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Monday, Dec 5, 2022

Sonendo Lands Another $63M in Funding

Stock Woes After IPO For Gentle Wave Maker

Sonendo Inc., which says it has a “paradigm-shifting platform technology for tooth decay,” has seen its shares fall more than 90% on Wall Street since it went public a year ago.

However, the Laguna Hills-based company (NYSE: SONX) still has many believers. On Sept. 23, it raised $63 million through a private placement of common stock and pre-funded warrants.

New and existing investors participating in the fundraise included Pura Vida Investments, First Light Asset Management, Blue Water Life Science Advisors, ArrowMark Partners, Driehaus Capital Management and JMR Capital.

The confidence booster by investors caused shares to rise 86% to $1.67 in the three trading sessions after the announcement. At press time, the shares were trading at $1.12 and a $56 million market cap.

A year ago, Sonendo raised $93.6 million in an IPO after pricing 7.8 million shares at $12 per share.

Revolutionary Product

“Our extensive due diligence has led to a strong conviction surrounding the potential for Sonendo’s cutting-edge technology to revolutionize the dental market, particularly as endodontists and dentists become more aware of its power to meaningfully improve their practices,” Matt Arens, founder, chief executive and senior portfolio manager of First Light Asset Management, said in a statement.

Sonendo plans to use the net proceeds from the financing to accelerate ongoing commercialization efforts and further expand its current product portfolio and for working capital as well as other general corporate purposes. The company reported cash and short-term equivalents at $51.8 million as of June 30, down from $84.6 million on Dec. 31.

“This financing meaningfully strengthens our balance sheet and enables us to continue improving patient care and delivering innovative products,” Sonendo CEO Bjarne Bergheim said.

$1.9B TAM

Sonendo was founded in 2006 by Bergheim’s father, Olav Bergheim, who still sits on the board. Olav Bergheim is a longtime OC entrepreneur who founded the $2.5 billion-valued ophthalmic device company Glaukos Corp. (NYSE: GKOS) in Aliso Viejo and has a life science accelerator, Fjord Ventures, that’s started more than 15 companies in medical devices.

Sonendo says it’s on a mission to make root canals less painful, more successful and much faster. It says tooth decay is the most prevalent chronic disease globally.

About 17 million root canal procedures are performed annually in the U.S., representing a $1.9 billion total addressable market, the company said.

It developed the GentleWave System, which uses fluids to flush the entire canal of the tooth without the need to remove tooth structure.

The company says its system has reduced the failure rate to under 3% and shortened the length of the procedure from about 90 minutes to 60 minutes.

Since commercializing in 2017, the system in now in about 900 offices throughout North America, performing some 800,000 root canals.

Sonendo previously topped the Business Journal’s list of fastest-growing midsized private companies, with two-year revenue growth of over 800% between mid-2017 and 2019, before experiencing what the CEO called a “pause” during the pandemic, sales-wise.

Analysts are forecasting sales will climb 25% to $41.6 million this year and another 36% in 2023.

Sonendo employs 239 total employees, including 174 who work at its 55,000-square-foot Laguna Hills base, which includes its manufacturing facility.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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