IPO Report: ReWalk Robotics (RWLK)

Francis Gaskins |

ReWalk Robotics (RWLK), based in Yokneam, Israel,is an innovative medical device company that is designing, developing and commercializing exoskeletons that allow wheelchair-bound individuals with mobility impairments or other medical conditions the ability to stand and walk once again.

Two companies are scheduled for the week of September 8, 2014.  The complete IPO calendar is available at IPOpremium.  Alibaba is scheduled for next week.

Manager, Co-Managers: Barclays, Jefferies & Co.

Joint Manager: Canaccord Genuity

RWLK  scheduled a $50 million IPO on the Nasdaq with a market capitalization of $172 million at a price range midpoint of $15 for Friday, Sept 12, 2014.   SEC filings

Overview

As of August 1, 2014, RWLK had placed 62 ReWalk Rehabilitation and 19 ReWalk Personal systems, 88% of which were purchased by RWLK’s customers, and 12% of which were placed with clinics and distributors for training, market development and clinical testing.

Through August 1, 2014 RWLK has trained over 400 ReWalk users, representing over 20,000 hours of use.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

.

           

ReWalk Robotics (RWLK)

$173

91.3

-8.9

3.7

3.2

30%

             

Conclusion
The rating on RWLK is neutral.

Small revenue, high loss rate.

Business

RWLK is an innovative medical device company that is designing, developing and commercializing exoskeletons that allow wheelchair-bound individuals with mobility impairments or other medical conditions the ability to stand and walk once again.

RWLK has developed and are continuing to commercialize ReWalk, an exoskeleton that uses RWLK’s patented tilt-sensor technology, and an on-board computer and motion sensors to drive motorized legs that power movement.

Current ReWalk designs are intended for people with paraplegia, a spinal cord injury resulting in complete or incomplete paralysis of the legs, who have the use of their upper bodies and arms. RWLK currentlys offer two products:

ReWalk Personal and ReWalk Rehabilitation.

ReWalk Personal is designed for everyday use by individuals at home and in their communities, and is custom-fit for each user.

ReWalk Rehabilitation is designed for the clinical rehabilitation environment where it provides valuable exercise and therapy.

It also enables individuals to evaluate their capacity for using ReWalk Personal in the future. In 2011, RWLK launched ReWalk Rehabilitation for use in hospitals and rehabilitation centers in the United States and Europe.

RWLK began marketing ReWalk Personal in Europe with CE mark clearance at the end of 2012 and received FDA clearance to market it in the United States in June 2014.

ReWalk is the first exoskeleton cleared by the FDA for personal use. In the future, RWLK  will need to obtain approval from the applicable regulatory agency of any additional jurisdiction in which RWLK  seeks to market ReWalk.

ReWalk is a breakthrough product that can fundamentally change the health and life experiences of users.

ReWalk is currently the only commercialized exoskeleton using a tilt sensor to restore self-initiated walking.

Designed for all-day use, ReWalk is battery-powered and consists of a light, wearable exoskeleton with integrated motors at the joints, an array of sensors and a computer-based control system to power knee and hip movement. ReWalk controls movement using subtle changes in the user’s center of gravity.

A forward tilt of the upper body is sensed by the system, which initiates the first step. Repeated body shifting generates a sequence of steps which allows for natural gait with functional walking speed.

Because the exoskeleton supports its own weight, users do not expend unnecessary energy while walking. While ReWalk does not allow side-to-side actuation, users are able to turn by shifting their weight to the side. ReWalk also allows users to sit, stand and, in some cases, climb and descend stairs.

ReWalk users are able to independently operate the devices, and most are able to put on and remove the devices by themselves. However, RWLK’s safety guidelines and FDA specifications require users to be accompanied by a trained companion.

Published clinical studies demonstrate ReWalk’s ability to deliver a natural gait and functional walking speed, which has not been shown in studies for any competing exoskeleton. In addition, RWLK’s interim analysis of an ongoing clinical study and its experience working with health care practitioners and ReWalk users suggests that ReWalk has the potential to provide secondary health benefits.

These benefits include reducing pain and spasticity and improving bowel and urinary tract function, body and bone composition, metabolism and physical fitness, as well as reducing hospitalizations and dependence on medications.

Because of these secondary medical benefits, RWLK believes that ReWalk has the ability to reduce the lifetime healthcare costs of individuals with spinal cord injuries, making it economically attractive for individuals and third-party payors.

While RWLK believes that ReWalk offers significant advantages over competing technologies and therapies, disadvantages include the time it takes for a user to put on ReWalk, the slower pace of ReWalk compared to a wheelchair, the weight of ReWalk when carried, which makes it more burdensome for a companion to transport than a wheelchair, and the requirement that users be accompanied by a trained companion.

RWLK believes that the current design of Rewalk provides a functional technical base that can be easily adapted to address medical indications other than paraplegia that affect the ability to walk. RWLK is currently engaged in research and development efforts to adapt ReWalk to address the mobility needs of quadriplegia and multiple sclerosis patients, and, in the future, RWLK plans to address these needs in stroke and cerebral palsy patients. RWLK is also developing its next generation of ReWalk, with a more efficient drive mechanism, slimmer profile and lighter body, as well as other improvements.

Development of ReWalk took over a decade and was spurred by the experiences of RWLK’s  founder, Dr. Amit Goffer, himself a quadriplegic.

As of August 1, 2014, RWLK had placed 62 ReWalk Rehabilitation and 19 ReWalk Personal systems, 88% of which were purchased by RWLK’s customers, and 12% of which were placed with clinics and distributors for training, market development and clinical testing.

Through August 1, 2014 RWLK has trained over 400 ReWalk users, representing over 20,000 hours of use.

Dividend Policy

No dividends are planned.

Intellectual Property

As of August 1, 2014, RWLK has three issued method and device patents in the United States and Europe on RWLK’s tilt sensor technology. RWLK has apparatus patent claims in the United States and Europe covering the design of ReWalk and similar devices which use a plurality of sensors to empower tilt-sensor technology.

In addition, in the United States, RWLK has method patent claims covering certain methods of user activation and control of systems such as ReWalk, including by sensing the users’ torso lean or weight shifts.

While its apparatus claims focus on protecting ReWalk in terms of its physical and structural characteristics, RWLK believes that its method claims, which protect the process behind how ReWalk is controlled by the user, provide additional protection for RWLK’s tilt sensor technology. RWLK also has six pending patent applications in various countries around the world covering supporting technology with respect to its existing ReWalk systems and planned future products, including one pending international application filed under the Patent Cooperation Treaty, which provides an applicant one filing date for patent applications that may be filed in 148 countries.

RWLK does not currently license any of the technology contained in its products other than with respect to technology that is generally publicly available, but RWLK may do so in the future.

Patents filed both in the United States and Europe generally have a life of 20 years from the filing date.

As the oldest of RWLK’s issued patents relating to its tilt-sensor technology was filed in May 2001, RWLK’s patents on that technology do not begin to expire until May 2021.

Competition

RWLK is aware of a number of other companies developing competing technology and devices, and some of these competitors may have greater resources, greater name recognition, broader product lines, or larger customer bases than RWLK does.

RWLK’s principal competitors in the medical exoskeleton market consist of Ekso Bionics (OTC: EKSO), Rex Bionics (London Stock Exchange: RXB), Cyberdyne (Tokyo Stock Exchange: 7779), and Parker Hannifin (NYSE: PH).

5% stockholders

Entities affiliated with SCP Vitalife Partners        24%

Yaskawa Electric Corporation                20.4%

Israel Healthcare Ventures 2 L.P.            18.7%

Entities affiliated with Pontifax                 11.5%

Entities affiliated with OurCrowd Investment in Argo L.P.             7.2%

Previz Ventures L.P.      6.2%

Jeff Dykan                    24.0%

Wayne B. Weisman       24.0%                                                                                    

Use of proceeds

RWLK intends to use the $44.3 million in proceeds from its IPO as follows:

for general corporate purposes, including sales and marketing expenditures aimed at growing its business and research and development expenditures focused on product development.

RWLK  expects that the net proceeds from this offering will be sufficient for it to expand its sales, marketing and training infrastructure and for its other current development activities, including adapting ReWalk for other indications and the development of its next generation of ReWalk.

RWLK may also use net proceeds from this offering to make acquisitions or investments in complementary companies or technologies, although RWLK does not have any agreement or understanding with respect to any such acquisition or investment at this time.

RWLK does not currently have specific plans or commitments with respect to the net proceeds from this offering and, accordingly, are unable to quantify the allocation of such proceeds among the various potential uses. RWLK will have broad discretion in the way that its uses the net proceeds of this offering.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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