IPO Report: Second Sight Medical Products (EYES)

Francis Gaskins  |

Second Sight Medical Products (EYES) is a medical device company that develops, manufactures and markets implantable visual prosthetics to restore some functional vision to blind patients. The company is based in Sylmar, CA.

Eight other companies are scheduled for the week of Nov. 17, 2014. The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: MDB Capital Group, LLC

Co-managers: None

End of lockup (180 days): Monday, May 18, 2015

End of 25-day quiet period: Monday, Dec. 15, 2014

EYES scheduled a $32 million IPO with a market capitalization of $311 million at a price range midpoint of $9 for Wednesday, Nov. 19, 2014 on Nasdaq.

Second Sight Medical Products IPO Report


EYES is a medical device company that develops, manufactures and markets implantable visual prosthetics to restore some functional vision to blind patients.

Each IPO share carries the right to obtain one additional share on the 2nd anniversary of the IPO at no cost.


Pre-IPO grade-score summary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Sept 9 mos


Second Sight Medical Products (EYES)












Market Do-



1-5, 5 is high







20 is perfect






C, 7


Neutral plus

Could be a very big stock over time

Implanted about 90 units of current product

Laying foundation for major sales growth

Sept 9 mos rev +88%

Gross margin improved to -14% from -306%

Operating loss is -851% of rev

P/E of -11, $21mm loss for Sept 9 mos


EYES is a medical device company that develops, manufactures and markets implantable visual prosthetics to restore some functional vision to blind patients.

Market potential for  the current product

The current product, the Argus® II System, treats outer retinal degenerations, such as retinitis pigmentosa, which we refer to as RP in this prospectus.

RP is a hereditary disease, affecting an estimated 1.5 million people worldwide including about 100,000 people in the United States, that causes a progressive degeneration of the light-sensitive cells of the retina, leading to significant visual impairment and ultimately blindness.

Argus® II System

EYES has implanted about 90 Argus II units.  The average implant duration for these patients is 2.9 years with several users continuing to use the system more than seven years following implantation.

To date EYES has successfully implanted patients in the United States, Canada, France, Italy, Germany, the Netherlands, Saudi Arabia, Spain, Switzerland and the United Kingdom.

To EYES’s knowledge the Argus II System currently is the only retinal prosthesis to be commercialized anywhere in the world and currently is the only such product to obtain FDA marketing approval in the US.

By restoring some functional vision in patients who otherwise have total sight loss, the Argus II System can provide benefits

The Argus II System is the only retinal prosthesis approved in the United States by the Food and Drug Administration, or FDA, and the first approved retinal prosthesis in the world.

Regulatory approvals

EYES received marketing approval in Europe (CE mark) for the Argus II System in 2011, and received FDA approval in 2013 to market the Argus II System in the United States.

In September 2014 EYES obtained registration of the product for sale in Turkey. EYES applied for regulatory approval in Canada and expanded approval in Saudi Arabia and anticipate receiving these approvals before the end of 2014.


A substantial portion of EYES revenue depends on the extent to which the product costs are reimbursed by third party private and governmental payers, including Medicare, and other US government sponsored programs, international governmental payers and private payers.

In the US EYES achieved several important reimbursement milestones that include obtaining:

 - required federally established codes: including Current Procedural Terminology (CPT) code 0100T to describe the out-patient surgical procedure, and Healthcare Common Procedure Coding System (HCPCS) code C1841 to describe the device, and ICD-9-CM codes 14.81, 14.82, and 14.83 to describe in-patient procedures related to the Argus II,

- payment mechanisms: including Medicare authorized Transitional Pass-through Payment and New Technology Add-on Payment programs, which provide for unique itemized payment for the device in both the out-patient and in-patient settings of care, and procedure assignment to Ambulatory Payment Classification (APC) 0672 (out-patient),  and MS-DRG 116 and 117 (in-patient),

- coverage by some Medicare Administrative Contractors (MACs) and Medicare Advantage (MA) and commercial insurance company plans, or on a case by case basis.

 All three items (coding, coverage, and payment) are necessary to have the surgical procedure and Argus II system reimbursed by payers. It should be noted that while coding and payment are established nation-wide, coverage is not currently being provided by the majority of MACs, MA plans, or commercial plans, although EYES expects more and more payers to agree to cover over time.

Within Europe, EYES obtained reimbursement approval in Germany and France.

EYES is also are seeking reimbursement approval in Italy and other countries including England, Netherlands, Switzerland and Turkey.

Growth plan

Over the next 12 to 18 months EYES intends to introduce the Argus II System in countries other than the US and Europe with the assistance of local partners in some cases.

Age-related macular degeneration (AMD)
EYES plans to further conduct a clinical study that is intended to demonstrate the safety and efficacy of the Argus II System for the treatment of age-related macular degeneration, or AMD, which is the leading cause of blindness in people over the age of 65 in developed countries.

AMD affects vision for between 20 and 25 million people around the world of whom approximately two million similarly are affected in the United States.

In September 2014, EYES received permission from the British Medicines and Healthcare Products Regulatory Agency or MHRA to commence an AMD Study.

EYES anticipates beginning this study late in 2014 and if able to achieve favorable patient outcomes, EYES estimates that it can obtain regulatory approval for AMD in the US and Europe in 2019, and may be able to market the product to treat AMD during the same year.

Additionally, EYES is developing another product for cortical stimulation that EYES expects will be able to treat nearly all forms of blindness. EYES refers to this product as the OrionTM I visual prosthesis.


EYES was founded in 1998 with the mission to develop, manufacture, and market implantable prosthetic devices that can restore sight to the blind.

In 2002, EYES began a clinical trial of its proof-of-concept device, the Argus I retinal prosthesis, at the University of Southern California.

Six human subjects were implanted with the Argus I retinal prosthesis in a study that was designed to demonstrate the feasibility and safety of long-term electrical stimulation of the retina and its ability to restore some functional vision.

By 2006, EYES developed a second generation device, the Argus II Retinal Prosthesis System that, among other attributes, is smaller, has more stimulating electrodes, and is easier to install surgically than the Argus I retinal prosthesis.

In that year, EYES conducted a small pilot study in Mexico, and EYES utilized data from this pilot study to obtain FDA approval to begin an Investigational Device Exemption (IDE) clinical trial at six hospitals in the US during 2007.

In 2008 EYES expanded the trial to include sites in three European countries. EYES completed enrollment for this study in August 2009.

Based on the long-term results of this study, which demonstrated the benefits of Argus II System, EYES obtained CE Mark approval in EU in February 2011, and FDA marketing approval, under a Humanitarian Device Exemption, in February 2013.

Currently, after more than 15 years of research and development, more than $124 million of investment and over $29 million of direct federal grants received in support of EYES’s technology development, EYES employs over 100 people in the development (engineering and clinical), manufacture, and commercialization of the Argus II System and future products.

Second Sight is the global leader in vision restoration to the blind. EYES believes that its competitive advantage and ability to maintain market share in the future will be bolstered by the following:

EYES has extensive IP protection that covers every major aspect of the technology EYES has developed.

EYES has approximately 300 granted patents and approximately 176 patent applications on a worldwide basis.

EYES believes that its IP and its technical approach, which does not rely on light getting to the implant, will result in a device that can deliver cortical stimulation to the brain which, subject to additional research and development, may result in a device that can treat nearly all forms of blindness.

EYES has regulatory leadership in that, to its knowledge, EYES currently possesses the only device that is both FDA approved and CE-marked to restore some functional vision to individuals who are or will become blind as a result of RP.

EYES continues to achieve meaningful reimbursement levels for the Argus II System in the US and some European countries.

EYES is currently working to expand the number of countries that reimburse EYES  for the Argus II System.

EYES plans to offer periodic software upgrades to enhance its customers’ experience, which arise from its strong engineering, research and clinical programs.

EYES plans to offer the next upgrade in 2016.

EYES expects to expand the numbers of eligible blind persons who will benefit from the Argus II System through additional clinical trials, planned to commence in the fourth quarter of 2014, to treat patients blinded by AMD.

EYES intends to develop a new device, the Orion I visual prosthesis, within approximately the 24 to 36 months following this offering that EYES expects may favorably address virtually all other forms of blindness.

Intellectual property

EYES relies on a combination of patents, patent applications, trademarks, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights, to protect its proprietary rights.

 As of October 31, 2014, EYES has:

 98 pending US patent applications and provisional patent applications

215 US granted patents

78 pending foreign patent applications

85 foreign granted patents


In the area of retinal prosthetics, there are a number of potentially competing efforts underway. EYES believes that most, if not all of these efforts, are not as advanced as the Argus II System in terms of commercialization, especially in the United States.

Commercial efforts by others include:

Retina Implant AG: A German company that is developing the Alpha IMS, a wireless sub-retinal implant using the image from the eye’s own optical system Retina Implant AG has a CE mark and to EYES’s knowledge expects to start commercialization of its product during 2015 in EU. To EYES’s knowledge, Retina Implant has not yet applied for or obtained FDA approval to begin a clinical trial.

Pixium Vision: A French company that is developing the IRIS (Intelligent Retinal Implant System) that is surgically placed into the eye and attached to the surface of the retina. Similar to EYES’s Argus II technology, its system uses a camera and a wireless transmitter. Pixium is reported to be in clinical studies with IRIS and EYES believes plans to submit a CE mark application in 2015-6. To EYES’s knowledge, Pixium Vision has not yet applied for or obtained FDA approval to begin a clinical trial.

NanoRetina in Israel and several other early stage companies are reported to have developed intellectual property or technology that may improve retinal prostheses in the future, but to EYES’s knowledge none of these efforts has resulted in a completed system that has been tested clinically in patients anywhere.

5% shareholders pre-IPO

Alfred E. Mann  42.0%

William J. Link    18.3%

Gregg Williams  22.2%   


No dividends are planned.

Use of proceeds

EYES expects to receive $31 million from its IPO and use it for the following:

$2.0 to $4.0 million to increase sales and marketing activities over the next two years to increase sales coverage and market penetration.

$4.0 million to increase development and clinical efforts to enhance the external hardware and software of the Argus II System.  If successful, these enhancements could improve the resolution and other performance characteristics of its system.

$2.0 million to conduct clinical trials to establish the safety and benefit of using the Argus II system to treat patients with AMD.  EYES will start with a feasibility trial in late 2014.  With promising results, EYES will begin a larger scale efficacy trial in early 2016 that could lead to marketing approval for the Argus II system for AMD patients in 2019.  EYES estimates that the cost to complete this additional trial would be approximately $4.5 million.

$5.0 million to conduct pre-clinical development of the Orion I cortical implant.  If successful, EYES will begin testing its Orion I technology in humans in late 2016.  The human clinical testing is likely to take the form of a feasibility study followed by a premarket approval pivotal trial.  The details of these trials will be determined collaboratively with the FDA at that time.  EYES cannot accurately estimate the timing or exact cost of these trials at this time.

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


Symbol Name Price Change % Volume
EYES Second Sight Medical Products Inc. 0.73 -0.01 -1.10 172,770 Trade



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