TearScience, the dry eye treatment company fresh off a 510(k) clearance, is starting to explore its options for an initial public offering. But if TearScience does go public, there’s a chance it won’t be on the New York Stock Exchange or NASDAQ.
Think SSE, SZSE or HKEX.
CEO Tim Willis told a crowd at the CED Life Science Conference in Raleigh, North Carolina, that there’s too much anecdotal evidence to suggest going public in Europe; India or China is a better move for medical device companies. He criticized most life sciences IPOs — and the few that happen in the medical device space — as funding events and not liquidity events.
“We are looking at it as a vehicle for liquidity,” Willis said.
Willis didn’t have many other details, only that TearScience is talking with investment bankers now and that they are very early in exploring the overseas IPO approach. He mentioned he’s followed an American company that went public in Turkey and considers China and India the best options for American companies.
“We looked at how many companies have gone public … and there’s been 30 to 35 in China. So, you have to go where the money is,” Willis said.
China is the world’s top location for IPOs, last year raising $73 billion combined from the Shanghai, Shenzen and Hong Kong indexes (that’s double what the American stock markets raised in IPO dollars). Non-Chinese companies that have done China IPOs there include Prada and Samsonite. Later this year, the China National Biotech Group will raise between $1.5 billion and $2 billion in a Hong Kong IPO.
It would seem the right time for TearScience’s next big move. The company added another $15 million to the bank account in October ahead of the FDA’s approval (and they have approval in Europe). Plus, there are no other devices on the market that treat evaporative dry eye — a condition that is typically treated with drugs or eye drops. Plus, those other existing treatments address symptoms rather than the condition’s cause.
The device, LipiFlow, uses a combination of heat and pressure to clear the channels that produce the oil that sits atop the tear film and keeps it from evaporating. With LipiFlow treatment, a patient can find dry eye relief for a year or more. TearScience’s product would serve about two-thirds of the 100 million dry eye sufferers.
TearScience may never get to the public markets. Acquisition is also an option. Willis told the crowd at the CED conference that many companies in his space get acquired only after they begin to file for an IPO.