A Medical Device Daily

Virtual Radiologic (VRC; Minnetonka, Minnesota) has filed a registration statement with the Securities and Exchange Commission (SEC) for an initial public offering of up to $75 million.

The company will list on Nasdaq under the ticker symbol VRAD. The number of shares and pricing range has not been determined.

VRC is a provider of remote diagnostic image interpretation services, or teleradiology, in the U.S., serving radiology practices, hospitals, clinics and diagnostic imaging centers by providing image interpretations 24/7, 365 days a year.

It employs a distributed operating model providing a team of American Board of Radiology-certified radiologists with the flexibility to choose the location from which they work, primarily in the U.S., thus serving clients throughout the country.

It describes its technology as a “robust, highly scalable communications network incorporating encrypted broadband Internet connections and proprietary workflow management software.” It says that it believes it has the largest group of U.S.-based radiologists dedicated to the practice of teleradiology

VRC was formed through a merger between Virtual Radiologic Consultants , a Minnesota corporation, and Virtual Radiologic Consultants , a Delaware corporation, that was consummated on May 2, 2005. On Jan. 1, 2006, Virtual Radiologic Consultants, the Delaware corporation and the surviving entity in the merger, changed its name to Virtual Radiologic Corporation.

The company reports revenue growth from about $1 million in 2002 to $5.9 million in 2003; $12.9 million in 2004; and $27 million in 2005. First-quarter revenues for the three months ended March 31, 2005, grew from around $5 million to around $9.7 million for the three months ended March 31, 2006.

Its 2004 operating loss was $1.2 million in 2004; $3.2 million in 200; and $1.6 million for the three months ended March 31, 2006. VRC said: “[W]e expect our operating expenses to increase in the future as we expand our sales and marketing activities, increase our technology development efforts, hire additional personnel and comply with the requirements related to being a public company.”

Among its risks, VRC says that it licenses its image management software from Fujifilm Medical Systems USA – one of its minority stockholders — and depends on updates or enhancements from Fujifilm. ”Our dependence on Fujifilm . . . could limit our ability to effectively update and enhance our workflow system,” the filing said.

Goldman, Sachs & Co. will act as the sole book-runner and co-lead manager, Merrill Lynch & Co. as co-lead manager and William Blair & Co. as co-manager for the proposed offering.

Also rolling out plans for an IPO on Friday wasThermage (Hayward, California). Its filing is for potentially raising up to $86.25 million, but the number of shares to be offered and the price range have not been determined.

Thermage will grant an option to the underwriters to purchase up to another 15% of the shares offered to cover over-allotments. It plans to list on the Nasdaq under the symbol THRM.

Thermage manufactures devices for the non-invasive treatment of wrinkles, in a procedure that can be performed “on any part of the body where treatment of wrinkles is desired,” it says.

The company's ThermaCool system uses monopolar radio frequency (RF) energy to heat and shrink collagen and tighten the epidermis and subcutaneous tissue while simultaneously cooling and protecting the surface of the skin, offered as an alternative to more complex and time-consuming surgical procedures. The heating and shrinking of the collagen causes a healing process that may further tighten the skin and reduce wrinkles over the next two to six months.

The procedure is usually performed in an office setting in a single treatment taking from 20 minutes to two hours, “depending on the treatment area.” The company says it is developing a variety of ThermaTips designed to optimize the procedure for new conditions and different parts of the body.

The company received FDA clearance and launched the ThermaCool system in 2002.

It is marketed in the U.S. to physicians through a direct sales force and internationally in 70 countries through a network of distributors. The sales force training in how to use the system.

Thermage reports that as of June 30 it had installed more than 1,800 ThermaCool RF generators and sold in excess of 275,000 ThermaTips, representing, it said, “an about equal number of Thermage procedures performed.”

It notes the increasing number non-invasive aesthetic procedure and says that skin tightening is the fastest growing sector of this market, projected to grow at a 31% rate over the next five years.

Among the risks listed in its SEC filing, the company notes that most of the ThermaCool procedures have been used on the face with its first-generation ThermaTip and that there are no published, peer-reviewed studies regarding the effectiveness of its latest generation 0.25 cm² and 3.0 cm² ThermaTips or its most recent procedure protocol, or for procedures on other parts of the body.

Additionally, it has not conducted any head-to-head clinical studies that compare ThermaCool to other aesthetic devices.

The filing said: “If we decide to pursue additional studies in the future, they could be expensive and time-consuming, and the data collected may not produce favorable or compelling results. If the results of such studies do not meet physicians' expectations, our ThermaCool system may not become widely adopted, physicians may recommend alternative treatments for their patients.”

Thermage had a loss of $6.6 million in 2003; a profit of $5 million in 2004; a loss of $8.2 million in 2005; and a loss of $3.8 million in the six months ended June 30.

Merrill Lynch, Pierce, Fenner & Smith will be the sole bookrunning manager for the IPO. Thomas Weisel Partners, Wachovia Capital Markets, C.E. Unterberg, Towbin and Maxim Group will be co-managers.