MAGNA-LAB'S MRI MAGNA-SL HEAD AND EXTREMITY SCANNER
This article was originally published in The Gray Sheet
MAGNA-LAB'S MRI MAGNA-SL HEAD AND EXTREMITY SCANNER will be targeted to the physician's office market, the start-up firm reports in a Dec. 24 registration statement for an initial public offering. Noting that the large size and high cost of whole-body magnetic resonance imaging units make them undesirable for the physicians office market, the Rockville, New York-based company states that it is "seeking to establish a new market...by emphasizing to individual practitioners the advantages of having a specific-use magnetic resonance imaging machine in their office." Designed to be smaller and "substantially less expensive" than conventional whole-body MRI machines, the research and developmental prototype of the Magna-SL is approximately two-and- one-half feet high, three-and-one-half feet deep, and two feet wide, requiring only 150 square feet of space to operate. The unit uses a three-sided magnet structure, open at top and bottom, "thereby permitting non-claustrophobic scanning." Most "currently available MRI scanners use a large magnet which surrounds a patient on all four sides," the firm points out. The Magna-SL is the first of three new MRI devices to reach the production prototype stage at Magna-Lab. Currently, the company is conducting preliminary research on two other devices: the Magna-SLM Mammography Scanner and the Magna-SLS Spine Scanner. The Magna-SLM Mammography Scanner is designed to permit "non- claustrophobic mammography at a cost comparable to current x-ray testing...while enabling women of all risk groups to receive annual scanning," since it will not expose the patient to x-ray radiation. The Magna-SLS Spine Scanner will "permit the non- claustrophobic imaging of the spine and back and would also make possible the imaging of a patient in a weight-bearing position which cannot be accomplished with currently available MRI devices." The company hopes that all three scanners can be cleared for marketing via the 510(k) process. Magna-Lab is expecting to gross $5 mil. from its offering of 833,000 units at $6 per unit. Each unit consists of one share of Class A common stock, one redeemable Class A warrant and one redeemable Class B warrant. The offering is being underwritten by D.H. Blair. Of the net proceeds, $400,000 is slated for continued work on the Magna-SL, including "development of a production prototype" and "refinement of its external appearance." Initial research and development of the Magna-SLM Mammography Scanner is expected to use $800,000 of the proceeds, while $350,000 is earmarked for initial research on the Magna-SLS Spine Scanner. The company believes that the proceeds will fund operations for approximately 12 months and are unlikely to be sufficient to "complete a working research and development prototype" of either the mammography or spine scanner. Approximately $500,000 will be used "to establish an in-house marketing capability including a sales force with adequate administrative support personnel for a marketing promotion campaign," the firm says, noting that it anticipates building a sales force of five direct representatives within 12 months. Magna-Lab intends to market its products overseas through contractual arrangements and has targeted $150,000 for "seeking to enter into joint venture or license agreements or similar collaborative arrangements for the marketing and distribution of the Magna-SL." From its commencement of operations in February 1992 through August 1992, Magna-Lab has sustained a net loss of $703,000. The firm was co-founded by Lawrence Minkoff, PhD, and Joel Stutman, PhD. Minkoff, who serves as chairman of the board, president and chief executive officer, also serves as president of Minkoff Research Labs, a principle shareholder in the company. From 1978 to October 1989, Minkoff was executive vice president of Fonar Corp., a developer of nuclear magnetic resonance devices. Stutman, who has served as vice president, chief operating officer and a director since the company's inception, had previously served as president of Imaging Systems International, a provider of MRI services, following a nine-year stint at Fonar. After the offering, the officers and directors as a group will own 65.8% of Magna-Lab stock and will have 87.3% of voting power.
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