TARGET THERAPEUTICS' SPINOFF CONCEPTUS
This article was originally published in The Gray Sheet
Executive SummaryTARGET THERAPEUTICS' SPINOFF CONCEPTUS initially will market its reproductive physiology devices in Europe. The start-up is projecting that the first in a line of devices to treat reproductive disorders will be introduced to some European markets as early as mid-1993. Conceptus will sell its products in Europe primarily through distributors, supplemented by a small direct sales staff located in the European countries of operation. The company plans to recruit a sales force to handle U.S. marketing. Formation of the new company was announced by Target in a Jan. 6 press release. Target explains that it formed Conceptus to commercialize "promising" research performed by independent physicians who adapted Target's catheter, guidewire and micro-coil technology for the diagnosis and treatment of infertility. Specifically, Conceptus is developing Target's Tracker catheter and associated guidewires for use in the non-invasive visualization of fallopian tubes, the tubal placement of sperm and/or eggs for assisting reproduction without laparoscopy, and the opening of blocked fallopian tubes. Under an existing Target investigational device exemption, Conceptus will begin studies of Target's micro-coils for the treatment of impotence through penile vein occlusion therapy. Target predicts that commercialization of modified Trackers, a tubal access kit and a uterine insemination kit can begin in Europe "within six months." Initial steps toward marketing in the U.S. also may be made within that timeframe. Commenting on the formation of Conceptus, Target President and CEO Richard Randall said: "Our goal in forming Conceptus is to apply Target Therapeutics' medical device technology to address infertility, while continuing to focus Target's resources on neurovascular and peripheral vascular intervention." The initial stockholders in Conceptus are Target, which holds a 36% stake, and venture capital funds affiliated with New Enterprise Associates. Target could increase its initial stake to a majority position of up to 58% if it exercises warrants for common stock in the future. In exchange for its stake in the new company, Target is providing "certain rights to its current and future proprietary technologies for exclusive use in developing and commercializing products for application in the field of reproductive physiology." Most of the remaining stock will be held by the venture capital firms, which are putting up $35 mil. The venture capital will support the new company's initial research and development costs. Target "will not be required to consolidate any of Conceptus' operating results into Target's financial statements until making a capital investment through the purchase of stock or the exercise of warrants to increase [Target's] equity position," according to Target. Target's Randall will serve as chairman and acting CEO of Conceptus until a full-time president and CEO is hired. The company is actively searching for someone to fill the position. Julian Nikolchev, who has served as manager of new ventures at Target, will assume the role of vice president of product development and operations at the new company. Transfers to Conceptus also include one employee as well as a specialist in clinical regulatory affairs. Conceptus recently hired Jim Messemer, formerly of Scimed, to serve as vice president of sales. Conceptus will begin operations in leased space in Target's Fremont, California facility, with Target manufacturing all Conceptus products. Eventually, Conceptus is expected to move into separate office and manufacturing facilities.
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