Medical Device Daily
Restore Medical (St. Paul, Minnesota) earlier this week registered with the SEC for an initial public offering of stock, with a potential to raise up to $50 million. Details about the number of shares offered and estimated price range for the IPO weren't disclosed.
The company's only product is the Pillar palatal implant system, an implantable device to treat sleep-disordered breathing conditions, such as obstructive sleep apnea (OSA) and snoring.
The procedure involves the implantation of three polyester inserts into the soft palate. Each insert is pre-loaded into a specially engineered, single-use delivery tool, packaged individually. The Pillar inserts are designed to stiffen and provide structural support to the soft palate tissue to prevent the fluttering or collapse of the soft palate, without interfering with normal soft palate functions such as swallowing or speech.
The insertion, the company says, triggers the body's natural fibrotic response to injury and the introduction of a foreign body during the weeks following the procedure, promoting tissue growth around and into the inserts, thereby providing additional stiffening and structural support.
The Pillar system was cleared by the FDA for snoring in December 2002 and for mild to moderate OSA in July 2004. It received the CE mark certification for both mild to moderate OSA and snoring in December 2004 and May 2003.
The company said it sells the system to otolaryngologists and to a “limited number“ of oral maxillofacial surgeons. It reports that more than 1,000 physicians have performed more than 11,000 Pillar Procedures worldwide, with the average price that patients pay in the U.S. ranging from $1,200 to $2,500.
That the procedure must ordinarily be paid for out-of-pocket by the patient is one of the risks listed by the company in its filing.
The company reports conducting various clinical studies of the system for snoring in the U.S., Europe, Hong Kong and Singapore and is in the process of obtaining two-year follow-up data on patients who participated in a snoring clinical study in the U.S.; three-year follow-up data on patients who participated in a snoring clinical study in Europe; two-year follow-up data on patients who participated in an OSA clinical study in Europe; and one-year follow-up data on patients who participated in an OSA clinical study in the U.S. It is also involved in a number of studies evaluating clinical outcomes from the use of the procedure, including prospective, randomized, placebo-controlled studies, as well as clinical studies that are structured to obtain clearance from the FDA and the EU for expanded clinical indications for use of our Pillar System.
The lack of long-term data, thus far, is another risk cited by the company.
Still another risk, it says in its SEC filing, is the general reluctance of pulmonologists to endorse palatal surgical procedures for treatment of OSA or snoring, based on what they see as uncertainty in clinical outcomes. More often, they prescribe CPAP as therapy of choice. Restore also sees other significant competitors in the market.
The company said it will use net proceeds from the offering for working capital and general corporate purposes. For the year ended Dec. 31, 2005, Restore reported a net loss of $7 million, compared with a loss of $7.8 million in 2004. Since it began operations in 1999, the company has incurred losses of $38.1 million through the end of 2005 and it says it will need increased investment in sales and marketing, so that will continue to see losses “through at least 2008.“
The company plans to list its common stock on the Nasdaq under the symbol REST. Deutsche Bank Securities, RBC Capital Markets and First Albany Capital were listed as underwriters for the offering.
In other financing activity: Wherify Wireless (Redwood Shores, California), a developer of wireless location products and services, reported entering into agreements with Cornell Capital Partners providing a total of $45 million in debt and equity financing.
Wireless will issue secured convertible debentures to Cornell and will receive $5 million in gross proceeds. The company also issued warrants to Cornell for the purchase of 2.5 million shares of common stock, half at an exercise price of $2 and half at an exercise price of $2.25. In addition, the company signed a standby equity distribution agreement for $40 million in committed equity capital.
The company may sell common stock to Cornell for up to $40 million, subject to maximum of $1 million per week, over a two-year period beginning on the effective date of the registration statement.
Wherify said it will use these funds for general working capital.
Timothy Neher, CEO of Wherify, called the funding “an important milestone for Wherify as we focus on launching the Wherifone and bringing the benefits of Wherify's Aided-GPS location technology to consumers in North America and around the world.“
Wherify develops products and services for family safety, communications, and law enforcement.