MEDICAL : Medstone’s Kidney-Stone Release May End Up Obstructing Its SEC Status
Dr. Richard Penfil, president of Medstone International, took a lot of heat from the company’s attorney when the Costa Mesa firm sent a press release this week announcing Food and Drug Administration approval to market a device that uses sound waves to crush kidney stones.
The FDA action was big news for Medstone, and the release was the kind of self-congratulations that companies commonly promulgate--but not when they are awaiting approval from the Securities and Exchange Commission to make their first public stock offering.
After prospective public companies register information about themselves with the SEC--as Medstone did in July--they are supposed to keep quiet, lest they be accused by the SEC of prematurely marketing their as-yet-unissued stock, said Donald J. Regan, Medstone’s Costa Mesa attorney.
“Our attorney is not the least bit happy about this going out,” Penfil said Thursday of the company’s public statements. He said Regan fears the SEC now may delay or prohibit Medstone’s proposed public stock offering.
Penfil had already said he figures that FDA approval to sell its lithotripters in the United States would boost the company’s sales from $6 million in 1987 to $20 million to $30 million in 1988.
Lithotripters use shock waves to crush kidney stones into fine grains of sand that a patient then passes in urine. They provide an alternative to surgical removal of the stones.
Although Medstone is the first U.S. firm to obtain FDA approval to market such a device in the United States, Dornier, a West German firm, has been selling its own lithotripter with FDA approval since 1984. Penfil said his product will sell for about half the price of the Dornier lithotripter.
Penfil, however, denied a newspaper report indicating that he said the FDA approval would help Medstone with its first stock offering. He said that is what made his attorney the most uneasy.
In retrospect, Penfil said he may have blundered by not seeking legal advice in preparing the press release. “I’m a physician, not an attorney,” he said.
