ReWalk Robotics IPO Exoskeletons For The Disabled

Originally published at IPO Candy on September 8th, 2014

Positioning Rewalk1

ReWalk (RWLK) makes an FDA-approved exoskeleton that enables disabled people, even those mostly paralyzed, to walk upright. Exoskeletons have been a hotbed of research and development over the last decade and they are now entering commercialization.

It’s still very early in the adoption cycle because these devices are new and expensive. The ReWalk, for example, is $70K. But exoskeleton technology in general, and the ReWalk in particular, are in the process of coming of age for military, medical, and ultimately for more utilitarian purposes.

ReWalk is positioning itself as the leader to allow paralyzed people to walk. There is some direct competition, however, from already-public company Ekso Bionics (OTCBB: EKSO). There have also been a few other IPOs like LDR, AMDA, and KTWO that target the same area with different therapies that are worth looking at in the context of this deal.

Market & Competition

Exoskeletons have been of particular interest to the military – both for increased strength and rehabilitation. The technology is also being developed into advanced “suits” for space or underwater exploration. (Think of the mechanized version Sigourney Weaver climbs into during the climax of Alien.)

The core market for ReWalk will center on medical use for patients confined to a wheelchair. Beyond the obvious attraction of being able to walk upright, even limited use has a number of health benefits ranging from prevention of bone loss to improved circulation, skin tone, and cardiovascular health.

In simple terms, the market for ReWalk is some portion of the nearly 300,000 people in the US with spinal cord injuries. The company estimates that 80% of these are candidates. There are also 12,000 new cases of spinal cord injuries each year. That would make the total market opportunity at $10B using a $50,000 unit cost. Obviously these are very round numbers.

ReWalk will face competition from other companies, but even if they fail to maintain the largest market share there is plenty of runway to build a $1B revenue company. The timing and pace of the commercial adoption is less clear than the potential market.

We are surprised that competition isn’t more intense at this point. Could be that it’s just too early for larger companies like Parker Hannifin (who licensed some technologies in this area in 2012[1]) to be interested. Only when a $1B market size is realized will they be seriously interested.

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