IPO Report: Sientra (SIEN)

Sientra (SIEN) sells its breast implants and breast tissue expanders, or Breast Products, exclusively to board-certified and board-admissible plastic surgeons and tailor its customer service offerings to their specific needs, which SIEN believes helps secure their loyalty and confidence. It is headquartered in Santa Barbara, CA.

Two other companies are scheduled to IPO for Wednesday Oct. 29, 2014.  The full IPO calendar is available at IPOpremium.

Manager, Joint-managers: Piper Jaffray, Stifel
Co-managers: Leerink Partners, William Blair 

SIEN scheduled a $75 million IPO with a market capitalization of $212 million at a price range midpoint of $15 for Thursday, October 30, 2014 on Nasdaq. SEC filings

SIEN IPO Overview

SIEN sells its breast implants and breast tissue expanders, or Breast Products, exclusively to board-certified and board-admissible plastic surgeons and tailor its customer service offerings to their specific needs, which SIEN believes helps secure their loyalty and confidence.

SIEN Valuation

Glossary

Conclusion

Neutral, C, 6.5

P/E of -89 annualizing June 6 mos

Rev +23%, gross profit 72%

Operating expenses 83% of rev

2.4 times book

No  patents

Business

SIEN are a medical aesthetics company committed to making a difference in patients' lives by enhancing their body image, growing their self-esteem and restoring their confidence.

SIEN was founded to provide greater choice to board-certified plastic surgeons and patients in need of medical aesthetics products.

SIEN has developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes.

SIEN sells its breast implants and breast tissue expanders, or Breast Products, exclusively to board-certified and board-admissible plastic surgeons and tailor its customer service offerings to their specific needs, which SIEN believes helps secure their loyalty and confidence.

These advantages have allowed SIEN to increase its market share each year since SIEN entered the market in 2012.

Market growth

Based on data from ASAPS and ASPS, between 1997 and 2013, the number of breast augmentation and breast reconstruction procedures has grown at a compound annual growth rate of approximately 7.3% and 4.4%, respectively

Primary products

SIEN’s primary products are silicone gel breast implants for use in breast augmentation and breast reconstruction procedures, which SIEN offers in over 120 variations of shapes, sizes and textures.

SIEN’s breast implants are primarily used in elective procedures which are generally performed on a cash-pay basis.

Many of SIEN’s breast implants incorporate one or more differentiated technologies, including a proprietary high-strength, cohesive silicone gel and proprietary texturing branded TRUE Texture.

SIEN’s breast implants offer a desired balance between strength, shape retention and softness due to the high-strength, cohesive silicone gel used in SIEN’s manufacturing process.

TRUE Texture provides texturing on the implant shell that is designed to reduce the incidence of malposition, rotation and capsular contracture.

SIEN also offers breast tissue expanders and a range of other aesthetic and specialty products. SIEN does not have any patents or patent applications, but rely on trade secrets, proprietary know-how and regulatory barriers to protect its products and technologies.

Approved by the FDA

SIEN’s breast implants were approved by the U.S. Food and Drug Administration, or FDA, in 2012, based on data SIEN collected from its ongoing, long-term clinical trial of its breast implants in 1,788 women across 36 investigational sites in the United States.

SIEN’s clinical trial is the largest prospective, long-term safety and effectiveness pivotal study of breast implant patients in the United States.

The clinical data SIEN collected over a five-year follow-up period demonstrated rupture rates, capsular contracture rates and reoperation rates that were comparable to or better than those of its competitors, based on its competitors' published six-year data. In addition to SIEN’s pivotal study, its clinical data is supported by its Continued Access Study of 2,497 women in the United States.

SIEN has also commissioned a number of bench trials run by independent laboratories that SIEN believes further demonstrate the advantages of its breast implants over those of its competitors.

Intellectual property

SIEN’s intellectual property portfolio consists primarily of trademarks and trade secrets and does not presently consist of any patents or patent applications.

SIEN does not currently intend to file any patent applications in the United States or elsewhere.

SIEN’s trademark portfolio consists of five registered U.S. trademarks and six pending Canadian trademark applications.

SIEN maintains a program to protect its marks and will institute legal action where necessary to prevent others from using and registering confusingly similar marks.

Competition

SIEN primarily competes with two companies that manufacture and sell breast implants in the United States: Johnson & Johnson through its wholly owned subsidiary, Mentor, and Allergan.

Both of SIEN’s U.S. competitors are either publicly-traded companies or divisions or subsidiaries of publicly-traded companies with significantly more market share and resources than SIEN has.

5% shareholders pre-IPO

Abingworth Bioventures V LP and affiliated entities         18.6%

OrbiMed Private Investments III, LP and affiliated entities  34.8%

Clarus Lifesciences I, L.P.          29.8%

Private Equity Managers (Healthcare) Offshore Holdings LP and affiliated entities  8.6%                          

Teachers Insurance and Annuity Association of America             6.9%

Hani Zeini   6.3%

Nicholas Simon             29.8%  

Rishi Gupta       34.8%  

Timothy Haines  18.6% 

Dividends

No dividends are planned.

Use of proceeds

SIEN expects to receive $67 million for its IPO and use it for the following:

$13.8 million to expand its sales force and marketing programs; $5.7 million to fund research and development activities; and the balance for working capital and other general corporate purposes.

SIEN may also use a portion of the net proceeds to acquire or invest in complementary products, technologies or businesses; however, SIEN currently have no agreements or commitments to complete any such transaction.