Irvine-based medical device maker Axonics Modulation Technologies Inc. could nearly double its employment over the next year if plans for an initial public offering move ahead.
The 5-year-old company, which makes electrical stimulation devices designed to treat overactive bladder and other urinary and bowel conditions, filed preliminary plans to go public last week with an expectation of raising more than $86 million.
If the offering goes forward this year, Axonics would be the fourth Orange County company to go public via an IPO this year; the others were also healthcare-related businesses based in Irvine.
Money raised from the offering would largely go toward hiring “a specialty sales force of approximately 60 sales representatives” to support the commercial launch of its first product, the company disclosed in regulatory filings last week.
In the first quarter of next year, Axonics plans to submit an application to the Food and Drug Administration to get approval of its primary urinary incontinence product, according to the filing with the Securities and Exchange Commission.
Axonics currently employs about 70 at its Spectrum-area headquarters and a nearby building that totals about 38,000 square feet. Most of its employees are involved in research and development.
Along with the new salesforce, money from the offering would fund the technological enhancement of existing products, as well as additional research and development activities, according to SEC filings.
A timeframe for the IPO hasn’t been disclosed, nor have specific terms of the proposed listing. The company’s scheduled to list its shares on the Nasdaq under the symbol AXNX.
The IPO is being underwritten by BofA Merrill Lynch, Morgan Stanley, Wells Fargo Securities and SunTrust Robinson Humphrey; the Irvine office of K&L Gates LLP is the primary law firm in the offering.
Last Line of Therapy
Axonics is developing a minimally invasive nerve stimulation product that treats overactive bladder and other related issues.
The rechargeable, implantable stimulator provides mild electrical pulses to stimulate the sacral nerves in the pelvis area to modify their activity and correct nerve messages to the brain that trigger a frequent and urgent need to go to the bathroom.
Some 4 million people in the U.S. and Europe are potential candidates for its product, the company estimated.
First-line therapies for overactive bladder and related issues are comprised of diet, exercise and pelvic-floor exercises, followed by drugs and medical management.
Urovant Sciences Ltd. (Nasdaq: UROV), an Irvine-based development-stage drugmaker that went public last month—its $140 million IPO is OC’s largest this year—also aims to treat overactive bladder issues.
Implantable device therapies that are along the lines of what Axonics makes, along with therapies such as Botox injections, are the last resort for treatment of those types of urinary and fecal incontinence issues.
Minneapolis-based Medtronic PLC’s sacral neuromodulation device would likely be Axonic’s main competitor.
Axonics said Medtronic’s device, InterStim II, requires a replacement surgery on average every 4.4 years, while its system is designed to last 15 years.
Axonics said its implantable system, r-SNA, a little larger than a quarter, is about 60% smaller than existing technology by Medtronic.
It is wirelessly charged; the recharging interval is approximately one hour every two weeks.
Patients using the product have the ability to adjust stimulation intensity up or down or switch it on and off, using a remote control that communicates with the device at a range of up to 3 feet.
Clinical studies for the product have thus far shown positive results, and a new 120-patient study is in the early stages of review, according to the company.
Axonics said in last week’s registration statement that fewer replacement surgeries resulting from its longer-lasting product will improve patient experience and “potentially reduce overall U.S. healthcare costs by up to $12 billion over a 15-year horizon.”
The global sacral modulation market was approximately $605 million last year and is projected to grow 8% year-over-year, according to the company.
It said it plans to “focus the significant majority of our sales and marketing efforts in the United States where reimbursement for [sacral neuromodulation] is well-established and covered by most major U.S. insurers.”
“Getting the U.S. FDA clearance is key” because the U.S. dominates the sacral neuromodulation market, Chief Executive Raymond Cohen told the Business Journal in an earlier interview.
New sales hires will focus their efforts on the approximately 1,000 physicians that generate 75% of U.S. implant volume for that type of treatment, the company said in the registration statement.
$55M Series C
The company’s raised more than $100 million since its inception, including a $55 million Series C offering this past March.
Investors from around the world have poured money into the firm. The latest round included Gilde Healthcare, a specialized European healthcare investor with offices in Boston and Utrecht, Netherlands, La Jolla-based CICA Inc., and Boston-based Cormorant Asset Management.
Earlier rounds included international investors, such as Geneva’s Neomed Management, Beijing’s Legend Capital, Paris’ Edmond de Rothschild Investment Partners and London’s Advent Life Sciences.
Cohen said he “raised the money from [international] investors on purpose … to try to spread the risk around a good project.”
Axonics has posted an accumulated deficit of about $67 million since its inception.
Chief Executive Cohen is a 35-year medical device industry veteran who has held leadership positions and served as a board member for a number of private and publicly traded life sciences companies.
From 2010 to 2012, he served as chief executive of Laguna Hills-based Vessix Vascular Inc., which was acquired by Boston Scientific (NYSE: BSX) in 2012 for an undisclosed amount.
He currently serves as chairman of Bothell, Wash.-based BioLife Solutions Inc. (Nasdaq: BLFS) and U.K.-based device firm DYSIS Medical Ltd.
He is also a board member at Spectrum Pharmaceuticals Inc. (Nasdaq: SPPI), a Henderson, Nevada-based biotech firm that maintains research and development operations in Irvine.
