Breast implants go public: Sientra sets terms for $75 million IPO

Sientra, an early-stage producer of silicone gel breast implants, announced terms for its IPO on Monday. The Santa Barbara, CA-based company plans to raise $75 million by offering 5 million shares at a price range of $14 to $16. At the midpoint of the proposed range, Sientra would command a fully diluted market value of $230 million.

Business
Sientra received FDA approval in 2012 for its silicone gel breast products that use proprietary branded TRUE texture. Its portfolio of breast implants are offered in over 120 variations to plastic surgeons. The company estimates that the US market for breast implants and tissue expanders was $600 million in 2013. Sientra notes that its industry is dominated by two major breast implant producers, Mentor (a division of Johnson & Johnson) and Allergan. In 2012, Mentor filed a lawsuit alleging that employees breached confidentiality and non-compete agreements, which were later dismissed in court.

Shareholders
Primary shareholders include OrbiMed (23% post-IPO stake), Clarus Lifesciences (19%), Abingworth Bioventures (12%), Goldman Sachs (6%), Teachers Insurance and Annuity Association (5%) and founder and CEO Hani Zeini (4%).

Financials
Revenue increased 22% to $22 million for the six months ended June 30, 2014 as plastic surgeons became more familiar with its products. Its gross margin fell 100 bps to 75% due to higher manufacturing costs and targeted pricing programs. Sientra's loss from operations narrowed to about $3 million from $9 million because of litigation expenses in the 1H13 related to Mentor litigation. The company has taken debt of $25 million as of June 30, up from $15 million at the end of December.

Sientra, which was founded in 2003 and booked $39 million in sales for the 12 months ended June 30, 2014, plans to list on the NASDAQ under the symbol SIEN. Piper Jaffray and Stifel are the joint bookrunners on the deal. It is expected to price during the week of October 27, 2014.