18 Jul Cash-rich TomoTherapy has no plans for IPO
Madison, Wis. – TomoTherapy, Inc., the medical device developer that has secured $42 million in outside equity and has rapidly grown sales of its precision radiation therapy technology based on the innovations of University of Wisconsin-Madison researchers, is riding high.
So high that it can take its time courting Wall Street.
The company, which recently completed an $8.2 million expansion project to quadruple its current production and test volumes, has no immediate need for additional capital to expand its market presence, according to company executives.
When asked about the possibility of issuing an initial public offering of company stock, company co-founder Thomas Mackie said there are no immediate plans to do so. A year ago, he openly considered the idea of going public.
“We’re always considering that, but not anytime in the foreseeable future. At some point in time, that may be an option for us,” Mackie said, pointing out the confidence of TomoTherapy’s equity investors.
“We are very favorably received. If we needed to get money from the venture market, we would have no trouble getting it,” he stated.
Founders, board members, and employees met Tuesday to celebrate the economic strength of the company in a ribbon-cutting ceremony for its new product manufacturing facility and test center, which is expected to create 300 jobs over the next three years. The center handles assembly and testing of Tomotherapy’s patented technology, the Hi-Art system, which is capable of selectively imaging and delivering radiation to cancerous tumors while limiting damage to peripheral tissue.
The operations call center, located across from its existing office on Deming Way, operates 24 hours every day, serving some 70 customer hospital client centers in 15 countries around the world. Revenues from these customers and other investors are going a long way toward sustaining the company.
“We have a lot of options at this point. Banks have been very helpful and we have a very strong cash balance. We are in good shape.” Mackie said. “It’s a nice situation to be in. We’re not really beholden to the market.”
CEO Fred Robertson echoed those sentiments. “We are looking at liquidity options,” Robertson said. “We are venture-backed and at some point our investors will want to be able to have the privilege to buy Tomo stock, but we don’t have any imminent plans for an IPO.
“The growth is healthy, we have tremendous market opportunities in the $2.5 billion market, and with our technology we believe we can capitalize on that.”
Del Coufal, vice president of marketing, remarked that the TomoTherapy’s “growth has been phenomenal,” noting the company has doubled its number of employees every year since 1997. By the end of 2005, it employed roughly 330 people, and its annual revenues are approaching $100 million.
The company’s growth triggered tangible excitement outside executive circles as well.
Ziva Wear began her employment as an engineer with TomoTherapy in 2000 and said the number of customer requests she receives for product development has almost quadrupled.
“The expansion is mind-boggling. It’s amazing how quickly we have grown,” Wear said. She added that it is exciting to work on a meaningful product and contribute to developing procedures as the company grows.
UW-Madison radiation oncologist Minesh Mehta touted the precision capabilities of the Hi-Art system, and what he called its “unprecedented” ability to spare normal tissue and save cancer patients from complications of radiation therapy.
He addressed TomoTherapy employees saying, “It’s a shame that you’re not in the hospital every day to see the fruits of your labor because what you are doing here is truly revolutionary work.”
Carlos Perez, Ph.D., author of a textbook on radiation oncology, said the Hi-Art system is an ideal way to treat patients, and will have far-reaching applications for image-guided radiation therapy.
Sun Prairie resident and cancer survivor Chuck Mueller told his story of undergoing a successful month-long TomoTherapy treatment process. He described the experience of being placed on a precision sled inside the doughnut-shaped machine and the thankfulness he felt towards every doctor and technician that helped save his life.
“It’s unbelievable what’s happening in technology today,” Mueller said. “I personally want to thank all of you.”
From theory to commercialization
TomoTherapy was born in the summer of 1988 when Mackie and one of his UW-Madison students began investigating theories about intensity modulated radiation therapy delivery systems that would operate like a modern inkjet printer to target cancer.
Mackie’s early team first filed a patent with the Wisconsin Alumni Research Foundation in 1992. Two years later, they attracted the attention of General Electric‘s medical division, which funded their research at UW-Madison from 1994 to 1997 before withdrawing from radiation therapy.
TomoTherapy officially began in 1997 when Mackie and co-founder and president Paul Reckwerdt began raising capital. The first commercial installation was built in 2003.
The recent expansion project includes leasing the new 66,000-square-feet manufacturing facility with customer support center and management offices, remodeling the first floor of the current facility, and adding 20,000 square feet of office space.
“A good enterprise like TomoTherapy can only exist if you have good government and sound public policy toward investment,” Mackie said, and representatives from the public sector made visible contributions in this spirit.
Wisconsin Department of Commerce deputy secretary Dave Storey presented a $500,000 loan to TomoTherapy on behalf of Gov. Jim Doyle.
“TomoTherapy, Inc. is exactly the type of manufacturer we are looking to grow here in Wisconsin – a high-end manufacturer requiring a high-end workforce,” Doyle said in a statement.
Meanwhile, the City of Madison contributed $700,000 from its revolving loan fund in conjunction with a $400,000 loan from the Madison Development Corp., according to Michael Gay of city’s Office of Business Resources.
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