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Tandem banks $120M in topped-out IPO, stirring med tech market hopes

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Tandem Diabetes raised $120 million in an IPO to help market its t:slim insulin pump.--Courtesy of Tandem

Insulin pump maker Tandem Diabetes bagged $120 million in its IPO, pricing shares at the top of its range and feeding optimism that medical device companies can cash in on the boom in biotech debuts.

Tandem flipped 8 million shares at $15 apiece, raking in $20 million more than its expected midpoint with the chance to add another $18 million to the haul if its underwriters pick up their options. The company will trade as "TNDM" on the Nasdaq once the opening bell rings this morning.

Tandem has said it'll put about $40 million of its haul toward a scale-up in marketing infrastructure, looking to expand the adoption of its banner t:slim device, an FDA-cleared touchscreen insulin pump. Tandem will earmark another $20 million of its raise for manufacturing while putting $12 million into R&D efforts, according to its most recent S-1. The company is at work developing t:flex, a pump with a larger insulin capacity, and t:sensor, which pairs Tandem's sleek design with continuous glucose monitoring.

More than 40 drug and diagnostics companies have gone public this year in the strongest market for life sciences IPOs since 2000, but Tandem makes just the second pure-play medical device outfit to follow suit, after orthopedics outfit LDR ($LDRH). Analysts blame the slower market for medical device IPOs on a tepid M&A climate across the industry, costly development and prolonged regulatory uncertainty.

But a few high-dollar successes could help motivate investors to give med tech a second look. Last month, LDR raised an overallotted $75 million and is trading almost 50% above its initial price, and now Tandem has notched a top-of-the-range debut with hopes of a strong Street performance.

Like many of the year's IPO seekers, Tandem has yet to post a profit, taking a $26.5 million loss in the first half of 2013 and saying it'll be a few years before it can work its way into the black. The company reported about $11 million in revenue over the same period, with t:slim accounting for roughly 93% of sales.

- read the announcement

Special Report: Are medical device companies invited to the biotech IPO party?

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