Syneron Medical to hold Nasdaq IPO next week

Syneron will issue five million share and its shareholders will sell 500,000 more, at a company value of $330 million, after money. Syneron chairman Shimon Eckhouse expects to earn $1.5 million.

Medical and cosmetic devices maker Syneron Medical will hold an IPO on Nasdaq next week, probably on Tuesday or Wednesday (August 3-4). Syneron plans to issue five million shares at $14-16 each. Company shareholders are also expected to offer to sell another 500,000 shares. Altogether, Syneron hopes to raise $75 million, and the shareholders hope to earn $7.5 million. The issue is expected to be held at a company value of $330 million, after money. Syneron's ticker will be ELOS.

Syneron's IPO is unusual for companies listing on Nasdaq. It filed its first and only prospectus to the Securities and Exchange Commission (SEC) just two weeks ago, and has already obtained a date for the IPO. The fact that the draft prospectus included all the issue details, from the number of shares to be issued to the value of the issue, was not usual practice.

A contrast can be made with Shopping.com, for example. Shopping.com submitted its first draft prospectus in late March 2004, and subsequently revised it twice. One update included the company's first quarter results. Although four months have passed since the first prospectus, no date has been set for the IPO.

Google's well-publicized IPO did not have such a rapid passage. Only yesterday did Google publish the full details of its issue, three months after submitting its first draft prospectus to the SEC.

Meanwhile, lawsuits

Syneron's story is in some sense the story of its largest shareholder, chairman Dr. Shimon Eckhouse. Eckhouse was once CEO of ESC Medical (now Lumenis (Pink Sheets:LUME)), and was ousted by Arie Genger, now the dominant figure at Lumenis. Eckhouse, who owns 23.8% of Syneron, is expected to sell 100,000 shares for $1.5 million during the issue, diluting his stake in the company to 17.9%.

Other shareholders who will sell similar number of shares are Syneron CEO Moshe Mizrahy, who will reduce his stake to 11.8%; and CTO Dr. Michael Kreindel, who cofounded the company with Eckhouse, and will reduce his stake to 15.6%. Israel Healthcare Ventures (IHCV) will also sell shares for $3 million, reducing its stake to 11.1%.

Syneron has developed a device called Aurora, based on ELOS technology, which combines optical and electrical energy for skin and acne treatments and hair removal.

While Syneron is moving forward on its IPO, it has had to deal with a patent infringement lawsuit filed in a San Francisco, California, court, by Thermage. The Thermage patent addressed in the lawsuit is a US patent that covers methods and devices for treating skin using either light or radiofrequency energy or both.

"It is clear to us that Syneron has copied some of our patented concepts," said Thermage president and CEO Bob Byrnes. "Our investors have spent over $47 million to develop these concepts into medical devices that offer real clinical benefits to our customers. We had hoped that Syneron would accept our recent offer of a limited license because we really didn't want to have to litigate this matter. But when they refused, we had no choice but to defend the inventions we worked so hard to develop."

Published by Globes [online] - www.globes.co.il - on July 27, 2004

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