California company built on research at MUSC goes public

Sunnyvale, Calif., is 2,800 miles from Charleston, yet officials at the Medical University of South Carolina were rejoicing when a company there went public last week.

The university is a big investor in the company, Micrus Endovascular Corp., which makes a device used to treat brain aneurysms. That investment won’t make the university rich: on the day of the offering, its investment was worth $500,000.

But to university officials, the symbolism of the IPO has a much greater value. The company is built around research done at MUSC, making it the institution’s first spin-off company to go public. That is also believed to be a first for a South Carolina research university.

Officials believe that having one of their own companies go public proves that research done here can lead to marketable products.

“The good news here is that this is validation that this kind of thing can happen,” said Ken Roozen, executive director for the university’s Foundation for Research Development.

Nevertheless, university and economic development officials speak with a tinge of regret at what might have been if the state had had the resources in the 1990s to keep the company in town.

Micrus was formed in 1996 and is based on work done by former MUSC neuroradiologist and company co-founder Dr. Joe Horton, who has moved to Alabama.

But Micrus never had a place in South Carolina. The company formed in Philadelphia, home to many medical device manufacturers, and moved to California in 1997.

Roozen believes that Micrus would have been more likely to stick around had it formed today, thanks to a series of efforts by the state Legislature, including bills to boost venture capital here, encourage research, build research facilities and help turn research into a marketable product.

For his part, Horton said he would have loved to start Micrus out of a King Street office, though his business partner wanted to move the company to California because of the workforce there.

Micrus, which employs 117 workers in the United States and another 15 in Europe, makes a device Horton developed that allows doctors to treat brain aneurysms without opening up the skull and moving part of the brain.

Doctors use a long tube called a catheter that is inserted into a blood vessel in the leg and is snaked all the way to the brain. They use that catheter to insert coils into the vessel. Those tiny coils fill the aneurysm and keep it from bursting.

While the company did go public last week, it remains a long way from the true measure of success: profitability.

Micrus lost $6.8 million in 2002, $4.2 million in 2003 and $2 million in 2004, though revenue from selling its products more than doubled during that period. According to its SEC filings, Micrus has a deficit of $37.3 million.

The company acknowledges that “it is possible that we will never generate sufficient revenues from product sales to achieve profitability.” Even if it can be profitable, it may not be enough to sustain it for long.

Micrus’ IPO priced at $11 a share. It closed at $11.01 on its first day on Nasdaq Thursday, where it trades on the National Market under the symbol MEND.