The big question for that company, ImaRx Therapeutics Inc., is simple: Can gas-filled "micro bubbles" injected into the bloodstream, combined with ultrasound, disrupt blood clots and pummel the nation's No. 3 killer?
While the company waits for an answer -- clinical trials could validate SonoLysis therapy in mid-2008 -- it is starting anew after a public offering this summer that placed it in the elite few of Tucson-based, publicly traded companies.
ImaRx, by many accounts, represents the ups and downs of a biotech company's growth, from an idea to a business venture.
For ImaRx, that process included a failed attempt to go public in September 2006, before regrouping and having a successful IPO in July.
It also includes the story of how ImaRx founder Dr. Evan Unger transitioned from a leading figure to quietly stepping aside as CEO after the company's failed IPO. Unger, a University Medical Center radiologist, is now pursuing other business interests.
Those involved were restricted by U.S. Securities and Exchange Commission rules from speaking publicly about their efforts to go public when they occurred.
Their stories, as well as those of early investors and observers, tell how a small Tucson venture can try to save lives -- and make money doing it.
"We generally believe that SonoLysis has the potential to revolutionize the treatment of stroke," CEO Bradford A. Zakes said.
Going public
In September 2006, ImaRx announced plans to offer 5 million shares for between $10 and $12 per share. That figure would have raised $50 million to $60 million for the company.
That's a figure that would have delivered the mother's milk of research and development: cash.
ImaRx's product sales have grossed millions for the company so far -- about $3 million for the six-month period ending June 30, SEC filings show. Those sales come from a product that ImaRx acquired from Abbott Laboratories, a drug known as Abbokinase that dissolves clots and acute pulmonary embolisms.
But the cost to run such a venture isn't cheap: At least $3.1 million was spent on research and development during that same period, filings show. In the same six months this year, ImaRx had a net loss of $3.88 million, an improvement from the $7.42 million loss the previous year.
So it was no surprise, investors say, when the company went public.
"It's often the cheapest way to raise capital," said Harry George, a co-founder of Solstice Capital and an early financier.
In 2006, Unger was still CEO when he led an "IPO road show," a series of presentations to potential investors that demonstrate the possibilities of the company's products.
But the week of its planned offering passed that September without an IPO. The company later reduced its work force by 20 percent, and its founder, Unger, stepped aside. Today, ImaRx employs about 30.
"When you go public, you need to create some buzz," said another current investor, Larry Hecker. "They may have just lost their momentum during the road-show process."
In December, ImaRx withdrew its IPO, citing "unfavorable market conditions."
From MD to CEO
Following medical school, Evan Unger was years away from building up a successful biotech firm.
George invested in that first company, ImaRx Pharmaceuticals, in the late 1990s. In October 1999, the company sold its diagnostic imaging products to DuPont for about $40 million. Unger retained more than 100 patents, and in January 2000 began testing his technologies under a new name: ImaRx Therapeutics.
In an interview this month, Unger declined to discuss the specifics surrounding his departure from ImaRx.
"My bailiwick is that I'm an innovator," he said. "There are very few people who have more patents than I do. I'm good at innovating and executing."
Some who are familiar with ImaRx and the story behind its public offerings credit Unger and others with building the company into what it is.
Unger "took that puppy from the baby stage and matured it and grew it," local investor Jerry Sonenblick said.
But, Unger said, where the company is now, "they need to execute. They don't need an innovator."
On Oct. 24, 2006, ImaRx announced that Unger was stepping aside as CEO. Unger was to remain a member of ImaRx's board of directors and head its scientific advisory board.
That move was met receptively by some investors, including George.
"While I regard Evan as an immensely creative scientist, from my initial involvement from the board I wanted to bring in a professional manager," George said. "Evan and I fought about it, but I didn't want him out of the company."
In May this year, Unger resigned from ImaRx's board.
Second public offering
Observers have drawn parallels between ImaRx and Oro Valley-based Ventana Medical Systems Inc. Both biotech companies were founded by UA scientists and both went public. In Ventana's case, the firm has become so promising that a major global pharmaceutical company, Roche Holding AG, made a hostile bid for it.
Ventana employs about 660 people at its Oro Valley site.
With the chance to raise capital in mind, ImaRx leaders gave the offering another swing.
But first, the company needed a new CEO after Unger's departure, and turned to Zakes.
"To say that it was a challenge was a bit of an understatement," Zakes said about taking on his new role. "ImaRx, given its deep (intellectual property) portfolio, had multiple programs running simultaneously. I viewed a significant portion of my job to strategically evaluate the programs that were under way, and really orient the company's efforts around those initiatives that would move the company forward."
So ImaRx moved forward in July, with Zakes leading the road show and a much reduced offering: 3 million shares at $5 each on the Nasdaq Capital Market, one tier of the broader Nasdaq exchange. Trading started at $4.90, but the value has gone down steeply since. On Friday, ImaRx's stock closed at $2.76 per share.
The prospects
More promising news lies ahead for ImaRx, say Zakes and ImaRx Chief Financial Officer Greg Cobb: What about treating other vascular problems? Or heart attacks, blood clots and premature occlusive arterial disease?
It's a proposition that even early investors see, and it's why they believe that a small biotech firm could make it big.
"I'm pleased that it is public," George said. "It's a very important company with big market potential."
The potential may materialize next year, when a clinical trial will show if SonoLysis works in conjunction with tPA, an existing stroke treatment.
If that's successful, ImaRx plans to test the SonoLysis therapy by itself. That would be a big reward for Zakes and ImaRx.
"It was about really taking a company that had tremendous opportunity and channeling the talented people in a direction to create value for our shareholders," Zakes said. "I think we've come a long way in the last year."
Tucson's public companies
--UniSource Energy Corp.
--Ventana Medical Systems Inc.
--Providence Service Corp.
--Ionatron Corp.
--ImaRx Therapeutics Inc.
ImaRx timeline: From idea to IPO
1990: UA Dr. Evan Unger founds ImaRx Pharmaceuticals.
1999: ImaRx and its diagnostic imaging products are sold to DuPont Pharmaceuticals Co. in October for about $40 million. Unger retains more than 100 patents.
2000-06: ImaRx Therapeutics emerges; clot-busting therapy for stroke patients continues development.
September 2006: ImaRx fails in its first attempt to make an initial public offering of stock and go public on a Nasdaq exchange.
October 2006: Unger steps down as CEO.
November 2006: Brad Zakes replaces Unger as CEO.
July 2007: Second IPO; company goes public, trading at $4.79 per share on its first day.
Mid-2008: Clinical trial results for SonoLysis clot-busting therapy.
Source: Interviews, Star archives
--Contact reporter Jack Gillum at 573-4178 or at jgillum@azstarnet.com.
To see more of The Arizona Daily Star, or to subscribe to the newspaper, go to http://www.azstarnet.com. Copyright (c) 2007, The Arizona Daily Star, Tucson Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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