Restoration Robotics, Inc.

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Case Summary

Company Name
Restoration Robotics, Inc.
Stock Symbol
Class Period
Purchasers of Restoration Robotics securities pursuant and/or traceable to the Company’s October 12, 2017 initial public offering
Motion Deadline
August 21, 2018
Northern District of California

The complaint charges Restoration Robotics, certain of its officers and/or directors, the venture capital firms that beneficially owned over 50% of Restoration Robotics stock before the initial public offering (“IPO”), and the underwriters for the IPO with violations of the Securities Act of 1933.  Restoration Robotics is a medical technology company that is developing and commercializing a robotic device (the “ARTAS System”) that assists physicians in performing many of the repetitive tasks that are a part of follicular unit extractions surgery, a type of hair restoration procedure.

On September 1, 2017, in connection with the IPO, the Company filed a Registration Statement on Form S-1, which after several amendments was declared effective on October 11, 2017.  On October 13, 2017, the Company filed the Prospectus for the IPO (together with the Registration Statement, the “Offering Documents”), which was used to sell 3,897,910 Restoration Robotics shares (including the over-allotment) to the public at $7 per share, raising approximately $27 million in gross proceeds.

The complaint alleges that the Offering Documents issued in connection with the IPO contained untrue statements of material fact and/or omitted to state material facts required to be stated therein, which rendered the Offering Documents false and misleading.  In particular, the complaint alleges the Offering Documents contained misleading statements and/or failed to disclose adverse information regarding, among other things, the development of the implantation facility for the ARTAS System, including the fact that many prospective customers were refraining from purchasing the system in anticipation of a new model that the Company had yet to completely design and engineer; the existence of issues in the Company’s salesforce that would require significant additional investment in the United States, particularly as Restoration Robotics was abandoning its focus on expanding internationally and was instead focusing on domestic sales; and the fact that the cash raised in the IPO would not fund the Company for a full year, as represented, but instead Restoration Robotics would have to seek out a loan agreement just months after the IPO related to which it would provide a convertible warrant capable of significantly diluting the Company’s shares.

At the time of the IPO, Restoration Robotics sold 3,897,910 of its shares at a price of $7.00 per share.  Since the IPO, however, the price of Restoration Robotics stock has fallen substantially as the adverse information has been disclosed to the market.  As of June 22, 2018, Restoration Robotics shares closed at $2.69 per share, a more than 61% decline from the price at which the shares were sold in the IPO.

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