This Week's Healthcare IPOs: Power Medical Instruments, BioHeart, Merrion Pharmaceuticals

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Includes: BHRT, MERR, PMII
by: Abbi Adest

There are three healthcare IPOs on deck for this week: Power Medical Instruments (PMII) a company that develops computer assisted surgical instruments; BioHeart (OTCPK:BHRT), a company which develops autologous cell therapies for the treatment of chronic and acute heart damage; and Merrion Pharmaceuticals (OTCQX:MERR), a specialty pharmaceutical company,based in Ireland, engaged in the development of improved oral dosage forms of drugs with poor bioavailability.

All quotations are from the companies' most recent S-1 filings with links provided.

POWER MEDICAL INSTRUMENTS (PMII)

Business Overview (from prospectus)

We are a medical device company that has developed and commercialized our SurgASSIST® platform of Intelligent Surgical Instruments™, a suite of computer-assisted, power-actuated endomechanical instruments. Surgeons use our Intelligent Surgical Instruments for cutting, stapling and tissue manipulation in a variety of procedures in open surgery and minimally invasive surgery, or MIS, including the emerging field of natural orifice translumenal endoscopic surgery, or NOTES. We believe that compared to conventional endomechanical devices, our Intelligent Surgical Instruments offer greater precision and consistency, superior compressive force, improved access to anatomical sites and enhanced ease of use. We also believe our Intelligent Surgical Instruments can provide a significant cost benefit in comparison to existing devices, by reducing both procedure cost and time. To our knowledge, our Intelligent Surgical Instruments are the first and only endomechanical instruments to incorporate digital technology. Our SurgASSIST system has been used in an estimated 30,000 surgical procedures in more than 350 hospitals and medical institutions worldwide.

Offering: 3.9 million shares at $12.00 - $14.00 per share. Net proceeds of approximately $43.0 million will be used for general corporate purposes, including working capital, the expansion of the companies sales and marketing organizations, continuation of research and development efforts, expansion of manufacturing capabilities and purchases of capital equipment.

Lead Underwriters: Jefferies, Lazard

Financial Highlights:

Our sales decreased by 34.3%, from $12.0 million in 2005 to $7.9 million in 2006... Our cost of sales decreased by 18.5%, from $12.3 million in 2005 to $10.1 million in 2006, but increased as a percentage of sales. Our gross profit decreased from a loss of $347,000, or 2.9% of sales, in 2005 to a loss of $2.2 million, or 27.7% of sales in 2006... Our research and development expenses decreased by 14.6%, from $5.5 million in 2005 to $4.7 million in 2006, but increased as a percentage of sales from 45.7% in 2005 to 59.4% of sales in 2006... Our sales and marketing expenses decreased by 8.6%, from $14.6 million in 2005 to $13.4 million in 2006, but increased as a percentage of sales from 121.9% of sales in 2005 to 169.6% of sales in 2006.

Additional Resources:

BIOHEART (OTCPK:BHRT) Business Overview (from prospectus)

We are a biotechnology company focused on the discovery, development and, subject to regulatory approval, commercialization of autologous cell therapies for the treatment of chronic and acute heart damage. Our lead product candidate is MyoCell, an innovative clinical therapy designed to populate regions of scar tissue within a patient’s heart with autologous muscle cells, or cells from the patient’s body, for the purpose of improving cardiac function in chronic heart failure patients. The core technology used in MyoCell has been the subject of human clinical trials conducted over the last six years involving 84 enrollees and 70 treated patients.

Offering: 4.2 million shares at $6.00-$8.00 per share. Net proceeds of approximately $23.6 million will be used to complete clinical trials, for further development, to repay debts and for general corporate purposes.

Lead Underwriters: Merriman Curhan Ford, Dawson James

Financial Highlights:

Total revenues were $106,000 and $135,000 in 2006 and 2005, respectively... Cost of sales was $73,000 in 2006 as compared to $87,000 in 2005... Research and development expenses were $6.9 million in 2006, an increase of $2.4 million, or 51.7%, from research and development expenses of $4.5 million in 2005... Total net interest income was $127,000 in 2006 compared to total net interest income of $37,000 in 2005.

Additional Resources:

MERRION PHARMACEUTICALS (OTCQX:MERR)

Business Overview (from prospectus)

We are a specialty pharmaceutical company engaged in the development of improved oral dosage forms of drugs with poor bioavailability. These include injectable drugs, certain existing oral drugs and large molecule drug candidates. Our drug delivery technologies, which have been tested in over 20 human clinical studies, have demonstrated the ability to improve absorption in the gastrointestinal, or GI, tract, thereby enhancing efficacy, reducing side effects and improving drug tolerability. As a result, we believe potential products incorporating our drug delivery technologies, if approved, will be more convenient for patients and will lead to increased compliance with the prescribed regimen. We hold 35 issued and in-process U.S. patents for the delivery of a variety of drugs and biologics, including our GIPET and GIRES drug delivery platforms. We are at an early stage of development, we have not generated revenue from the sales of any products, and no products employing either GIPET or GIRES have received regulatory approval to date. As a result, the claims regarding their effectiveness have not been accepted by the FDA. We have incurred losses from operations each year since inception and anticipate that we will continue to incur substantial losses for the foreseeable future. As of June 30, 2007, we had an accumulated deficit of $21.6 million.

Offering: 4.0 million shares at $10.00 - $12.00 per share. Net proceeds of approximately $37.6 million will be used product development, clinical testing and for general corporate purposes.

Lead Underwriters: Punk Ziegel, Goodbody

Financial Highlights:

From inception (December 12, 2003) to June 30, 2007, the period covered by the selected financial data contained in this prospectus, we incurred total costs of approximately $6.8 million in connection with our research and development programs. Of this total, an estimated $134,000 was attributable to the development of MER 103; $447,000 to the development of MER 101; and $164,000 to the development of MER 104. The remaining $6.1 million can be attributed to internal clinical development costs for our product candidates that are not directly allocated to MER 103, MER 101 and MER 104. We use our employee and infrastructure resources across multiple research projects, including our drug development programs. We do not allocate our employee and infrastructure costs on a project-by-project basis. For the six month period ended June 30, 2007, other expenses consisted primarily of personnel costs of $866,000, patent portfolio costs of $266,000 and R&D general trial costs and consumables and overhead costs of $712,000.

Additional Resources: