Neal St. Anthony/On Business: Urologix CEO presides over a Phoenix-like rise for firm
Neal St. Anthony
Friday, June 15, 2001
Mike Selzer is walking, talking proof that running a small, public company can range from the pits to great promise.
Urologix, which developed a non-invasive treatment that shrinks enlarged prostates, was among several med-tech firms that went public in late 1996 with promising
technology but facing long odds.
"The class of 1996 does not have a lot of postgraduate success," Selzer joked.
The stock of Urologix shot to $30. Employment swelled to 120-plus at the Plymouth-based company.
But urologists weren't buying the new technology and insurers weren't paying for it. Urologix was a country mile from its sales goals and profit projections by the time
Selzer came aboard 30 months ago.
The stock price had settled at about $3 per share.
"We've raised almost $100 million [in equity] and we have yet to be profitable," said Selzer, 48, a candid, 23-year veteran of Medtronic. "We're just now getting to the
point -- and I just looked at the 1996 business plan -- where we're getting to the projected 1997 numbers."
Two years removed from the 1999 bottom, Urologix is posting 50-percent plus quarterly sales increases. Nearly 1,000 of the nation's 10,000 urologists have signed on for
the economical, outpatient treatment. Wall Street stock pickers have returned to follow the company.
Urologix expects to break even in the quarter ending Sept. 30. The stock has traded between $20 and $28 this spring.
"We're kind of a little band of warriors who have been fighting uphill for awhile and we can see the top and then we'll see the next mountain," said Selzer, 48, who ran a
$100 million sales operation at Medtronic. "We've moved from early innovation -- let's just get a product out there -- to one more commercially oriented that's taking
market share and building a bigger company with a foundation and culture that we can sustain for the long term."
In Selzer's dark, early days, Urologix's status as an orphan public company, abandoned by analysts and early investors, was a drag.
The company had to prove the technology worked and was cost effective, doctor by doctor.
A slimmer Urologix, now with about 100 people and growing, has added several hundred doctors as customers and investors and started to get insurance companies and
other third-party payers to pay for what is a less-costly, less-traumatic procedure than traditional surgery.
Being publicly held works better for Urologix today.
Customers can quickly learn about the company, its background and financial standing. Employees, most of whom get stock options, started to see the rising value of their
work. The stock is now acquisition currency. Last fall, Urologix paid $8 million in cash and stock to buy a private company with a complementary product whose
management wanted to be part of a growing public concern.
"Going public is often seen as a milestone," Selzer said. "Management declares victory. I go public every day when the market opens. We talk to investors and build the
company."
Urologix, which has a market capitalization of about $275 million, is expected to earn about $1.5 million, or 11 cents per share, on revenue of $29.5 million in fiscal 2002,
said Chad Simmer, analyst at Miller Johnson Steichen Kinnard. Analysts at UBS Paine Webber, CS First Boston and some big-name institutional investors are now
betting on earnings growth that they expect to top 50 percent a year for the next several years as revenues surge past the critical break-even point.
Urologix offers an anesthesia-free, catheter-based therapy that uses a cooled-microwave technology to treat the "benign prostatic hyperplasia" that plagues 23 million
men worldwide. Urologix's Targis and Prostatron therapies combine targeted microwave energy to reduce the enlargement with a cooling therapy that protects healthy
tissue and mitigates discomfort during the procedure.
The total charge usually is around $2,500-$2,700.
Medicare, which insures more than 60 percent of men seeking the treatment, agreed to cover reimbursement for the in-office procedure in January, a breakthrough for
Urologix.
"Surgery done in a hospital used to be around $8,500, including treatment and the follow-up and a couple nights in the hospital," Selzer said. "Drugs run $300 to $600 a
year. Many men on drugs get dissatisfied and the alternative may be an $8,500 surgery. Drugs are chronically more expensive.
"Men need a treatment more efficacious than drugs, but less invasive than surgery."
Blue Hawaii
Selzer this week took part in an interesting forum on "Expansion and Exit Strategies" in tough markets for private and newly public companies.
Going public is not for everybody. Some companies prefer to stay private and selling out can be a great option, several hundred attendees learned during a forum
sponsored by The Collaborative, Dan Carr's 14-year-old network of emerging companies, investors and advisers.
Take Brad Balogh, the former CEO of LSC, a provider of enterprise data storage software. He recently sold out to Sun Microsystems for $74 million in stock. LSC, a
$10 million revenue company, was preparing to go public last year when the IPO market tanked.
Balogh is now a lot richer but said he missed the opportunity to run a public concern.
"We had competitors who could price us out of the market," he added. "The sale also was a good exit strategy for shareholders."
After listening to a couple of laments by Balogh, Carr brought the house down when he reminded Balogh that there were three guys with suits on the panel.
"You're the only one up here with a Hawaiian shirt on," Carr said.
The Daisy Sale mystery
Bob Waters, 74, of Minneapolis thinks he has cracked the Daisy Sale mystery. That is, where the name for Dayton's mid-year sale came from.
No one at Dayton's (er, Marshall Field's) seemed to know last week, after the department store chain confirmed the Daisy Sale name is history. (From now on, the sale
will be called Field Days.)
Waters believes the name dates back to the 1920s, when his father, Fred C. Waters, owned the Twin City Decorative Supply Co. on 1st Avenue North in Minneapolis. The
business distributed and supplied decorating supplies mostly to retail businesses in the area.
"Back then, window displays in the department stores were the big thing," Waters recalled, ticking off the names of stores (Powers, Donaldsons, Young-Quinlan) that are
now a distant memory.
Ed Dean, who was responsible for trimming Dayton's windows in the 1920s, told Fred Waters that the store was looking for a unique way to advertise its mid-year sale.
Waters mentioned that he had a large stock of artificial daisies in his storeroom that could be used as a theme.
As the younger Waters recalls, the first Daisy Sale was a success and the name stuck.
"I was sure sad to see they were getting rid of the name," he said.
-- Staff Writer Janet Moore contributed to this column.
Neal St. Anthony can be reached at 612-673-7144 or Nstanthony@startribune.com.
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