Medical device maker Axonics Modulation Technologies Inc., Orange County’s latest public company to reach $1 billion in valuation, isn’t just growing by stock price.
The 7-year-old company, which makes electrical stimulation devices designed to treat overactive bladder and other urinary and bowel conditions, recently finalized a deal to nearly double the size of its operations, which are in the Irvine Spectrum.
The expansion comes amid a ramp-up in sales, from a few million this year to $80 million in 2020, according to the consensus estimate of three analysts who follow its stock. All three rank the company as a “strong buy.”
Axonics’ market value passed the $1 billion mark for the first time in the past month.
“The $1 billion market cap suggests that shareholders are expecting Axonics to achieve significant revenue growth in the U.S. in 2020 and beyond,” Chief Executive Ray Cohen told the Business Journal last week.
Axonics inked a deal with landlord Irvine Co. to lease a second building along Alton Parkway, on the opposite side of the Santa Ana (5) Freeway from the Spectrum Center mall.
The two-story office at 15326 Alton Parkway runs about 32,600 square feet, regulatory filings this month indicate. The tenant will be paying between $2 and $2.70 per square foot per month at the building over the course of the eight-year lease, filings show.
It brings Axonics’ footprint in Irvine about 67,000 square feet, in an assortment of manufacturing space, administrative office and a training facility, among other uses, company officials said last week.
The company has been ramping up sales and marketing staff, as well as additional hiring in support of manufacturing, in preparation for the U.S. launch of its initial product—the implantable Axonics r-SNM System.
Its initial product is a USB stick-sized neurostimulator designed to last at least 15 years in the body. The SNM device works by stimulating electrical impulses in the pelvis area to correct faulty nerve activity.
The device has been shown to decrease overactive bladder activity by 50% in two-thirds of the patients enrolled in the company’s studies to date.
One-third of patients saw a complete reduction in incontinence.
FDA Awaits
The company’s product is already approved for sale in Europe, Canada, and Australia; it is aiming to get FDA approval for its main product later this year.
As of last September, Axonics employed about 70 people. The company’s “head count is now approximately 250, and we expect to finish the year with [nearly] 275 employees of which 125 [are] based in Irvine,” Cohen said.
The balance of the company’s worker base is for its domestic and European commercial teams, he said.
The ball is currently in the government’s court, in terms of bringing the r-SNM product to market domestically.
“We continue to believe that the FDA approval will come during the second half of 2019,” Cohen told analysts during its first quarter analyst call in May.
In terms of its domestic launch, hiring and training has been ongoing with “the goal of hitting the ground with velocity in the U.S. market,” he said at the time.
The company is currently looking to hire about a dozen staffers in Irvine, according to its website. Most are engineering-related positions.
$1B Milestone
The new office is one of several signs of growth for Axonics, which went public last October, one of four Orange County-based initial public offerings last year.
The company’s $120 million IPO is the best performing of the four. Axonics priced its IPO at $15 per share, and its stock now trades at about $38 per share.
Its shares jumped more than 20% after its first-quarter earnings, when it reported better-than-expected sales in Europe—$1.1 million, more than double analyst expectations. It had no sales in the year-ago period.
“We are thrilled that public market institutional investors are supporting the company,” Cohen said last week.
Cohen owns about 2.6% of the shares, worth an estimated $28.7 million as of press time.
Rothschild Investor
Chairman Raphaël Wisniewski, who has served on the board since 2014, is a partner at Andera Partners, previously known as Edmond de Rothschild Investment Partners, a venture capital firm with extensive experience in the life sciences industry. In the 1990s, Wisniewski served in the healthcare groups of the investment banking divisions of Goldman Sachs and Solomon Smith Barney where he focused on investments in the pharmaceuticals, medical devices, biotechnology, and services industries.
Paris-based Andera manages BioDiscovery 4, a venture capital fund that has 3.6 million Axonics shares worth an estimated $137 million and making it Axonics’ largest shareholder, according to a proxy issued earlier this month.
Another director and large shareholder is Juliet Bakker, the co-founder and manager director of Longitude Capital Management, which led a $40 million financing of equity and credit for Axonics in 2018. Longitude Capital owns 10.3% of its shares.
“Longitude is confident that Axonics is well positioned to address the needs of patients with urinary and bowel dysfunction and disrupt the worldwide market for sacral neuromodulation,” Bakker said in a statement last year.
In May, the company reported an operating loss of $13.6 million for the first quarter, compared to $6.5 million in the first quarter of 2018. It had about $144 million of cash and short-term investments as of May.
It’s expected to report second-quarter results in early August.
