10/17/2007

TranS1, Inc. Shares Soar in Market Debut

NEW YORK, Oct 17 (Reuters) - Shares of TranS1 Inc (Nasdaq: TSON), which develops products for sufferers of lower back pain, soared in their stock market debut on Wednesday, a day after the company's initial public offering priced above the forecast range.

The stock opened at $25.01, more than 66 percent higher than the offering price, and climbed as high as $26 in morning Nasdaq trade.

By early afternoon, the shares were still up 62 percent at $24.30.

On Tuesday, the company's IPO of 5.5 million shares sold for $15 each, compared with a forecast range of $12 to $14. The offering raised $82.5 million.

STOKING INTEREST

TranS1's strong debut could revive interest in biotechnology and biomedical offerings, said analysts, after recent IPOs from the sector mostly floundered.

"This is the first to price above range," said Scott Sweet, managing director of research firm IPOboutique.com. "And it may bring in some interest" for offerings from medical and pharmaceutical firms, he added.

AUDIENCE

Some of TranS1's products are commercially available in the United States or Europe, while it is trying to obtain regulatory approval for others.

And a new procedure it is developing to benefit its target audience -- those who suffer from back pain -- may also be drawing interest, said Sweet.

"It is minimally invasive and it is a revolutionary product" for "one of the most complained-about maladies," said Sweet.

TranS1 said it plans to use the proceeds from its IPO for sales and marketing and to support research, development and the costs of seeking regulatory approvals.

For the six months ended June 30, TranS1's revenue more than tripled, to $7 million from $2.2 million a year earlier, while its net loss narrowed to $4 million from $4.6 million.

TranS1 expects the market for back pain treatments such as those it offers to grow to $1.8 billion by 2011 from $1.4 billion last year, based on data compiled by Millennium Research Group.

And the rise of minimally invasive spine procedures, such as those the company is developing, could accelerate the pace of growth, it said in an amended filing with the U.S. Securities and Exchange Commission.

Based on TranS1's opening share price on Wednesday, the Wilmington, North Carolina, company's initial market capitalization was $470 million.

Underwriters, led by Lehman Bros and Piper Jaffray, have an option to purchase an additional 825,000 shares to cover over-allotments. (Reporting by Lilla Zuill)