When Plymouth, Minn.-based ev3 Inc. reports its first quarterly results as a public company, investors also are sure to take a look at Irvine-based medical device maker Micro Therapeutics Inc.
Ev3, which raised $165 million in an initial public stock offering in June, owns 70% of Micro Therapeutics.
The companies have four common directors and could face conflicts of interest.
“Because a portion of (Micro Therapeutics) is owned by minority shareholders, we cannot treat (Micro Therapeutics) as we would a wholly owned subsidiary,” ev3 said in a regulatory filing.
Device maker ev3 has a market value of about $620 million, while Micro Therapeutics counts a value of $194 million at recent check. It plans to use its share of the offering to pay down debt and for general corporate purposes.
The device maker is in a “quiet period” and declined to comment about the offering or its relationship with Micro Therapeutics.
Both companies target diseases related to vascular, or blood vessel, conditions.
Ev3 makes products for three blood vessel types: cardiovascular, neurovascular and peripheral vascular diseases. Its devices use catheters to treat coronary artery problems, among other conditions.
The company said it believes the aging population and trend toward less active lifestyles could increase demand for its products.
Micro Therapeutics’ devices address blood vessel diseases and brain disorders, including strokes caused by vessel blockages or ruptures.
According to its Web site, the company makes and sells about 225 medical devices for the diagnosis and treatment of neurovascular diseases.
Ev3, like many emerging medical device companies, isn’t yet profitable. The company posted an operating loss of $91 million on sales of $86 million in 2004.
“Our operations to date have consumed substantial amounts of cash, and we expect this condition to continue,” ev3 said in a filing.
The financial picture for Micro Therapeutics is similar,it posted an operating loss of $24.3 million on sales of $36 million last year.
In its filing, ev3 said that any decline in Micro Therapeutics’ stock price would cause the value of its shares to decline. It also noted that Micro Therapeutics hasn’t been profitable since its founding in 1993.
Last week the companies reported solid sales gains in the second quarter. Micro Therapeutics said its sales in the period rose 44% to $13.1 million, compared to a year earlier. Ev3 said its sales grew 53% to $31.5 million in the quarter.
Besides its ownership stake in Micro Therapeutics, ev3 has another local tie,Chief Executive Jim Corbett.
Corbett, an Orange County resident, is chairman of Micro Therapeutics. He was Micro Therapeutics’ chief executive in 2002, shortly after ev3 bought its stake in the company.
