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Summary

  • It's a medical device company.
  • It is notoriously difficult to introduce a medical device.
  • TRIV lost $50 million in 2013.

Based in Santa Rosa, CA, TriVascular Technologies (NASDAQ:TRIV) scheduled a $91 million IPO on the Nasdaq with a market capitalization of $271 million at a price range midpoint of $14 for Wednesday, April 16, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: J.P. Morgan and Credit Suisse

Co-Managers: Canaccord Genuity, Stifel

End of lockup (180 days): Monday, October 13, 2014

End of 25-day quiet period: Monday, May 12, 2014

Summary
TRIV is a medical device company developing and commercializing innovative technologies to significantly advance minimally invasive treatment of abdominal aortic aneurysms.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

TriVascular Technologies

$270

13.9

-5.4

2.9

3.2

34%

Conclusion

It is notoriously difficult to introduce a medical device and the introduction costs are high: TRIV lost $50 million in 2013.

Nine of TRIV's patents expire between 2018 and 2020, plus products from major companies compete with TRIV's lead product.

The IPO rating on TRIV is neutral.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

TRIV is a medical device company developing and commercializing innovative technologies to significantly advanced minimally invasive treatment of abdominal aortic aneurysms, or AAA.

TRIV's mission is to help physicians improve the lives of patients suffering from aortic disease through excellence in research, product development, manufacturing, sales and service.

Technology Platform

TRIV developed its technology platform leveraging engineering principles utilized in many industries, including aerospace, aircraft and automotive, and applied these concepts with the goal of designing an optimal solution for AAA therapy to address unmet clinical needs.

For example, TRIV leveraged its knowledge of fluid mechanics in developing its sealing technology.

Ovation System

The Ovation System, TRIV's solution for the treatment of AAA through minimally invasive endovascular aortic repair, or EVAR, is a new stent graft platform.

It is designed to specifically address many of the limitations associated with conventional EVAR devices and expand the pool of patients eligible for EVAR by virtue of its low profile, flexible delivery system and novel sealing mechanism.

The Ovation System consists of a main aortic body, injected with a conformable polymer, and typically two iliac limbs. These components allow the device to be customized to a patient's unique anatomy to effectively seal the aneurysm.

Ovation System Milestones

TRIV received CE Mark clearance in August 2010 and began commercial sales of the Ovation System in Europe in September 2010.

TRIV received FDA approval of the Ovation System in October 2012 and began selling the Ovation System in the United States in November 2012.

Since TRIV's first-in-man implants in November 2009, the Ovation System has been implanted in more than 3,000 patients in over 25 countries, both in clinical trials as well as commercially.

Marketing and Sales

TRIV markets and sells its products to physicians and hospitals through a direct sales organization in the United States, Germany and the United Kingdom.

In other markets outside of the United States, TRIV markets and sell products through distributors.

For the year ended December 31, 2013, revenue was $19.5 million and 54% of revenue was attributable to sales of the Ovation System in the United States. For the year ended December 31, 2013, the net loss was $50.3 million.

History

TRIV's subsidiary, TriVascular, Inc., originally formed in California in January 1998, was sold to Boston Scientific Corporation in April 2005 and renamed as Boston Scientific Santa Rosa Corporation, or BSSR. In March 2008, TRIV acquired BSSR from Boston Scientific Corporation to continue the development of the EVAR products and re-instated the original "TriVascular" name.

Dividend Policy

No dividends are planned.

Intellectual Property

As of January 31, 2014, TRIV owned 112 issued patents globally, of which 38 were issued U.S. patents.

As of January 31, 2014, TRIV owned 75 patent applications pending globally, of which 37 were patent applications pending in the United States.

Subject to payment of required maintenance fees, annuities and other charges, nine of TRIV's issued U.S. patents expire between 2018 and 2020, 21 expire between 2021 and 2025, and the remaining eight expire between 2026 and 2030.

As of January 31, 2014, TRIV's trademark portfolio contained 27 trademark registrations, 5 of which were U.S. trademark registrations, as well as several pending U.S. and foreign trademark applications.

Competition

TRIV experiences significant competition and it expects that the intensity of competition will increase over time.

For example, TRIV's major competitors, Medtronic, Inc., W.L. Gore Inc., Cook Medical Products, Inc. and Endologix, Inc., have each obtained full regulatory approval for their EVAR systems in the United States and Europe.

In addition to these major competitors, TRIV also has smaller competitors and emerging competitors with active EVAR system development programs.

5% stockholders

Entities affiliated with NEA 26.6%

Entities affiliated with Delphi 21.4%

Entities affiliated with MPM 14.2%

Entities affiliated with Kearny 6.0%

Christopher G. Chavez 5.6%

Use of proceeds

TRIV expects to net $82 million from its IPO. Proceeds are allocated as follows:

$3.5 million principal amount plus $1.1 million in accrued interest (assuming a repayment date of April 25, 2014) of the net proceeds from the offering to repay all principal amount and accrued interest owed under TRIV's promissory note to Boston Scientific Corporation.

The promissory note carries an interest rate of 5.25% per annum and matures on March 28, 2018. Beyond repayment of the promissory note to Boston Scientific Corporation, TRIV does not expect to use the proceeds of this offering to repay any outstanding debt.

TRIV anticipates using the remaining amounts to expand its sales and marketing infrastructure, to fund additional research and development, and for working capital and other general corporate purposes, however, as of the date of TRIV's prospectus, TRIV has not specifically allocated amounts of the net proceeds among such purposes.

Disclaimer: This TRIV IPO report is based on a reading and analysis of TRIV's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: TriVascular Technologies