Amedica IPO: A Bargain for Investors?Amedica IPO: A Bargain for Investors?

One has to wonder about Amedica (Salt Lake City). The spinal implants company, whose Initial Public Offering (IPO) began February 13, started the ball rolling at $5.75 a share (ticker AMDA). This was significantly lower than had been expected. Mark Hollmer, writing for FierceMedicalDevices, says that starting price lowered expectations for the company for the second time in a week. "The company initially disclosed IPO plans earlier this year that called for raising $35 million by offering 3.2 million shares at between $10 to $12 apiece," says Hollmer. He continues, "IPO research outfit Renaissance Capital said the disclosure came after Amedica filed confidentially in September. On Feb. 12, that changed to at least $32 million with an offering of 3.5 million shares at $8 to $10."Then, on February 13, the IPO press release announced the "pricing of its initial public offering of 3,500,000 shares of common stock at a public offering price of $5.75 per share," a second price cut. At the closing bell on Friday, February 14, the stock's second day on the NASDAQ, the share price stood at $5.68, after having briefly dipped to $5.30. The company had initially filed IPO paperwork in May 2007, but, citing "market conditions," withdrew that filing the following August.Amedica has many of the ingredients of a good, even a great, company. They have a portfolio of patents on their Valeo silicon nitride spinal fusion line, and are developing total hip and knee joint replacement products. Amedica's spine products are FDA cleared, CE marked, and are available in the United States, Europe, and South America.Silicon nitride offers advantages over other implant materials. Wikipedia says, "It is silicon nitride's hydrophilic, microtextured surface that contributes to the material's strength, durability and reliability compared to polyether ether ketone (PEEK) and titanium." Amedica claims their products have been used in more than 14,000 procedures. Still, there are bigger and more established players in the spine products space - companies like Stryker, DePuy, Orthofix, and even Medtronic, to name a few. And OrthoStreams.com lists a total of 240 spine startups as of February 9. Weighing against Amedica are its significant debt and ongoing losses. According to SeekingAlpha, "For the nine months ended September 2013, revenue was $16.6 million, gross profit was 69% and operating loss was $7.4 million." It would seem that the company's next step should be to try to turn a profit.