Friday, July 11, 2008

Implant Sciences removes med coatings from its business

By Ryan McBride

It seems like every time you turn around nowadays, another company announces plans to move into the life sciences business. So much so, the story line has fatigued, and yet unfortunately it slogs on and rears its hackneyed head in the columns of newspapers. (Okay, I’ve done a few of these stories.) So give a round of applause to Implant Sciences Inc. (AMEX: IMX) for bucking this “me-too” trend.

Despite the clinical sounding name, Implant Sciences announced last week that it took one step closer to exiting from the life sciences business altogether, with the sale of assets related to its medical-coatings business.

In the realm of business news, Implant’s $750,000 sale of those assets wasn’t a big deal. But in the context of sinking that old “life sciences for everyone” tale, the deal was a refreshing if only because it was different. To be clear, it’s wonderful that so many companies in the life sciences industry are dedicated to developing products that improve patients’ lives. And with the recent adoption of the $1 billion stimulus package for the life sciences industry in Massachusetts, there are plenty of good reasons to be in the business. My beef is with the tired story line, and I include myself among the guilty (though reformed). For Implant Sciences, the withdrawal from the life sciences sector is understandable. CEO Phillip Thomas explained in an interview last week that the firm’s business of coating radioactive seeds for cancer therapy and orthopedic implants has become less profitable due to a glut of competition.

Meanwhile, the firm’s bomb-detecting operation is booming (forgive the irresistible pun). Thanks in part to the need for tight security at the Summer Olympics in Beijing, Implant has recorded more than $7 million in orders for its Quantum Sniffer portable explosives detectors since May, according to the company and CEO Thomas. (I wonder how many other New England firms have struck gold by tapping into the vein of the summer games in August? Know of any? E-mail me or leave a comment on our website.)

Implant launched its explosives-detection business six years ago, not long after the terrorist attacks of Sept. 11, 2001, when demand soared for technology to thwart such tragedies. The security unit of the company has grown into one of three major revenue streams for Implant along with its semiconductor and medical businesses. To move out of the semiconductor field, Implant sold its chip-making subsidiary, Core Systems Inc. of California, this winter.

In recent years Implant has sold its bomb-detection devices throughout the U.S., Europe and Asia. The contraptions, which detect the vapors given off by explosives, can even be found in a major airport in Moscow. Thomas said that he expects his firm’s security business to double or triple this year. The firm took in $4.6 million from its security business — of total revenue of $15.4 million in fiscal 2007, according to its annual earnings report.

Still, Implant’s strategy to move out of life sciences and semiconductors comes after the firm had grown both businesses in the past several years. It acquired Core Systems in 2004 for $5.3 million, and the firm teamed with Wilmington medical device firm CardioTech International Inc. (AMEX: CTE) in 2005 to form CorNova Inc., a startup focused on the development of artery-opening stents.

Thomas said that Implant still owns shares in CorNova, but no longer has a seat on the Burlington startup’s board of directors. In fact, he said he would like to sell some of Implant’s polymer-coating technology for medical devices to CorNova, which already uses the coatings to develop its drug-eluting stents. The coatings are also designed improve the compatibility of the stents in the body, he said.

With a focus on bomb-detecting technology, the name Implant Sciences (which made a lot of sense while it was in the medical devices business) doesn’t seem to be a fit. How about this: Send me an e-mail with suggested new names for the company and I’ll forward them along to Thomas. Think Homeland Security — and not, in this case, life sciences.