Portable dialysis machine manufacturer Outset Medical Inc. saw its shares soar after the opening of its Nasdaq IPO to $52 after opening at an already elevated price of $27 a share for an expected $241.7 million.
Trading under the ticker symbol OM, the company priced 8.95 million of its shares at $27 apiece, upsizing its previously reported plans to offer 7.6 million shares between $22 and $24. The offering is set to close Sept. 17.
The stock rose as high as $61.60 before closing at $60.68, finishing the day with a market cap of nearly $2.5 billion.
Bofa Securities, Morgan Stanley and Goldman Sachs & Co. LLC are acting as joint lead book-running managers for the offering. SVB Leerink and Stifel are acting as co-managers for the offering.
The San Jose, Calif.-based company’s Tablo hemodialysis system is designed to serve as a standalone unit. While traditional machines may require a connection to an outside source of clean water, the Tablo unit includes integrated water purification hardware, allowing it to run off of tap water and a basic electrical outlet.
It also uses prewired, single-use cartridges to reduce the number of steps and training required to set up the machine. The system can perform dialysis for as little as 30 minutes or as long as 24 hours.
In July, the company reported the system’s first use within a patient’s home, after it received an expanded clearance from the U.S. FDA at the end of March.
In May, the company deployed 50 Tablo systems for emergency use to five hospitals in New York City and Long Island under a multiyear contract with the U.S. Department of Health and Human Services, originally formed to provide dialysis services in communities following natural disasters.
Outset Medical estimates that dialysis therapy is currently delivered to more than 550,000 patients in the U.S. multiple times per week, totaling 85 million treatments per year and costing about $75 billion.
Outset recently closed a $125 million series E financing led by D1 Capital Partners, bringing its total prior of funds raise prior to the IPO to about $447 million. The funds are being used to support ongoing commercial expansion of the Tablo system, including home use.
There are other companies developing home dialysis products.
In June, Lausanne, Switzerland-based Debiotech SA and Neokidney BV, of Amsterdam, reported the creation of Nextkidney SA to lead the development and commercialization of Neokidney, a lightweight, plug-and-play, home hemodialysis device.
In February, San Francisco-based startup Cloudcath reported it had raised a $12 million series A round to support commercialization of the Cloudcath system that enables remote, real-time monitoring for at-home peritoneal dialysis patients. It is pending U.S. FDA clearance.
Cloudcath has run a 150-patient clinical trial in Mexico. After it receives the anticipated FDA clearance, it plans to follow roughly 750 to 1,000 at-home peritoneal dialysis patients in a postmarket analysis through the end of 2021.
U.K.-based Quanta Dialysis Technologies Ltd. is also eyeing the home dialysis space. In July 2019, the company scooped about $46.7 million in a series C round aimed at funding an FDA submission and U.K. commercial launch of its SC+ home hemodialysis system.