Sleep apnea device maker Inspire Medical Systems Inc. is going public, becoming the sixth Minnesota-based company to register for an IPO this year.
 
With more than half a year left, Minnesota has already managed to generate double the number of companies going public than it did last year. And 2017 was no small feat; three IPOs were conducted by local companies last year, the most to come out of the state in a decade. Those three offerings had raised a cumulative $92.9 million.
 
In the case of Inspire’s IPO, the Maple Grove-based business is looking to bring in $86.25 million, according to a regulatory filing. That capital, the company said, would have a dual purpose of funding product development and research activities, as well as expanding its sales and marketing personnel and efforts in the U.S. and Europe. Any remaining funds would be designated for working capital and general corporate purposes, Inspire wrote in its filing.
 
By going public, Inspire is ultimately hoping to escape being in the red. Sales of the company’s flagship device, a pacemaker-shaped implant used to treat obstructive sleep apnea, rose from $16.4 million in 2016 to $28.6 million last year, but were not enough to offset its operating expenses that created a $18.5 million and $17.5 million loss during the respective years.
 
Despite recently ranking as Minnesota’s fastest-growing private company, Inspire has not reported a positive bottom line in its 11 years of business. The company, in its filing, reported an accumulated deficit of just over $125 million as of 2017’s end.
 
Nevertheless, Inspire believes there’s an enormous market opportunity for its principle product.
 
“Based on industry sources, we estimate that approximately 2 million patients are prescribed a CPAP [or continuous positive airway pressure] device annually in the United States,” Inspire wrote in its filing. “We estimate that at least 35 percent of patients prescribed a CPAP device are not compliant with the therapy and approximately 70 percent of those non-compliant patients have an airway anatomy that would allow for effective treatment with Inspire therapy.”
 
Those potential markets together make up a patient pool of approximately 500,000 people in the U.S., amounting to an annual market opportunity of $10 billion, according to Inspire’s estimations.
 
“We also believe there is a substantial market opportunity outside the United States,” the company added.
 
Inspire’s sleep apnea device has been available in the U.S. under premarket approval since April 2014, as well as in Europe since November 2011. More than 2,500 patients to date have been treated using Inspire’s device. Worldwide, the World Health Organization counts more than 100 million people suffering from some form of sleep apnea.
 
Inspire’s device, in particular, targets obstructive sleep apnea, the most common form of sleep apnea. OSA, as the condition is also known, is attributable to patients with a high number of partial or complete airway blockages that can lead to snoring and, if left untreated, a risk of high blood pressure, heart failure, stroke and other life-threatening diseases.
 
Inspire spun out of local medical device giant Medtronic in 2007. Today, Medtronic owns a 5.7 percent stake in Inspire. Inspire also counts local hospitality magnate Marilyn Carlson Nelson among its stakeholders.
 
According to its IPO filing, the company employs 109 people, about two-thirds of which are marketing and sales people.
 
Upon going public, Inspire’s stock would trade under the “INSP” symbol on the New York Stock Exchange. Its IPO follows offerings from local companies ConvergeOne, Securetech Inc., Crosscode Inc., Bridgewater Bancshares and Ceridian HCM Holdings Inc.