Lumbar spine surgery company TranS1 Inc. (NSDQ:TSON) raised $18.3 million of a hoped-for $20 million round through public sales of common stock.
The Wilmington, N.C.-based company sold some 6.2 million shares at $3.25, according to SEC filings.
TranS1 plans to use the funds for additional clinical trials, reimbursement efforts, sales personnel, research and product development activities and working capital. It added that funds may go toward acquisition of or investment in technologies, products or assets that complement the business.
TSON shares were up 3 percent to $3.35 in afternoon trading today, after closing at $3.25 last night.
The offering, announced last week, was a risky venture, the company reported. Although its spinal surgery products have FDA 510(k) clearance, long-term efficacy hasn’t been demonstrated through clinical trials.
Adding another layer of risk is that sales depend largely on third-party coverage and reimbursement. Reimbursement for TranS1’s products was complicated by a billing re-coding in 2009 which placed them in Category III alongside products often considered "experimental" or "investigational," according to SEC filings.
"This uncertainty around the availability and amount of reimbursement has caused some physicians to revert to other fusion surgeries where coverage and reimbursement are more certain," TranS1 wrote.
A billing code panel will review the categorization and consider bumping some of TranS1’s products to Category I in October.
TranS1 reported heavy losses in second quarter ended June 30, 2011. The Wilmington, N.C.-based spinal company posted a 26 percent decrease in sales to $5.3 million, compared to $7.2 million during the same period last year.
Company losses widened 19 percent to $4.3 million, or a loss of 21 cents per diluted share, compared to $3.6 million, or 18 cents per diluted share in Q2 of 2010.