Specifically, its up-sized 7.2 mln share IPO priced at $15 vs. the $13-$15 expected range. The deal was originally expected to consist of 6.0 mln shares. In all, it generated $108 mln in total gross proceeds, about $24 mln, or 29%, more than anticipated.
Other than simply being a healthcare IPO, SIBN has a couple other positive factors working in its favor. Unlike most healthcare IPOs to come through the pipeline, SIBN actually has FDA-approved products that are generating revenue. For the six months ended June 30, 2018, revenue grew by 17% to $26.4 mln.
The IPO is also backed by solid underwriters, Morgan Stanley and BofA Merrill Lynch, and the float is rather light at just 7.2 mln shares. So, there isn't a huge amount of supply for investors to soak up.
All in all, it was another highly successful IPO from the healthcare sector, which remains hot despite the recent volatility in the stock market. SIBN is set to open for trading later this morning on the Nasdaq.
SIBN is a medical device company that has pioneered a proprietary minimally invasive surgical implant system, which it calls iFuse, to fuse the sacroiliac joint to treat sacroiliac joint dysfunction that often causes severe lower back pain. Published clinical studies have shown that 15% to 30% of all chronic lower back pain is associated with the sacroiliac joint. SIBN believes iFuse is currently used in the majority of minimally invasive surgical fusions of the sacroiliac joint in the US. The two sacroiliac joints are the largest joints in the body and connect the sacrum, near the base of the spine, to the iliac bones, the two major bones of the pelvis.
The company's implants have a triangular cross section, which resists twisting of the implant within the bone, helping stabilize the joint even before fixation of the bone onto the implant. SIBN introduced its second generation implant, the iFuse-3D, in 2017. It was cleared for marketing by the FDA in March 2017 and the European Union in May 2017. This patented titanium implant combines the triangular cross-section of the iFuse implant with a proprietary 3D-printed porous surface and fenestrated design. This design allows the surgeon to fill the implant with ground-up bone before implanting it, which some surgeons believe accelerates bone through-growth.
SIBN estimates that over 30 mln American adults have chronic lower back pain. For patients whose chronic lower back pain stems from the sacroiliac joint, iFuse could be beneficial for at least 30% of patients who are properly diagnosed. SIBN estimates that the potential market for iFuse in the US could be 279,000 patients annually, for a potential annual market in the US of approximately $2.7 bln. While SIBN has made significant inroads at penetrating this market, patients received only 4,319 iFuse procedures in 2017 so there is room to grow.
Since January 1, 2018, because of the strength of published clinical evidence on iFuse, 18 US payors have published reimbursement policies exclusively covering the patented triangular design of iFuse implants and excluding coverage of other products that are intended to fuse the sacroiliac joint.
Turning quickly to the financials, SIBN is not yet profitable and its revenue growth has been pretty modest. Revenue in 2016 was $42.1 mln, that grew 14% in 2017 to $48.0 mln. In 1H18, revenue grew 17% yr/yr to $26.4 mln. SIBN states that its growth rate has recently increased, which is attributed in part to more widespread insurance coverage, with many recent positive payor coverage policies exclusive to SI-BONE's iFuse system, as well as its efforts to educate the market regarding sacroiliac dysfunction. So perhaps growth will pick up more in 3Q18, but it's not clear yet.