal testing company Natera and customised knee implant developer ConforMIS. Both listed on Nasdaq on July 1; at $180m and $135m respectively they take the first and second places this year.

Like Natera, Penumbra offered its shares at a price 13% higher than it had previously announced, but unlike the IVD group it has seen its stock increase since, with an impressive 38% rise in its first day on the NYSE.

The winner so far in terms of share price growth is Glaukos. Glaukos also had a storming first day, with its stock opening on Nasdaq at $29.11 and closing at $31.22, a 73% increase from its initial price of $18.

Penumbra has not beaten that record – but it has done very nicely. So far, at least.

Top five medtech IPOs on US and pan-European stock exchanges in 2015 so far
Company Area Date Amount raised ($m) Offering price Range Stock exchange Share price to 18 Sep
Natera In vitro diagnostics July 1 180 $18.00 $15-17 Nasdaq -16%
ConforMIS Orthopaedics July 1 135 $15.00 $14-16 Nasdaq 12%
Penumbra Cardiovascular September 18 120 $30.00 $25-28 NYSE 38%
Biocartis In vitro diagnostics April 27 108.8 €11.50 €10-11.50 Euronext Brussels 17%
Glaukos Ophthalmics June 25 108.0 $18.00 $16-17 NYSE 70%

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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