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This article was originally published in The Gray Sheet

Executive Summary

DIAMETRICS MEDICAL WILL LAUNCH IRMA ON-SITE BLOOD CHEMISTRY SYSTEM in the fourth quarter, the Roseville, Minnesota development-stage firm says in a prospectus for its just-completed initial public offering. Diametrics closed the sale of 2.3 mil. shares of stock for $13 per share on Aug. 5. Hambrecht & Quist and Vector Securities were the underwriters for the deal. The IRMA (immediate response mobile analysis) system, which is composed of a portable, battery-powered analyzer and a single-use cartridge, measures oxygen, carbon dioxide and acidity in a blood sample within two minutes, according to the prospectus. The device is 510(k) cleared for blood gas testing at "central and stat laboratories" as well as for point-of-care use and is expected to have a list price of $5,000, Diametrics says; the disposable cartridges will sell for $12 each. The cartridge, which is inserted into the analyzer prior to being injected with a blood sample, contains "electrical contacts, sensors and sample and waste chambers." The analyzer is "about the size of a lap-top computer," weighs about four pounds and utilizes a touch-sensitive screen and an on-board printer, the prospectus explains. In the future, Diametrics plans to develop additional cartridges for potassium, calcium, chloride, sodium, blood urea nitrogen, glucose and hematocrit in selected combinations. The first additional cartridges are expected to be rolled out in 1995. Founded in 1990, Diametrics is targeting the point-of-care niche in the blood chemistry testing market. "The company's IRMA system has overcome the drawbacks associated with existing blood gas testing products through the application of proprietary enabling technologies," the prospectus says. "These technologies, a unique gas-stabilized calibration system and analyte-specific, membrane-based electro-chemical sensors, make the IRMA System easy to use and permit rapid, cost- effective, point-of-care testing," the company claims. Two of Diametrics' founders, Walter Sembrowich, PhD, and David Deetz, serve as co-chairs of the company. Sembrowich was "instrumental in the start-up of a medical diagnostics unit of PPG Industries, Inc., which markets a point-of-care blood gas instrument," the prospectus notes; Deetz was manager of research and development for the PPG medical diagnostics unit. Diametrics' management is headed by President and CEO Michael Connoy, who joined the firm in February ("The Gray Sheet" Jan. 25, In Brief). Connoy previously was president and chief operating officer of Empi for nearly five years, and prior to that spent 15 years with Baxter's Scientific Products division. Initial marketing efforts for the IRMA system, Diametrics' first product, will be focused on acute care hospitals in the U.S. The firm currently has a five-person sales and marketing staff including two senior sales reps, and plans to add six more senior reps by the end of the year. Overall, the firm has 88 full-time employees and plans to hire 50 to 60 additional persons by the end of 1993. The firm plans to use the bulk of net proceeds from the offering to increase manufacturing capacity via the acquisition of capital equipment and facilities expansion. The remainder will be used for expansion of sales and marketing operations, R&D, and for "working capital and other general corporate purposes." As of March 31, Diametrics had raised approximately $20.5 mil. in private placements since its inception. Over the same period the firm has incurred a cumulative net loss of about $8.2 mil. Proceeds from the public offering as well as existing capital are expected to meet the firm's needs until operations become profitable.

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