Michael Quinn is back in Orange County, and he’s brought a medical device company with him.
Quinn, the turnaround executive who helped lead Newport Beach-based Imagyn Medical Technologies Inc. through bankruptcy and Irvine-based Premier Laser Systems Inc. into it, now has brought Sunnyvale-based CardioGenesis Corp. south for its health.
Faced with mounting debt and falling revenue, the company,previously called Eclipse Surgical Technologies Inc.,hired Quinn in October. Besides changing the name, Quinn since has cut payroll from 180 to about 100 and outsourced manufacturing of the firm’s laser system for relief of angina.
Quinn’s also moved the company to the cheaper and more device-friendly OC, taking space in Foothill Ranch and hired about 100 people locally.
“We did a salary (comparison),$100,000 here was equal to $130,000 to $145,000 in Sunnyvale,” Quinn said. “The benefit packages (there) were 10% to 15% higher.”
Quinn says that the vast majority of CardioGenesis’ employees did not make the move from Sunnyvale.
“We hired 110 people in Orange County,” Quinn said.
Employees were found through networking, Quinn said.
“I spent 30 years in Orange County. I know a lot of people. We used only one headhunter to hire our financial vice president.”
CardioGenesis also sliced its office rent in half with the move, he said.
Orange County’s medical device industry landscape was also a factor in CardioGenesis’ move, according to Quinn.
“This is a medical device-rich area. The device industry in Silicon Valley is compressing. The one in Orange County is emerging. That’s good for us,” Quinn said.
And besides industry and economic factors, Quinn said the OC business climate affected the decision to move.
“Orange County is much, much more business-friendly,” he said, citing John Wayne Airport and what he called “basic business manners.”
But the driving force was the bottom line, and Quinn takes credit for slowing the flow of red ink at his new company.
“The cash burn, when I came in, was $1.6 million per month. I cut it down to around $500,000,” Quinn said.
CardioGenesis’ core business is surgical laser devices to treat angina, a severe form of chest pain. The company has systems on the market and a newer system awaiting federal approval.
CardioGenesis lasers are used to drill holes in a patient’s heart muscle to stimulate blood flow to the area; most patients who undergo the procedure already have had heart bypass operations and angioplasties.
Eclipse posted a net loss of $14.6 million on $22.2 million in 2000 revenue. For this year’s first quarter, Eclipse posted a net loss of $2.4 million on revenue of $3.1 million. The company said revenue has come down as sales of its existing laser systems have slowed.
CardioGenesis is preparing to submit its new transmyocardial revascularization device to a Food and Drug Administration panel during a July 9 meeting. The panel is empowered to make a recommendation, but FDA approval still may be some time off.
If the FDA signs off on CardioGenesis’ laser procedure, Quinn predicts that the company will double in size during the device’s first year on the market and should generate around $100 million within two years.
“This company should have $50 million to $100 million in sales. It’s not only unique, it’s life-saving,” Quinn said.
CardioGenesis’ laser procedure is used on patients who are severely ill, according to Quinn.
“They’re at the end of the line. A month later, they’re playing golf,” he said.
Not all of CardioGenesis’ Silicon Valley operations are coming down to Orange County. Quinn said that the company is outsourcing its laser and catheter manufacturing operations. Hand pieces are manufactured in Ventura and lasers are manufactured in Sacramento, he said.
CardioGenesis plans to use the University of California, Irvine, as a resource, Quinn said. He said the company was going to use UCI students for internships, including those from the business, engineering and scientific disciplines.
Quinn’s background includes holding senior positions during the past three decades with Orange-based drug distributor Bergen Brunswig Corp., Bergen competitor Cardinal Health Inc. of Dublin, Ohio, and American Hospital Supply Corp., later acquired by competitor Baxter International Inc.
In 1998, Quinn retired as president of Pittsburgh-based Fisher Scientific Co., having boosted the firm’s revenue 40% to about $2 billion annually in his 2-plus years there. Six months later,saying, “I was going to shoot myself if I didn’t do something”,he took the job of president and chief operating officer of Imagyn, a maker of urological and gynecological products that had staked its future on an impotence treatment only to be blown out of the water when Viagra hit the market.
Creditors forced the firm into bankruptcy in May 1999, but its management was able to negotiate a reorganization that gave major creditor Credit Suisse First Boston Corp. 75% of the company and it emerged from Chapter 11 in October of that year.
The next month, Quinn was hired as chief executive of Premier Laser, a one-time Wall Street darling that had fallen precipitously after a dispute with a major distributor and the restatement of financial reports led to several lawsuits.
Although Quinn was able to take control of the firm from founder Colette Cozean and secure $2 million in financing, Premier had to lay off nearly 70% of its workforce in February 2000. The next month, it filed for Chapter 11 protection. In August, Premier sold its assets to an Israeli firm.
CardioGenesis’ rivals include Johnson & Johnson, PLC Systems Inc. of suburban Boston and U.S. Surgical Corp. of Norwalk, Conn. n
