Under the new SEC Regulation A + rules, Aperion Biologics could raise up to $50 million. It checked the box on its registration statement for a Tier 2 filing, which includes “offering of securities of up to $50 million in a 12-month period with not more than $15 million in offers by selling security-holders that are affiliates of the issuer.”
The new SEC rules, part of the JOBS Act, seeks to simplify the process of raising money for smaller startup companies by streamlining the process and requiring less paperwork. It also allows companies to raise equity investment from non-accredited investors or the average investor.
“It does open up the public market to companies that previously couldn’t access these investments,” said David Cocke, Chief Financial Officer with Aperion.
“It’s a less burdensome process,” Cocke said. For example, it requires Aperion to provide two years of audited financial statements versus five years for a traditional Initial Public Offering.
WR Hambrecht + Co will conduct the offering. The number of shares and price range for the proposed offering has not yet been determined, according to a news release.
Aperion Biologics sent out a news release stating it is seeking $20 million to market its Z-Lig ACL Device in Europe and to begin clinical trials in the U.S.
Dr. Kevin Stone founded Aperion Biologics in 1996 under a different name and he created the Z-Lig ACL device in 2008 in San Francisco. The company moved to San Antonio in 2009. The Z-Lig is a patented engineered tendon device made from a pig that can be used by surgeons to replace a ruptured anterior cruciate ligament, known as an ACL, in the knee. For ACL reconstructive surgery today, surgeons currently use autografts made from the patient’s own tissues or an allograft, which is tissue from a cadaver.
The ACL repair and replacement market worldwide is a $2.5 billion market with 800,000 procedures taking place annually at a cost of about $2,500 per surgery, according to Aperion Biologics. The market is projected to grow at six to ten percent a year.
The Z-Lig is not yet available in the U.S. but it did receive Europe’s CE Mark approval for surgeries in Europe last year after a successful human clinical trial involving 66 patients there, said Daniel Lee, the company’s Chief Executive Officer.
In its filing, Aperion Biologics, which lists three full time employees and one part time employee, reported losses of $3.29 million and $5.45 million for fiscal 2014 and 2013 respectively and no revenue. For the first nine months of this year, the company reported $27,000 in revenue and $1.8 million in losses. It also has more than $40 million in liabilities.
The company plans to use the proceeds from the sale of its stock to repay some debts, compensate some of its employees, who have taken reduced salaries, and to market its Z-Lig product throughout Europe and Africa. It also wants to launch a clinical trial in the U.S., Lee said.
Aperion Biologics will be seeking a listing on the NASDAQ stock exchange, Cocke said.
Aperion Biologics has received U.S. Food and Drug Administration approval to start clinical trials in ten different centers in the United States, Lee said.
“We may have a center here in San Antonio,” he said. “We’ll have centers in Texas.”
Overall, Aperion Biologics is a startup with an interesting technology in a space that is a high growth area over the next ten to twenty years, Lee said.