| Focal, Inc. | |||
| Ticker: | FOCL | 4 Maguire Road | |
| Exchange: | NASDAQ-National Market | Lexington, MA 02173 | |
| Industry: | Manufacturing (SIC Code 3841) | (781) 280-7800 | |
| # of Employees: | 91 | ||
| Type of Shares: | Common Shares | Filing Date: | 10/21/97 | |
| U.S. Shares: | 2,500,000 | Offer Date: | 12/11/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $11.00 - $13.00 | |
| Primary Shares: | 2,500,000 | Offer Price: | $10.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.70 | |
| Offering Amount: | $30,000,000 | Selling: | $0.38 | |
| Expenses: | $600,000 | Reallowance: | $0.10 | |
| Shares Out After: | 12,865,337 |
| Manager | Tier | Phone |
| Lehman Brothers Incorporated | Lead Manager | (212) 526-8100 |
| Pacific Crest Securities Inc. | Co-manager | (503) 790-0293 |
| Piper Jaffray Incorporated | Co-manager | (612) 342-6220 |
| Issuer's Law Firm: | Wilson, Sonsini, Goodrich & Rosati |
| Bank's Law Firm: | Mintz, Levin, Cohn, Ferris, Glovsky And Popeo |
| Auditor: | Ernst & Young |
| Registrar/Transfer Agent: | Norwest Bank of Minnesota |
Dollar amounts in U.S. millions except for per share data | |||||
| 9 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 9/30/97 | 9/30/96 | 9/30/97 | ||
| Revenue: | $3.10 | $12.83 | $2.35 | Assets: | $18.18 |
| Net Income: | -$10.06 | $0.58 | -$7.38 | Curr Assets: | |
| EPS: | -$1.22 | $0.06 | -$0.92 | Liabilities: | $5.70 |
| Prior EPS: | Curr Liabilities: | ||||
| Cash Flow/Oper: | Equity: | $12.48 | |||
| Cash Flow/Fin: | Cash: | $13.22 | |||
| Cash Flow/Inv: | |||||
| Business Description |
| The company develops, manufactures and commercializes synthetic, absorbable, liquid surgical sealants based on the company's proprietary polymer technology. The Company's family of FOCALSEAL surgical sealant products is currently being developed for use inside the body with or without sutures and staples to seal leaks resulting from lung, neuro, cardiovascular and gastrointestinal surgery. FOCALSEAL-L, the Company's first surgical sealant product, will initially be used to seal air leaks following lung surgery. The Company has entered into an exclusive marketing and distribution agreement for its surgical sealant products outside North America with Ethicon, Inc., a division of Johnson & Johnson ("Ethicon"), a worldwide leader in surgical wound closure products. The Company anticipates commercial launch of FOCALSEAL-L for lung surgery indications in Europe through Ethicon in the first half of 1998. |
| Competition |
| The Company competes with many domestic and foreign medical device, pharmaceutical and biopharmaceutical companies. In the surgical sealant area, the Company will compete with existing methodologies for sealing air and fluid leaks resulting from surgery, including some traditional wound closure products such as sutures and staples, marketed by companies such as Johnson & Johnson, United States Surgical Corporation, American Home Products Corporation and others. Other products currently being marketed include fibrin glue, sold in Europe and the Pacific Rim countries by Immuno AG, Cention, Fujisawa and others, and under development by Baxter Healthcare Corporation, Bristol-Myers Squibb Company, Vitex and others. Other competitors in the surgical sealant market include Closure Medical Corporation, B. Braun GmBH and Cryolife. Competitive products may also be under development by other large medical device, pharmaceutical and biopharmaceutical companies. The other areas in which Focal is developing products, such as post-surgical adhesion prevention and restenosis drug delivery, are intensely competitive markets and the Company will encounter competition from major medical device, pharmaceutical and biopharmaceutical companies in such markets. Many of the Company's current and potential competitors have substantially greater financial, technological, research and development, regulatory and clinical, marketing and sales, and personnel resources than the Company. These competitors may also have greater experience in developing products, conducting clinical trials, obtaining regulatory approvals, and manufacturing and marketing such products. Certain of these competitors may obtain patent protection, approval or clearance by the FDA or foreign countries or product commercialization earlier than the Company, any of which could materially adversely affect the Company. Furthermore, if the Company commences significant commercial sales of its products, it will also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which it currently has limited experience. Finally, there can be no assurance that the Company's marketing partners will not pursue parallel development of other technologies or products, which may result in a marketing partner developing additional products that would compete with the Company's products. |
| Business Plan |
| The Company's objective is to become a leader in the market for surgical sealants and in other markets where the Company's novel polymer technology could address large unmet clinical needs. The following are key elements of the Company's strategy: (I) Market Focalseal Surgical Sealant Products Through Ethicon Internationally and Establish Its Own Direct Sales Force In North America, (ii) Develop New Products By Leveraging Its Proprietary Polymer, (iii) Commercialize Focalseal Surgical Sealants To Parallel The Existing Market For Synthetic Absorbable Sutures, (iv) Fund New Research and Development Initiatives Through Corporate Collaborations and (v) Retain Proprietary, And Ousource Non-Proprietary, Manufacturing Processes. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for research and development, clinical trials, expansion of manufacturing capabilities and sales and marketing activities, capital expenditures, working capital and general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| Michael Levinthal | 147.80% | 12.00% |
| Janet Effland | 15.30% | 12.30% |
| Entities affiliated with Patricof & Co. Ventures | 15.30% | 12.30% |
| Entities affiliated with Mayfield Fund | 14.80% | 12.00% |
| Jesse I. Treu, Ph.D. | 9.10% | 7.30% |
| General Electric Pension Trust | 8.20% | 6.60% |
| Domain Partners II, L.P. | 5.70% | 4.60% |
| Fred E. Silverstein, M.D. | 5.10% | 4.00% |
| Entities affiliated with Frazier & Company | 5.10% | 4.00% |
| Officer Name | Title | Age |
| David M. Clapper | President, Chief Executive Officer and Director | 46 |
| Mary Lou Mooney | Vice President, Clinical and Regulatory Affairs & Quality | 41 |
| Glenn M. Kazo | Vice President, Corporate Development | 36 |
| David J. Enscore, Ph.D. | Vice President, Development & Drug Delivery | 46 |
| W. Bradford Smith | Vice President, Finance and Administration and Chief Financial Officer | 42 |
| Ronald S. Rudowsky | Vice President, Marketing and Procedure Development | 48 |
| Aruthur J. Coury, Ph.D. | Vice President, Materials Research | 56 |
| Stephen J. Herman | Vice President, Operations | 49 |