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Angio Dynamics, Inc.

Angio Dynamics, Inc.

603 Queensbury Avenue
Queensbury, New York 12804
U.S.A.
Telephone: (518) 798-1215
Toll Free: (800) 772-6446
Fax: (518) 798-3625
Web site: http://www.angiodynamics.com

Public Company
Founded:
1988
Employees: 257
Sales: $67.3 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: ANGO
NAIC: 423450 Medical, Dental, and Hospital Equipment and Supplies merchant Wholesalers

AngioDynamics, Inc. is a Queensbury, New York-based medical device company that specializes in products used in the treatment of peripheral vascular disease (PVD) and other noncoronary diseases. PVD is a narrowing of blood vessels that restricts blood flow in the arms and sometimes legs, a condition affecting some 11 million Americans. AngioDynamics designs and manufactures a variety of treatment products, including angiographic catheters, hemodialysis catheters, angioplasty catheters, drainage products, endovascular laser procedure products, image guided vascular access products to guide the placement of catheters, and thrombolytic catheter products used to deliver blood-clot dissolving agents. AngioDynamics relies on a direct sales force to market its products in the United States and a network of distributors to sell to more than 30 other countries. Spun off from E-Z-EM in 2004, Angio-Dynamics is a public company listed on the NASDAQ.

PARENT COMPANY ROOTS DATING TO 1959

AngioDynamics grew out of E-Z-EM, a company cofounded by Howard S. Stern, who would also cofound AngioDynamics. After earning a Bachelor of Chemical Engineering degree in 1953 and a Master of Science in Chemical Engineering in 1954 from the Massachusetts Institute of Technology, Stern served a stint in the U.S. Navy before landing a job as director of marketing at Radiation Applications Inc., a small New York City radiation applications company. At a dinner party in 1959 a conversation with radiologist Dr. Phillip H. Meyers led to the creation of E-Z-EM. Meyers told Stern of a problem he was having in giving barium enemas to patients about to have their lower intestines X-rayed. (Because it was a heavy element, the barium absorbed X-rays and helped to improve the picture definition and highlight possible problems.) The barium was delivered through a rectal tip attached to a bucket filled with barium, but patients often had to contend with contamination problems. Stern offered a simple yet profound solution: Package the barium in a bag, and make the entire enema disposable. Meyers was convinced the idea had merit and the two men teamed up to launch a business to provide disposable barium enemas.

With a 100-pound barrel of barium sulfate, sheets of plastic, and his mother's iron, Stern set to work developing prototypes, which he often hung on the shower curtain at home next to hand-washed pantyhose, a sight that caught the notice of guests. The greatest challenge Stern faced was mixing the barium and the water in the bag, but once he realized the two could be mixed in the bag by kneading and any lumps could be eliminated with a filter, he had a rudimentary kit ready in 1960. To make a truly commercial product he turned to an inflatable vinyl toy manufacturer who agreed to supply the custom bags, and a fishing lure manufacturer was contracted to provide the rectal tips. Unable to find a large company to represent the new product, and having lost his job at Radiation Applications, Stern decided to market the product himself. In 1962 he and Meyers each chipped in $1,000 and established E-Z-EM, setting up shop in a small room in a New York City loft where Stern's father ran a garment factory. Stern generally devoted his mornings to production, able to turn out 100 pre-packaged barium enema kits, while he spent the afternoons making sales calls and deliveries. He limited his overnight trips to such towns as Boston, Philadelphia, and Detroit, where he had friends willing to let him sleep on their couch. It was slow going at first, but sales soon began to pick up, and E-Z-EM turned a profit of $62,000 in the first year. Little of that went into Stern's pocket, however. He once told Forbes that in the first three years of the company's existence he made about $10,000.

When Stern learned that some radiologists were using barium sulfate in oral examinations, he also began selling the substance without the bags in different flavors. In 1964 he was able to move his operations to a new plant and later in the decade solidified his hold on the market by offering superior service, more than willing to provide radiologists with special orders. The market for barium sulfate was not significant enough to attract the attention of large medical products companies, allowing E-Z-EM to dominant the niche, but it also limited Stern's growth potential. By the early 1980s the company was doing close to $30 million in annual sales and enjoying a healthy profit. Stern took E-Z-EM public and sought new opportunities in related fields to take advantage of his many contacts with radiologists. The company became involved in Nucleotome, a noninvasive device used to remove damaged spinal cartilage; PercuCut biopsy needles, used by radiologists to mark the location of breast lesions for surgical treatment; and Flexi-Therm, a thermographic system to detect pain and disease.

LAUNCH OF ANGIODYNAMICS IN 1988

Founded in 1988, AngioDynamics was part of this effort to diversify beyond barium sulfate. It began as a research and development division at E-Z-EM to produce medical plastics products for use in the fast-growing field of interventional radiology. Serving as point person was AngioDynamics' cofounder Eamonn P. Hobbs, who had expertise in the field.

Growing up in Springfield, Massachusetts, Hobbs was a top high school student whose high grades and SAT scores earned him full scholarships to schools such as Duke, Massachusetts Institute of Technology (MIT), and Stanford. Because of his dream of becoming an astronaut, however, he opted for the Air Force Academy, which he began attending shortly after high school graduation. He soon learned that he suffered from progressive astigmatism in his right eye, a condition that would prevent him from flying. Hobbs quit the Academy and returned home. Having lost his opportunity for a scholarship, Hobbs enrolled at the University of Lowell, an affordable school that a friend recommended. It was here that Hobbs earned a plastics engineering degree with a biomaterials emphasis. After graduating in 1980 he went to work at Indiana's Cook Incorporated, which produced cardiology and gastroenterology medical devices used by interventional radiologists. He went to work for E-Z-EM in 1985, but left a year later to launch his own company, Hobbs Medical Inc. After selling the business in 1988 he rejoined E-Z-EM to start a new medical plastics venture with Stern.

COMPANY PERSPECTIVES

Innovation is our future the future of our industry, our company, our customers, and most importantly our family and friends.

AngioDynamics' primary focus is to offer an innovative and comprehensive product line for the interventional treatment of peripheral vascular disease (PVD) and other non-coronary diseases. We are dedicated to designing, developing, manufacturing and marketing high quality medical device products that meet the needs of today's interventionalists.

Hobbs set major goals for the new E-Z-EM division. In a 2005 interview with Design News, he said, "I had a five-year plan to be at $100 million." At the time, however, the Food and Drug Administration office began emphasizing its enforcement role in response to problems in the generic drug business. As a result, the approval process took much longer than expected and Hobbs's business plan was trashed. "We had to scramble to make ends meet," he told Design News.

The division's first products were introduced under the AngioDynamics name in 1991: the ProInfusion Catheter, a part that created an even distribution of fluid in the company's line of Pulse*Spray Sets. A year later the business was organized as A.D., Inc., a wholly owned E-Z-EM subsidiary. It moved to its own Queens-bury, New York facilities and hired the first sales reps. A second product also was put on the market in 1992: the SOFT VU line of Angiographic Catheters, featuring a soft radiopaque tip to reduce the possibility of blood vessel trauma and a high-torque shaft to improve vessel selection.

In 1996 A.D., Inc. changed its name to AngioDynamics, Inc., and Hobbs, who had been serving as vice-president, was named president and chief executive officer, with Stern acting as chairman. In that same year, the company introduced another new product, the Schon Chronic Angiographic Catheter. Several other products followed in the second half of the 1990s. There were three new offerings in 1997: the ANGIOPTIC Angiographic Catheter, featuring a self-dilating radiopaque tip; the OMNIFLUSH Angiographic Catheter, designed to protect against vessel wall injury; and the Pulse*Spray Injector, an automatic delivery system for thrombolytic agents. AngioDynamics released a pair of products in 1998: the Schon Acute Hemodialysis Catheter, kink resistant and featuring large side holes to reduce clotting and improve flow; and the UNI*FUSE Infusion Catheter, which employed the Flow Thru Hub and its self-adjusting occluding wire to minimize kinking and provide even distribution over longer clots. In 1999 AngioDynamics added three more products to its catalog: the ABCESSION General Drainage Catheter, which was able to recover its shape even if twisted or severely bent; the ANGIOFLUSH III Contrast & Fluids Managements System; and the WORKHORSE PTA Balloon Catheter, used to inflate a peripheral blood vessel to improve blood flow.

AngioDynamics continued to introduce new products in the early 2000s, starting with the Micro Access Sets that provided physicians with a myriad of choices in creating an image-guided vascular access instrument (three different wires, five needle options, and three sheath dilator options). In 2001 the company introduced its Image-Guided Vascular Access Products, as well as the ABCESSION Biliary Drainage Catheter and the ACCU-VU Sizing Angiographic Catheter, which took further advantage of the company's OMNI-Flush technology. New products in 2002 included the highly durable Dura-Flow Chronic Hemodialysis Catheter, which made use of the HYDRO-TIP to allow for excellent flow rates even if the tip was pressed against a vessel wall; the Endovascular Laser Venous System (renamed two years later as VenaCure Laser Vein Treatment), a less painful alternative to surgical and chemical treatments for varicose veins; and the PVA Plus Embolic Therapy. In 2003 AngioDynamics introduced the AQUALiner Hydrophillic Guidewire, specially coated to reduce friction.

2002 EXPANSION PROGRAM

Business was so strong that in 2002 AngioDynamics launched a $3.5 million expansion program that more than doubled the size of the company's 26,000-square-foot facility to 58,000 square feet and led to the hiring of more than 200 employees over the next few years. Stern retired as E-Z-EM's and AngioDynamics' chairman in February 2004. Suffering from brain cancer, he died two years later, in January 2006. A month after Stern's retirement, E-Z-EM announced that it would spin off AngioDynamics in an initial public offering of stock underwritten by Adams Harkness & Hill Inc. of Boston and RBC Capital Markets of Toronto. The proceeds were earmarked to pay back a 1997 $3 million loan from E-Z-EM and provide working capital. The offering was held in May 2004 when 19.6 percent of the company's stock was sold, netting nearly $18 million for AngioDynamics. In October of that year the spinoff was completed when E-Z-EM distributed the remaining 80.4 percent of AngioDynamics stock as a dividend to its investors.

KEY DATES

1962:
E-Z-EM is founded.
1988:
AngioDynamics is founded as the E-Z-EM research and development division.
1991:
The first AngioDynamics products are introduced.
1992:
A division is incorporated as A.D., Inc., an E-Z-EM subsidiary.
1996:
A.D. becomes AngioDynamics, Inc.
2004:
AngioDynamics is spun off as a public company.

Now independent, AngioDynamics continued to grow at a strong pace. For the fiscal year that ended on May 29, 2004, the company reported sales of more than $49 million, a marked improvement over the $38.4 million of a year before. Net income also increased from $1.2 million to $3.1 million. The following year saw revenues top $60 million and net income exceed $4.5 million. Record sales and earnings continued into 2006 as the company remained committed to investment in research and development, resulting in the steady introduction of new products, such as the May 2006 launch of the MORPHEUS CT PICC Insertion Kit, a peripherally inserted central catheter (PICC) designed to be inserted at a patient's bedside rather than the hospital's interventional radiology suite where the procedure was usually done. To support its growth, AngioDynamics made plans for a secondary offering of stock in mid-2006.

PRINCIPAL SUBSIDIARIES

Leocor, Inc.

PRINCIPAL COMPETITORS

Boston Scientific Corporation; Cook Incorporated; Diomed Holdings, Inc.

FURTHER READING

Byrne, John A., "'Rear Admiral,'" Forbes, September 13, 1982, p. 74.

, "Too Much Cash?," Forbes, May 21, 1984, p. 168.

Cochran, Thomas N., "The House That Barium Built," Barron's, February 22, 1988, p. 15.

Furfaro, Danielle T., "Warren County, N.Y., Medical Supplies Maker Plans to Double Size of Plant," Times Union (Albany, N.Y.), March 21, 2002.

Harlin, Kevin, "Parent Firm to Spin Off Queensbury, N.Y., Medical Device Maker AngioDynamics," Times Union (Albany, N.Y.), March 9, 2004.

Maloney, Lawrence D., "Time to Take the Leap?" Design News, October 24, 2005.

Much, Marilyn, "Medical Gear Maker Considered a Safe Bet," Investor's Business Daily, May 27, 2004, p. A06.

"Stern Ready for New Age in Health Care," Long Island Business News, February 28, 1994, p. S24.

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