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CORPORATE FOCUS—MiniMed Inc.

You would think a company that has grown its revenues 273 percent since going public in 1995 would be ready for a breather, but not MiniMed Inc. The company, which makes insulin pumps and other products for diabetics, is moving from Sylmar to a $70 million biotech center at Cal State Northridge. The move will triple the floor space to 654,000 square feet as the company prepares to boost its manufacturing and support personnel from 1,400 ultimately to 4,500 workers. “When we moved into our Sylmar facility I didn’t think we could fill it up. Then all of a sudden we were out of space,” said Kevin Sayer, the chief financial officer. “Now we have a lot more room to grow.” MiniMed’s insulin pumps, smaller than most pagers and costing about $4,500 each, allow diabetics to administer insulin to themselves in smaller, controlled doses without having to whip out a syringe. The company has taken off as more diabetics have come to appreciate the convenience and benefits of using a pump to control their disease, said founder Alfred Mann. “We’ve created some products that make a major difference in people’s lives, products that improve quality of life and reduce the risk of long-term damage from diabetes,” said Mann. “That’s pretty exciting.” Up until the early ’90s, MiniMed was a money loser, but Mann was convinced that insulin pumps would catch on among diabetics. Certainly, the pumps were more convenient than using a syringe, but Mann also believed the pumps provided a more effective treatment for diabetes. A study published in the New England Journal of Medicine in 1993 backed up Mann’s theory. Researchers found that diabetics face fewer dangerous complications such as heart disease, kidney failure and blindness if they monitor their glucose more intensely and inject insulin more frequently. It took about two years for the benefits of so called “intensive therapy” to filter down to doctors and their patients, but once word began hitting the street, MiniMed’s revenues, and fortunes, took off. After losing money in 1994, the company earned 6 cents a share on $56.9 million in revenue in 1995, starting the company on a growth spurt that has never stopped. By the 1999 fiscal year, the company was earning 70 cents a share on $212 million in revenue. In the second quarter ended June 30, net income was $8.6 million (13 cents a share) vs. $4.9 million (8 cents a share) for the same period last year. “I think we’re very well positioned from a product perspective,” said Sayer. In fact, the company has several other products in its pipeline, but the one closest to release is a device that will allow diabetics to constantly monitor their glucose levels without having to continually prick their fingers. Once the monitor hits the market, most likely by next year, MiniMed will create a treatment option that should substantially increase its market share, said Phillip Nalbone, an analyst with Salomon Smith Barney. “Add the glucose sensor to the pump and you have a very powerful product,” said Nalbone. MiniMed also has partnered with Eli Lilly & Co. to produce a disposable insulin cartridge for the company’s insulin pumps. It makes refilling the pumps more convenient and allows MiniMed for the first time to book revenue from insulin. Sayer doesn’t expect approval from the U.S. Food and Drug Administration until 2002. The company is also seeking FDA approval for a disposable patch designed to treat people with type-2 diabetes, the most prevalent form of the disease, which strikes people later in life. Considering Americans are growing fatter and more sedentary every day, and the number of new cases of type-2 diabetes is skyrocketing, so could the market for the patch. The incidence of the disease increased 33 percent nationwide between 1990 and 1998 and about 800,000 new cases are diagnosed every year. Experts say roughly 3 million people in the United States with type-2 diabetes need insulin injections to prevent some of the damaging side effects of the disease, such as blindness and circulatory problems that can lead to amputation. Mann is also excited about an implantable pump and glucose monitor that is currently being tested in animals. The device would create the first closed-loop system that controls insulin levels like the body’s own pancreas.

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