On Thursday of last week, MAKO Surgical Corp went public. The Company, which makes robotic arms for minimally inveasive knee surgery, raised an impressive $51 million in capital selling at $10 a share. Although it lost some ground on the first day of trading, Mako was close to fully recovered by the end of Friday at $9.72.
This IPO is proof positive that the markets reward companies for developing innovative orthopedic technology. In this case you have a technology that goes far enough to change surgical technique vis a vis a haptic guidance system that allows the surgeon to achieve what is effectively a knee resurfacing procedure versus a full knee replacement. The company said 181 procedures have been performed using its robotic system since commercial introduction in June 2006. Priced at $10 per share, the market capitalization of Mako is approximately $194 million which is nearly an infinite multiple of revenues. 9 month ended Sept 2007 revenues were only $355 thousand and losses for that period were nearly $13 million.
Mako plans to use the IPO proceeds to expand sales and marketing and continue its research and development. The company will also make a $4 million payment to IBM under a licensing agreement. After all is said and done, you could argue that Mako added enough cash to its existing coffers to keep it going steadily for another 3 to 4 years before the Company has to go back to the market. Company financial details can be found on this prospectus document filed with the Securities and Exchange Commission.
