Surgical Equipment Maker Salient Files for IPO

3/13/08

A Dover, NH, company with a new way to seal blood vessels during surgery has filed for an initial public offering. Salient Surgical Technologies submitted the paperwork for an IPO to the Securities and Exchange Commission today, but didn’t disclose details of how many shares it plans to offer or how much money it hopes to raise. (The filing does say, however, that the maximum aggregate price for the offering would be $86.25 million.) No date for the IPO has been set.

From its founding in August 1999 until Wednesday, the day before the filing, the firm was known as TissueLink Medical. In a press release announcing the change, President and CEO Joe Army said the new name was intended to emphasize that Salient is a medical device company, not a biologics firm or tissue bank.

Salient uses what it calls “transcollation” technology to seal blood vessels. Its handheld device produces radio frequencies that heat up tissue and a saline solution to carry the radio frequencies to the desired site. The heat causes collagen—a major component of skin, muscles, blood vessels, and bone—to shrink, closing blood vessels and stopping bleeding. The traditional way to seal blood vessels has been to use electrodes to cauterize them.

Salient says an advantage of its technology is that the saline it provides carries away excess heat, so that a patient’s tissue never gets above about 100°C, compared to about 300°C for cauterizing systems. That reduces damage to surrounding tissue. Electrodes can also stick to dry cells, causing more bleeding when they tear away. Saline prevents that problem, the company says. And, it notes, because nothing is burned, there’s no smoke, and there’s less blood to obstruct the surgeon’s view of what he’s working on.

Salient also says its system cuts bleeding in half and reduces blood transfusions by 75 percent, tackling issues of blood shortage and possible immune reactions. It claims patients experience less swelling pain and swelling, recover faster, and have to spend less time in the hospital, all of which improve patient outcomes while cutting costs.

The main markets the company has targeted so far include orthopedic surgeries, such as hip and knee replacement, as well as spinal surgery and cancer surgery. Researchers are exploring other types of procedures that might benefit from the technology.

Salient launched its main product, the Aquamantys System, in March 2006. The company had sales of $29.5 million in 2007. In the prospectus, Salient says it has only penetrated about 10 percent of the hospitals in the U.S. that could use its equipment, and that even those could expand their use of the system.

Salient originally licensed the technology from medical device company Medtronic, and now licenses five patents owned by the Minneapolis-based firm. Salient owns another six U.S. patents and has 22 more pending. The company has also filed a number of patent applications in Europe and Japan.

Army, who had been the chief financial officer since 1999, became president and CEO last June. In July 2007, Salient closed a Series E round of financing for $20 million, bringing total funding to about $90 million. Investors include Medtronic, Brait SA, Vanguard Venture Partners, and other groups from the U.S., the U.K., and Japan.

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