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[IP] From the Indianapolis Star

It's in his blood

Man's unrelenting pursuit of meter for diabetics has firm poised for success.

By Jeff Swiatek

Indianapolis Star

December 24, 2000 

In his decadelong quest to invent a better blood-testing device for 
diabetics, Jim Connolly lived on a shoestring budget, using his basement as a 
laboratory and traveling the country in an aging Chevy Citation, seeking 
money from investors.

Once, desperate for gas money to drive to New York to meet with a potential 
investor, Connolly volunteered to unload a fruit truck outside the 
Indianapolis City Market for $30.

"That was a fairly good adventure," chuckled Connolly. He talked the New York 
investor into writing a $40,000 check, in addition to $200 in cash to pay for 
the trip back home.

Connolly is the classic case of a dogged entrepreneur trying to bring an 
innovative product to market. But while most fall short of their goal, 
Connolly achieved his.

Earlier this year, Connolly's Indianapolis company, Polymer Technology 
Systems, began widespread retail sales of the BioScanner 2000, a hand-held 
blood tester that fulfills the vision of Connolly and the dozens of 
engineers, chemists and investors who helped him.

"We have something nobody else has, and we now have a way to capitalize on 
it," said Connolly, 52, sitting in the company's combined office, labs, 
production area and warehouse in Park 100 on the Northwestside.

Polymer Technology has 80 employees and will end the year with more than $1 
million in sales of the BioScanner and its patented blood testing strips. But 
success remains far from a sure thing.

The company still lacks permanent financing to expand its marketing and 
product line. To get the funds, it soon may have to sell out to a larger 
company or offer stock to the public. And there's the ever-possible threat of 
being crushed by direct competition from any of the big firms that dominate 
the diabetes blood-testing market.

Even so, Polymer Technology stands as a rare entrepreneurial success story 
and a lesson in how ability, persistence and luck can pay off.

Connolly "has had a tremendous amount of success," said Duane Durkos, a 
former business partner of Connolly's who runs BCD & Associates, a product 
consulting firm in Zionsville. 

"You've got to give him a huge amount of credit," said Durkos.

Connolly's background lent itself to his entrepreneurial task. He grew up in 
Florida, with a father who sold insurance and a mother trained as a 
physicist. In college, he took seven years to earn a bachelor's degree in 
medical technology because, he said, he didn't like the theoretical side of 
the coursework.

His inventive fires were lit during an internship with famed immunologist 
Florence B. Seibert, who was then in her 70s. "That was a woman who really 
defined passion for me," Connolly said of Seibert, who invented the first 
reliable test for tuberculosis. "Florence Seibert showed me what real 
research and development is."

Connolly got the idea for the blood scanner in the mid-1980s while working 
for Roche Diagnostics Corp. of Indianapolis, which makes blood glucose test 
strips for diabetics. Inserted into a scanner with a drop of blood, the 
chemically treated strips measure a diabetic's blood-sugar level.

Connolly saw the need for a hand-held device that would test for more than 
blood-sugar levels, because diabetics often suffer from high cholesterol and 
other problems measurable in the blood. No such device existed. His zeal for 
the invention grew during several other corporate jobs.

By 1992, Connolly had settled in Indianapolis working full time on the 
project. An informal team of engineers and chemists had done much to develop 
the dry chemical blood tests, along with scanner software that could read the 
data and store it.

To finance the project, Connolly used his own money, at one point selling his 
Rolex watch. Divorced at the time, he shared an apartment with Durkos for a 
while and lived on whatever income was left from the research.

"One year," he said, "I had an income of zero."

Facing constant money constraints, the team's scientists improvised on the 

Once, short the $10,000 it would take to buy an expensive polymer needed for 
a cholesterol test, chemists bought a case of kidney beans at a Kroger store 
and extracted a compound that worked just as well, Connolly said.

To save on travel costs, Connolly drove the Citation everywhere, meeting with 
investors and scientists and coming straight home so he didn't have to pay 
for a hotel room. He finally got rid of the car when mileage hit 235,000.

In 1993, Connolly remarried. He met his new wife, Giannina Hofmeister, while 
attending Mass at a Zionsville church, where she played the organ.

Hofmeister said Connolly asked her repeatedly over nine months to go out for 
coffee before she finally agreed. "He just kept being persistent," she said. 
"I felt so sorry for him when I kept saying no."

Hofmeister would prove a welcome addition to Polymer Technology.

The former wife of Indianapolis jewelry store owner Gary Hofmeister, she used 
her experience from that business to help Connolly. She also provided another 
car and credit cards that weren't maxed out, while her house served as the 
company's first office.

"Sometimes I paid company bills" from personal savings, said Hofmeister, who 
is a concert pianist and was an associate professor at St. Mary-of-the-Woods 
College in Terre Haute.

Hofmeister also accompanied Connolly on his road trips to generate more 
investment capital, and she saw the same good-natured persistence he used to 
court her.

"He believes so much in what he is doing there is absolutely no resentment 
when somebody says no," said Hofmeister, who did the initial hiring at 
Polymer Technology and bought its office furnishings at auctions.

When money ran out, Connolly managed to find more.

Hard up for cash to finance government-required human tests on the blood 
scanner in 1996, Connolly ran into the wife of an investor at a funeral. She 
referred Connolly to her husband, and he set up a meeting with merchant 
brokers who raised $1.8 million for Polymer Technology.

"That was a turning point for our company," Connolly said.

The human testing took well over a year and demanded more time and money than 
expected because some of the blood tests were first-time products that the 
Food and Drug Administration hadn't seen before, said Connolly.

"There were no guidance documents from the FDA," he said. "You're playing a 
game without any rules. It certainly made it difficult. We probably spent 
more money on the FDA (approvals) than anything."

But Polymer Technology managed to win five consecutive FDA approvals for its 
tests, the latest coming earlier this year.

The company's finances remained precarious as late as last December, when, 
for the first time, it couldn't meet payroll.

Hofmeister was ready to sell her house to raise the needed money. "It was 
that close," she said.

Instead, a friend summoned a dozen would-be investors to his house for a 
spur-of-the-moment investor presentation by Connolly just before Christmas.

"He came away with enough checks to meet payroll," Hofmeister said. The 
investor pitch-in, she added, "was like a Jimmy Stewart movie."

The company's balance sheet has since improved with income from product sales 
pouring in and another round of private investor financing. Among investors, 
Connolly said, is Indianapolis high-tech investor Rollin Dick, a former chief 
financial officer of Conseco Inc. of Carmel.

The new money also allowed the company to hire a president, T. Scott 
Housefield, a veteran business executive who was president of Brightpoint 
International, an Indianapolis wireless communications firm. The coming of 
Housefield in March relieved Connolly of some pressing responsibilities.

Now, Polymer Technology's footings look so solid that Connolly last month 
felt emboldened to buy back his Rolex watch. "For three times what I sold it 
for," he noted.

Next year will bring decisions on whether the company will put itself up for 
sale or offer stock to the public, said Chief Operating Officer John R. 
Sullivan, another ex-Brightpoint executive who joined the company in July.

"It needs to happen next year," Sullivan said, because many of the company's 
more than 100 shareholder-investors have carried the company for years and 
want the ability to cash out.

Polymer Technology should be attractive to a buyer or prospective 
shareholders because it's expected to turn its first-ever quarterly profit in 
2001, said Sullivan, who predicts annual sales could top $100 million in two 
or three years.

In the coming year, the company also will pursue FDA approvals for up to 
seven more blood tests and a larger version of the BioScanner built for 
high-volume use in doctors' offices.

Hofmeister, who is a company director and secretary-treasurer, said she and 
Connolly probably won't stay on as officers if Polymer Technology is sold. 
Both need a break from the years of grueling workdays, she said.

Connolly has more reason than ever to be glad his vision became reality. He 
recently was diagnosed with adult-onset diabetes, making him a candidate to 
use his own invention.
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