ARDEN HILLS, Minnesota–Transoma Medical Inc. has become the latest medical device start-up to shut its doors.
The Arden Hills-based company, which was developing a device to remotely monitor the electrical activity of a patient’s heart, could not raise additional money from investors, sources said. As a result, Transoma closed its human applications operations and will return to its original animal business.
The company employed more than 300 people. In 2007, Transoma generated $37.2 million in revenue, most of it coming from its animal testing operations.
It’s a stunning fall for Transoma, which had already raised millions of dollars from investors like Affinity Capital Partners in Minneapolis and had once filed for a $75 million initial public offering only to withdraw it last year because of poor market conditions. The company had extensively developed and tested its Sleuth device, which allowed doctors to monitor and collect data on patients who suffer from sudden fainting spells.
Founded in 1984 as Data Sciences International, Transoma’s expertise was pharmaceutical research; it developed implantable wireless devices to monitor the effects of drugs on animals. The company decided to focus on patients who had chronic heart-related conditions such as syncope and refractory epilepsy, who could benefit from long-term monitoring — a potential $2.1 billion U.S. market.
But a weak economy, which scared off investors, and a poor IPO environment worked against Transoma. The company’s demise does not bode well for Minnesota medical start-ups, said Ross Meisner, managing director of Dymedex Consulting in Vandais Heights. Transoma boasted prominent investors, won regulatory approval and generated real sales but still failed, he said.
“Transoma is a good example of how challenging the market is right now,” Meisner said.