Palmaz Scientific

About Palmaz Scientific

Palmaz Scientific Inc. was a medical-device technology company established in 2008 by Dr. Julio Palmaz, the inventor renowned for creating the first commercially successful intravascular stent. The company's objective was to pioneer the next generation of implantable prosthetic devices and arterial stents. The venture was co-founded by Dr. Palmaz and Steven B. Solomon, who served as the CEO. Dr. Palmaz, an Argentinian-born medical doctor, revolutionized cardiac care with his balloon-expandable stent, an invention he developed between 1978 and 1985 and for which Johnson & Johnson acquired the rights in 1988 for a substantial sum. This prior success was a key factor in Palmaz Scientific's ability to attract investors.

The firm was headquartered in San Antonio, Texas, but conducted its research and development in California. Its business model was centered on advancing stent technology through innovations in materials science. Despite raising approximately $40 million from over 300 investors, including a $3 million loan from the Texas Emerging Technology Fund, the company failed to commercialize any of its technology or generate recurring revenue. By August 2015, the company was facing severe financial distress, having accumulated losses exceeding $54 million. Dr. Palmaz disclosed to shareholders that the company was running out of money and had been sustained by millions of dollars in loans from his family.

The company's trajectory was marred by internal and external challenges. It struggled to form partnerships with larger medical device manufacturers. Internally, there were allegations from shareholders of fraud, civil theft, and mismanagement, with claims that the company failed to disclose material information about its leadership and used funds for excessive salaries. These issues led to multiple lawsuits and investigations by the SEC and the U.S. Attorney's office, though these investigations were later closed without any charges being filed. In March 2016, facing mounting debt and an inability to secure further capital, Palmaz Scientific filed for Chapter 11 bankruptcy protection. Just before the filing, both Dr. Palmaz and CEO Steven Solomon resigned from their positions. Substantially all of the company's assets, which primarily consisted of a large portfolio of 256 issued and 182 pending patents, were sold at a bankruptcy auction in June 2016. The winning bid of $22.6 million was submitted by Vactronix Scientific Inc., a newly formed company headed by Dr. Palmaz's wife, Amalia Palmaz.