Beta Bionics Goes Public: Insights from CEO and CFO on the IPO Process

Beta Bionics, a company developing an insulin delivery system dubbed the "bionic pancreas," recently completed its initial public offering (IPO), raising over $200 million. The successful IPO marks a significant milestone for the medtech industry, which had experienced a three-year drought in public offerings. CEO Sean Saint and CFO Stephen Feider shared their experiences and insights on the IPO process, shedding light on the challenges and considerations for companies looking to go public.

The Road to Going Public

The decision to go public is a complex one that requires extensive planning and preparation. For Beta Bionics, the process began over a year in advance, with the company setting a target date to "flip public" on January 6, 2025. This date, when the public would first see the company's S1 filing, was set in April or May 2024.

Saint emphasized the importance of being ready before pursuing an IPO. He noted that while some may advise against going public, the benefits include easier access to capital, increased liquidity for employees and shareholders, and greater ease for investors to trade in and out of the stock.

Financial Metrics and Market Expectations

According to Saint, certain financial metrics are crucial for companies considering an IPO. While these metrics can change, he shared some general guidelines:

1. A significant revenue stream, potentially around $50 million per year
2. Some level of revenue predictability
3. Pre-revenue companies face greater challenges in today's market

Feider added that the year leading up to the IPO involves hundreds of meetings with potential investors, during which the company aims to help them understand the business and build their financial models. However, discussions about price and valuation are typically avoided until much closer to the IPO date.

The IPO Process and Pricing

Beta Bionics initially aimed to raise $114 million but ultimately secured over $200 million in their upsized IPO. Saint described the process as a negotiation, emphasizing the importance of starting with a reasonable target. The company was pleased with the response to their road show and the indications of interest they received.

Feider detailed the final stages of the IPO process:

1. One week before the IPO, the company assessed their desired share price, initially settling on $15.
2. Due to higher-than-expected demand, the price was bumped to $17 just days before the IPO.
3. The final pricing and allocation decisions were made merely two days before the bell-ringing ceremony.

Post-IPO Realities and Challenges

Since going public, Beta Bionics has faced new challenges and realities. Feider noted that while the company itself hasn't changed, there are now additional disclosure requirements and compliance measures to manage. He also expressed surprise at the stock price volatility, with shares trading around $10 two months after opening at $17, despite no fundamental changes in the company or its outlook.

Both executives highlighted the shift in communication strategy required as a public company. They now must be more cautious about how they respond to investor inquiries to ensure consistency with previous statements and avoid sharing material, non-public information.