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Restore Medical Files IPO of $50M: Roseville Firm's Device Treats Snoring, Apnea

Posted on: Tuesday, 14 March 2006, 06:01 CST

By Sheryl Jean, Pioneer Press, St. Paul, Minn.

Mar. 14--Restore Medical Inc., a Roseville company that makes a medical device to treat snoring and sleep apnea, filed Monday to raise $50 million in an initial public offering.

It's the second Minnesota IPO filed this year. Merrill Corp., a St. Paul provider of document and technology services, was the first with a $253 million filing last month.

Restore Medical CEO Bob Paulson declined to comment. The number of Restore Medical common shares to be sold and their price range have not been determined.

In documents filed with the U.S. Securities and Exchange Commission, the company said it plans to use the money it raises in the offering for research and development and to expand its sales force and enhance its marketing programs to doctors and consumers.

The sleep disorders market is huge, Restore Medical said in its SEC filing. The American Medical Association estimates that 59 million people in the United States suffer from sleep apnea. The market is much larger internationally, with 57 million people in China alone with sleep apnea.

Restore Medical's Pillar implant -- three small pieces of polyester yarn -- is inserted into the soft palate on the roof of the mouth to stiffen it to reduce vibrations that can cause snoring and sleep apnea, which can lead to other medical conditions such as strokes and heart attacks. The U.S. Food and Drug Administration cleared the Pillar implant for snoring in 2002 and for mild to moderate sleep apnea in 2004.

Restore Medical's revenue has increased significantly in the past year but the company is not profitable. The company lost $7 million on net sales of $4.8 million last year, compared with a net loss of $7.6 million on sales of $944,816 in 2004.

Chairman Mark Knudson founded the company in 1999. It employs 62 people. Venture capital firms, which have invested about $40 million in Restore Medical, own most of the company, according to the SEC filing. Knudson's Twin Cities venture capital firm owns about 14 percent.

Sheryl Jean can be reached at sjean@pioneepress.com or 651-228-5576.

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Copyright (c) 2006, Pioneer Press, St. Paul, Minn.

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Source: Saint Paul Pioneer Press (St. Paul, Minn.)

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