ORANGE COUNTY AT WORK: CAREERS, COMPANIES, CORPORATE LIFE : Pilot Hopes Catheter Firm May Finally Take Off

There was a time when all Ron Luther wanted to do was fly. And in the tense months that led up to the 1962 Cuban missile crisis, that’s exactly what Luther--then a Marine Corps captain--did for a living.

All that changed one night when, somewhere off the coast of Virginia, Luther tried to land his jet fighter on the bobbing deck of an aircraft carrier in preparation for an upcoming reconnaissance flight over Cuba.

Instead of coming to a speedy stop, Luther’s RF-8 Crusader careened across the flight deck and plunged over the side--with Luther still strapped into the cockpit.

With his left arm nearly torn off in the crash, Luther spent 13 frigid minutes treading water waiting for a nearby destroyer to fish him out. Robbed of the use of his arm, Luther’s military career came to an end that cold March night.

In the years that have passed, Luther has regained nearly complete use of his arm. And he sets aside a few hours each week to fly the bright red biplane in which he owns a partial interest.

But flying isn’t what makes Ron Luther tick anymore.

They Even Beat Flying

“My passion is really catheters,” said the founder, president and occasional janitor of Luther Medical Products Inc. “Given the choice between flying and making catheters, I’d pick catheters.”

Tiny by any measure, Luther Medical has only about a dozen workers. And its sales last year didn’t even break the $500,000 mark. But despite its small size, the Santa Ana company has built a reputation for pluck and innovation.

And pluck is what it has taken for Luther Medical to stay afloat.

Despite a couple of potentially rewarding joint ventures with large conglomerates, Luther Medical has always been the bridesmaid but never the bride.

Three years ago, a unit of the Warner Lambert Co. bought options to buy Luther Medical stock and acquired licenses for Luther Medical products. That relationship ended, however, when Warner Lambert got rid of its Deseret Medical Inc. unit, taking the New Jersey drug giant out of the catheter business--and out of Luther’s life altogether.

More recently, talks that might have led to the acquisition of Luther Medical by the BOC Group Ltd., a London industrial conglomerate, ended after tests indicated that a new Luther Medical catheter material was too sensitive to alcohol for European standards.

Though Luther Medical has had its share of disappointments, the company’s unique product line continues to generate interest, even if profits have yet to materialize.

For instance, Luther’s patented soft catheter is made from a plastic material that is stiff enough to insert into a patient’s vein while dry, but softens and expands once it becomes wet, thereby allowing a better fit with less damage to the wall of the vein.

A recently introduced version of that catheter is designed for use specifically with AIDS patients and uses a single, multiple-walled tube to deliver more than one medication or nutritional solution at a time.

“The object is to make them last as long as possible because these people are so debilitated that they often don’t have the mechanics for blood clotting and fighting infection,” Luther said. “You don’t want to put any more holes in them than you have to.”

Perhaps Luther’s most interesting product is his unique, patented “peel-away” needle. Unlike with conventional needles, the catheter is actually fed through the Luther needle, which is then removed from the patient and peeled off the tubing like a banana.

“I would certainly say that Ron really has been an inventive person,” said Pieter Halter, editor of Biomedical Business International magazine, a Tustin journal. “He’s an idea man, no doubt.”

Though few who are familiar with Luther Medical will dispute that reputation for innovation, some analysts say that while long on potential, the company for too long has been short on delivery. After seven years, they say, Luther Medical remains little more than a mere mom-and-pop operation.

“That company has had a lot of promise, but I don’t see the cash register knocking anyone down over there,” said Jules Marx, a health care research analyst for the New York investment firm of D. H. Blair & Co.

A bearlike man with a taste for golf and Havana cigars, Luther makes no bones about the fact that there has been more thin than thick during the seven years that Luther Medical has been in existence.

Kept Company Afloat

Indeed, Luther Medical stock has kept the company afloat for the most part, Luther said. The company, which has lost more than $3.2 million since its founding in 1980, raised a total of about $3.9 million through stock and debenture sales, from which it has been funding its operations.

Luther, who claims not to have paid himself for three years, said he has sold some of his own stock--he holds about 12% of Luther Medical’s outstanding shares--to meet living expenses. Occasionally, others have gotten the shares too.

“There was one time I had to give the landlord his rent in stock,” Luther recalled over lunch at his favorite noontime spot--the officers club at Tustin Marine Corps Air Station. “God bless him, because if he hadn’t done that, we’d probably have disappeared.”

But after numerous disappointments and plenty of false starts, Luther Medical may finally be on the verge of success--at least it might look that way.

In January, the company reached an agreement with Baxter Travenol Laboratories Inc. under which Luther Medical will supply the medical products giant with several versions of a tiny catheter and needle designed for use with premature infants.

Baxter Travenol has not yet placed an initial order, but Luther estimates that the contract will roughly double his company’s revenue. But securing the various product and labeling approvals necessary to begin shipments to Baxter Travenol remains the major hurdle to realizing the new business, he admitted.

“For the first year, we’re looking at about $500,000 in revenues,” Luther said. “But when does that first year start? That’s my question.”

Even without Baxter Travenol, things appear to be looking up for Luther Medical, especially because of the interest being taken in the company by a Canadian venture capitalist who has agreed to pump $1.5 million into its operations.

Fred Davies of Vancouver approached Luther Medical late last year with an offer to buy 1.5 million shares of stock for $1 each at a time when Luther Medical was trading for only 75 cents a share.

In fact, using some of Davies’ money--Davies’ stake in the company eventually will total 15% after the exercise of all warrants he holds--Luther Medical has embarked on the acquisition trail and soon expects to complete a purchase that Ron Luther says will generate about $2 million a year in revenue.

Though Luther declines to identify the company being acquired until after the merger is complete, he describes it as an Orange County “medical products company, but not exactly in the catheter field.”

Indeed, Luther Medical will make additional acquisitions while at the same time beefing up its efforts to market its own products, said Davies, who expects his investment in the company to eventually pay large dividends.

“I would be surprised if within three years this company isn’t doing (at least) $50 million a year in sales,” Davies said.

Although Luther himself is feeling a lot more optimistic about his company’s prospects than he might have a year ago, he said he still will not consider his company a success until its shareholders get a return--and then some--on their investments.

“I think I have finally arrived,” he said. “But I may step off the boat and find that the dock is not there.”