Kips Bay Medical Prices IPO at Low End of Range

Feb.13.11 | About: Kips Bay (KIPS)

Kips Bay Medical (NASDAQ:KIPS), a development stage medical device company, priced its IPO on February 10, after downsizing at $8 per share.

Business Overview (from prospectus)

We are a development stage medical device company focused on developing, manufacturing and commercializing our external saphenous vein support technology, or eSVS MESH, for use in coronary artery bypass grafting, or CABG, surgery. Our eSVS MESH is a mesh sleeve made of nitinol, an alloy of nickel and titanium, that, when placed over a saphenous vein graft during CABG surgery, is designed to improve the structural characteristics and long-term performance of the vein graft. The saphenous vein is a superficial vein in the leg, often used in CABG surgery. Based on the data collected in a 90 patient multi-center clinical trial conducted outside the United States, we received our CE Mark in May 2010. We began marketing and commenced shipments of our eSVS MESH in select European Union markets in June 2010, in the United Arab Emirates in October 2010 and in Turkey in January 2011, but we have not generated significant revenue from the sale of products to date. The United States Food and Drug Administration, or FDA, is reviewing our application for an investigational device exemption, or IDE, which, if granted, will allow us to begin clinical trials of our eSVS MESH in the United States. We anticipate beginning enrollment in a United States IDE trial in the first half of 2011.

Offering: 2.1 million shares at $8 per share. Net proceeds of approximately $10 million will be used to fund the process of seeking regulatory approval for eSVS MESH, and approximately $3 million to fund the development of additional applications of eSVS MESH./p>

Lead Underwriters: Rodman & Renshaw (NYSEARCA:RODM), Newbridge Securities

Financial Highlights:

To date the company has not generated any revenue from product sales. Since they have obtained regulatory approval in May 2010, they have began marketing and shipments of eSVS MESH.

Competitors

The development and commercialization of medical devices to treat cardiovascular disease is a highly competitive industry. Physicians and patients may select among a variety of treatments to address coronary artery disease, including pharmaceutical therapy, balloon angioplasty, stenting with bare metal or drug-eluting stents, and CABG procedures, with the selection often depending upon the stage of the disease. According to the American Heart Association, in 2006, approximately 661,000 balloon angioplasty procedures were performed, with approximately 652,000 of these procedures involving the placement of one or more stents. The American Heart Association also reports that in 2006, approximately 253,000 patients received 448,000 bypass procedures. If physicians choose alternative treatments to CABG surgery due to the disadvantages of CABG surgery, such as the failure rate of CABG surgery, or if additional alternative treatments for cardiovascular disease are developed, there may be a decrease in the number of CABG surgery procedures. The American College of Cardiology/American Heart Association treatment guidelines state that CABG is the only recommended revascularization procedure for those patients with left main or three-vessel coronary disease.

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