Visicu Issues IPO

Telemedicine company Visicu Inc. (Baltimore) fared well in its initial public offering (IPO) this month, with shares soaring from its offering price of $16 to more than $24 on the day of its trading debut.

Visicu’s Sample: Taking it public.

Headed by chairman and CEO Frank T. Sample, the company develops and markets a remote monitoring system called the eICU. Designed for intensive care units (ICUs), the system aims to boost the productivity of intensive care specialists. Visicu was formed in 1998 by Brian Rosenfeld, MD, and Michael Breslow, MD, intensivists who managed adult critical care at Johns Hopkins Hospital for more than 25 years. Rosenfeld and Breslow remain with the company as executive vice president and chief medical officer, and executive vice president for clinical research and development, respectively.

The company reports that widespread market acceptance of its eICU program will be necessary for Visicu to achieve profitability, and the company notes in its prospectus that this milestone might never be reached. As of the end of December, the company had set up 27 eICU centers that serve 173 ICUs in 97 hospitals, where the company monitors approximately 2250 beds.

Among the business risks listed in its prospectus, which include those typical of a public company, Visicu noted several threats related to its patent. One of the company’s competitors, iMDsoft Ltd. (Tel Aviv, Israel), has requested that the U.S. Patent & Trademark Office declare an interference and revoke Visicu’s only issued U.S. patent. The company also requested that it be issued a patent with identical claims. In a separate case, Cerner Corp. (Kansas City, MO) has filed a lawsuit against Visicu seeking a declaration that the company’s patent is invalid and unenforceable.

Visicu noted in its prospectus that any loss or narrowing of its patent could subject the company to increased competition. Several days later, however, the company reported that the U.S. Patent Office had issued a notice of intent to allow all claims of Visicu’s patent after reexamination. “We are pleased that the U.S. Patent Office has decided to allow all 26 of our amended patent claims after a rigorous review through the reexamination proceeding,” Sample said. “This once again reinforces for us and our clients that our system for the advanced remote monitoring of ICU patients is a novel invention worthy of patent protection.”

Visicu, which now trades on the Nasdaq under the symbol EICU, has incurred significant operating losses since its inception in March 1998. It incurred operating losses of about $8.4 million in 2003, $8.1 million in 2004, and $1.7 million in 2005. The company reports in its prospectus that its accumulated deficit was about $34.9 million as of December 31, 2005. Visicu expects its operating expenses to increase as it expands its sales and marketing activities, increases product development efforts, hires additional personnel, and works to comply with the requirements related to being a public company.

In 2005, the company reported net income of $10.1 million on revenue of $18.4 million, compared with a net loss of $4.1 million on revenue of $5.5 million in 2004.

© 2006 Canon Communications LLC

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