Durham, North Carolina-based Bioventus Inc has just sold 8.0 million shares of its common stock ($13 per share) to raise, before underwriting expenses, $104 million ($119.6 million if the underwriters exercise their option to purchase more shares).
According to the company’s filing with the Securities and Exchange Commission (SEC), Bioventus had hoped to offer its stock at between $16.00 and $18.00 per share. Market conditions, however, pushed the price down to $13.00. The company’s stock symbol is “BVS” and will trade on NASDAQ’s Global Exchange. The company will have a market value of somewhere around $700 million which equates to about 2.3x expected 2020 revenue—average for public orthopedic companies.
The newly public regenerative medicine and biologics company was founded nine years ago (2012) when it was spun-off from Smith & Nephew. Its original funders were Essex Woodlands Health Ventures, Spindletop Healthcare Capital, Pantheon Global, Ampersand Capital and Alta Partners. One issue that affected BVS’ underwriting was general investor skepticism regarding the biotechnology sector. Since 2015, NASDAQ’s Biotechnology Index has fallen 26%. And, of course, COVID pushed BVS’ sales down in 2020, as it did for virtually every orthopedic supplier.
Most analysts think demand for orthobiologic products will grow at a 7% annual growth rate—which is about 2x faster than expected demand for orthopedic surgery.
Bioventus employs more than 700 people around the world. The company’s three verticals are osteoarthritis joint pain treatment and joint preservation, bone graft substitutes, and minimally invasive fracture treatment.
BVS’ joint pain injection therapies are hyaluronic acid viscosupplementation therapies for osteoarthritic knee pain. The U.S. Food and Drug Administration (FDA) provided premarket approval for its following injection therapy products: Durolane, GELSYN-3, and SUPARTZ FX.
Bioventus’ bone graft substitute products are used by surgeons in “spinal fusion, orthopedic trauma, foot and ankle, hand and wrist, hip and knee and craniomaxillofacial surgeries.” The company’s bone graft substitute products include the following: OsteoAMP, “an allograft-derived bone graft with growth factors”; Exponent, “a demineralized bone matrix”; PureBone, “cancellous bone in different preparations”; Signafuse and Interface, “bioactive synthetics”; OsteoMatrix, a “collagen ceramic matrix”; and CellXtract and Extractor, “bone marrow isolation systems”.
The Bioventus product for fracture treatment is the Exogen ultrasound bone healing system. The FDA-approved device is used for the “non-invasive treatment of established nonunion fractures and certain fresh fractures.”
Financially, Bioventus reports “a 7.4% CAGR [compound annual growth rate] in revenue since 2016.” Since 2016, its revenue has grown from $274.5 million to $340.1 million in 2019. However, because of all the COVID related disruptions to orthopedics in 2020, “total net sales declined from $242.6 million for the nine months ended September 28, 2019, to $222.6 million for the nine months ended September 26, 2020.”
This was not BVS’ first attempt at an initial public offering, as the company previously filed for an initial public offering in 2016, before withdrawing the offering a few months later.
Canaccord Genuity LLC is the lead manager for the offering. Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, and Goldman Sachs & Co. LLC are the joint lead book-running managers and representatives of the underwriters.
