Silk Road Medical IPO Prices At High End After Getting Rare Top Rating
Medical device company Silk Road Medical (SILK) priced its initial public offering at 20 a share, at the high end of its recently raised expected range. The Silk Road IPO garnered lots of attention from investors, with one IPO research firm giving the company its highest rating. Silk Road stock will start trading Thursday.
Silk Road Medical raised $120 million after selling six million shares. The Silk Road Medical IPO price range was recently raised to 19 to 20 per share from 15 to 17. Silk Road also hiked the number of shares on offer by 28% to 6 million from 4.7 million.
“There is little question that this IPO is the ‘deal of the week’ and we have been told by the underwriters to manage expectations accordingly,” IPOboutique.com said in a note to clients. The IPO research firm rates IPOs on a scale of 1 to 5. It gave Silk Road a rare rating of 5, or “strongest buy,” at the IPO price. The last IPO that received a 5 rating was Facebook (FB) in 2012. Glitches marred the Facebook IPO, though.
A review of the Silk Road IPO “checks all the boxes, which we rarely see in an IPO,” said Jeff Zell, senior research analyst at IPOboutique. This includes products built to scale and approved by the Food and Drug Administration.
“From an IPO perspective, recent Medical device IPOs have been extremely well-received, with recent performers Shockwave Medical (SWAV) and Inspire Medical (INSP) posting excellent first-day returns and aftermarket performance,” he said.
Silk Road Medical Targets Strokes
Silk Road Medical focuses on preventing strokes. It uses minimally invasive technology “to safely and effectively treat carotid artery disease, one of the leading causes of stroke,” the company said in its IPO filing. “We have pioneered a new approach for the treatment of carotid artery disease called transcarotid artery revascularization, or TCAR, which we seek to establish as the standard of care.”
The company estimates that, as of Dec. 31, 2018, more than 7,750 TCAR procedures had been performed globally, including more than 4,600 in 2018.
“We believe a total annual U.S. market opportunity of approximately $2.6 billion exists for our portfolio of TCAR products,” it said.
Silk Road Market Opportunity
Silk Road estimates there were approximately 4.3 million people with carotid artery disease in the U.S. in 2018. Further, existing treatment options have substantial safety and effectiveness limitations. TCAR starts with a small incision in the neck slightly above the collarbone, otherwise known as transcarotid access. There, surgeons place the company’s Enroute Transcarotid Stent System to help prevent strokes.
“The safety, effectiveness and clinical advantages of TCAR have been demonstrated in multiple clinical trials, post-market studies and registries that have evaluated outcomes in more than 3,500 patients in the United States and Europe to date,” the company said.
The company reported revenue of $34.5 million in 2018, up 143% from the prior year. It showed a loss of $39 million. The lead underwriters are JPMorgan and BofA Merrill Lynch. Investors include Warburg Pincus, Vertical Group Norwest Venture Partners and Janus.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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