Trivascular Technologies IPO Could Be Less Than A Treat For Investors


TRIV, a medical device firm, pursuing technologies to improve treatment of aortic abdominal aneurysms (AAA), plans to raise $91.0 million in its upcoming IPO.

TRIV accumulated a significant deficit of $238.5 million as of December 31, 2013, and we are unconvinced the company will capture a large portion of that market.

Despite significant market for AAA stent grafts, TRIV’s competitors could have the edge. We plan to avoid this IPO.

Trivascular Technologies Inc (NASDAQ:TRIV), a medical device firm pursuing technologies to improve treatment of aortic abdominal aneurysms (AAA), plans to raise $91.0 million in its upcoming IPO.

The Santa Rosa, California-based firm will offer 6.5 million shares at an expected price range of $13-$15 per share. If the IPO can hit the midpoint of that range at $14 per share, TRIV will command a market value of $284 million.

TRIV filed on March 10, 2014.

Lead Underwriters: Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC

Underwriters: Canaccord Genuity Inc, Stifel Nicolaus & Company Incorporated

Summary of TRIV

TRIV is a medical device company engaged in the development and commercialization of technologies to advance the minimally invasive treatment of AAA.

The firm's Ovation System is a new stent graft platform designed for the treatment of AAA through endovascular aortic repair (EVAR). The system offers a novel sealing system and flexible delivery that TRIV believes will allow for less invasive treatment, decreased anesthesia, and fewer complications for patients.

Over 3000 patients have been treated with the Ovation System, which TRIV began to sell in the US in November 2012.


TRIV offers the following figures in its S-1 balance sheet for the year ended December 31, 2013:

Revenue: $19,508,000.00

Net Loss: ($50,308,000.00)

Total Assets: $64,700,000.00

Total Liabilities: $53,508,000.00

Stockholders' Equity: ($228,798,000.00)

Stiff Competition

TRIV faces competition from other makers of EVAR stents, many of which are better capitalized and better known than TRIV. Major competitors include Medtronic Inc (NYSE:MDT), W.L. Gore Inc, Cook Medical Products, Inc. and Endologix, Inc (NASDAQ:ELGX).

CEO Brings 30 Years' Experience in Medical Device Industry

President, CEO and Chairman Christopher G. Chavez joined TRIV in April 2012, bringing over 30 years' experience in the medical device industry with him. He previously served as President of the Neuromodulation Division of St. Jude Medical, Inc and as CEO, President and Director of Advanced Neuromodulation Systems.

Mr. Chavez also worked at Johnson & Johnson in various positions, including Vice President and General Manager of the Infection Control Business Unit. He holds an M.B.A. from Harvard Business School and a Bachelors of Accountancy from New Mexico State University, Las Cruces.

Investors Should Consider Avoiding This IPO

We plan to avoid this IPO.

Though TRIV believes that it will be able to drastically improve its sales through increased investment in its sales and marketing infrastructure, the firm is losing tremendous amounts of money, and has accumulated a significant deficit of $238.5 million as of December 31, 2013.

Though there is a significant market for AAA stent grafts-estimated at $1.4 billion globally in 2012-we are unconvinced that the Ovation System will capture a large portion of that market, especially given its lack of traction thus far.

The Ovation System's numerous potent competitors create an uphill battle for TRIV as well.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.