Sanuwave (Alpharetta, Georgia), a company developing non-invasive, biological response activating devices in the regenerative medicine area, reported that it has become the subsidiary of a publicly traded company through a reverse merger agreement with a subsidiary of Rub Music Enterprises (RME). Sanuwave is the surviving entity in the reverse merger, which became effective on Friday.
Sanuwave intends to apply its Pulsed Acoustic Cellular Expression (PACE) technology in wound healing, orthopedic/spine, plastic/cosmetic and cardiac conditions. It is developing a platform of products that activate biologic signaling and angiogenic responses, including new vascularization and microcirculatory improvement, helping to restore the body's normal healing processes and regeneration.
Christopher Cashman, president/CEO of Sanuwave, told Medical Device Daily the reverse merger allows Sanuwave to become a public company in a much quicker timeline than if it had opted for an initial public offering, especially in a less-than-favorable economic environment. By going public, the company expects to have access to capital markets and also hopes to gain wider coverage and recognition of Sanuwave and its technology, he added.
Becoming a public company also opens up Sanuwave's opportunity to other prospective groups that would want to work with the company, such as physician groups, and brings more awareness of the company's technology to patients once it does go commercial, Cashman said.
RME's common stock is traded on the OTC Bulletin Board under the symbol RBME. The company said it intends to change RME's name and apply for a stock symbol change that more closely reflects Sanuwave's name.
"Becoming a public company is another important milestone for Sanuwave as we strive to bring to market safe and effective, non-invasive technologies in regenerative medicine for the repair and regeneration of tissue, musculoskeletal and vascular structures. We believe we have a robust research and development pipeline, experienced management and research teams, and broad patent protection. As a public company we expect to have more access to the capital markets to help further the development and commercialization of our products," Cashman said.
The company's immediate focus is the potential $5 billion U.S. advanced wound care market, Cashman said. With its investigational device exemption (IDE) wound care study on diabetic foot ulcers in progress, he added, "we look forward to continuing our developmental activities and bringing our lead product, dermaPACE, to the market. We remain on track to complete enrollment by June 2010, and look forward to submitting our premarket approval application to the FDA in 2011."
Sanuwave said patient enrollment for the dermaPACE IDE trial for healing diabetic foot ulcers recently reached 75% completion. The trial has 22 sites, with 20 in the U.S. and two international sites in the UK and Germany. The objective of the study is to compare the safety and effectiveness of the dermaPACE device to sham application, when administered in conjunction with the standard of care, in the treatment of diabetic foot ulcers. It is a randomized, double blind, placebo control, parallel assignment study design (Medical Device Daily, Aug. 25, 2009).
Sanuwave says it believes it has already demonstrated that its technology is safe and effective in stimulating healing in certain chronic conditions of the foot and elbow through its U.S. Class III PMA-approved Ossatron device, and in the stimulation of bone and chronic tendonitis regeneration in the musculoskeletal environment through the utilization of its Ossatron and Evotron devices in Europe. In May 2007 Sanuwave received the CE mark for dermaPACE for use on acute and chronic defects of the skin and subcutaneous soft tissue (MDD, May 31, 2007). It is currently being marketed in Europe through distributors in select countries, Sanuwave noted.
"We believe our PACE technology provides us with additional opportunities outside of wound care for business expansion, and our ongoing research in orthopedics, spine/neuro, plastic/aesthetics and cardiac areas is paving the way to enter those markets. With a legacy of commercial development and Class III PMA regulatory successes, we look forward to achieving our future milestones," Cashman said.
In connection with the reverse merger, RME issued roughly 11 million new shares of its common stock and 2.2 million warrants to purchase its common stock. Also in connection with the reverse merger, RME repurchased and canceled 39.2 million shares of its outstanding common stock. After the reverse merger, there are a total of about 12.5 million shares of RME common stock outstanding, with former Sanuwave shareholders holding about 88% on a fully-diluted basis. The shares issued to former Sanuwave shareholders in the reverse merger were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, and are not presently eligible for resale to the public. In addition, after the reverse merger, there are 3.7 million warrants outstanding to purchase RME's common stock. As of Friday, RME had $3.3 million of cash and cash equivalents. The executive officers and directors of Sanuwave became the executive officers and directors of RME upon the closing of the reverse merger.
In other dealmaking activity:
• Qiagen (Venlo, The Netherlands) said it has acquired DxS (Manchester, UK), a privately-held developer and manufacturer of companion diagnostic products. The deal is valued at about $95 million in cash (subject to customary purchase price adjustments), plus up to an additional $35 million if specified commercial and other milestones are met.
With this acquisition, Qigen says it has "taken a strong leadership position in the new era of personalized healthcare." The company said it believes it offers all the required elements to help drive and shape this rapidly emerging trend in healthcare.
Qiagen also reported that the combined company is currently active in more than 15 collaborations with pharmaceutical companies to market or develop companion diagnostic products. The programs span genetic, expression, epigenetic and other markers. The company said this pipeline "is the deepest such portfolio in the pivotal field of molecular diagnostics for personalized healthcare."
The company noted the TheraScreen: K-RAS Mutation Kit developed by DxS has already been CE-marked. In the U.S., the company expects to submit the test for FDA approval in 2010. It is estimated that in the future the market for overall K-RAS testing could reach up to $100 million, Qiagen said.
"The acquisition of DxS is strategically a highly important transaction for Qiagen. It combines two leadership positions to create a very powerful leader in a transformational area of healthcare: personalized healthcare. This transaction is a key element of our strategy to lead in molecular diagnostic-based prevention, profiling and personalized healthcare. These three elements are expected to significantly shape and contribute to future improvements in healthcare and have the potential to provide significant benefits to patients as well as exceptional value for payers, providers, and the pharmaceutical industry," said Peer Schatz, CEO of Qiagen.
The company said DxS' senior management will join it in "leading roles" in its "rapidly expanding personalized healthcare focus area, facilitating rapid integration and focus on the further expansion of this key segment." Qiagen also said it intends to establish DxS' headquarters in Manchester as a Center of Excellence in Pharma Partnering.
Qiagen expects to incur one-time charges of about 2 cents in EPS in the third quarter 2009 in connection with this acquisition. The company also expects this transaction to contribute roughly $6 million in sales in the remainder of 2009 and about $30 million in sales in 2010. On an adjusted basis excluding one-time charges, integration and restructuring costs, and amortization of acquisition related intangible assets, the acquisition is expected to be neutral to EPS in the remainder of 2009 and to be dilutive by 2 cents in 2010. Beyond 2010, it is expected that the acquisition will be accretive to adjusted EPS.
• ATW Companies (Warwick, Rhode Island), a provider of custom manufactured metal components and services, said that its subsidiary, Parmatech-Proform (Petaluma, California), has acquired the Metal Injection Molding (MIM) business of Morgan Advanced Ceramics (New Bedford, Massachusetts). The acquisition will expand the MIM technology currently offered by Parmatech, ATW said.
The newly acquired business specializes in providing solutions to meet application challenges through its own MIM process. Its products are used in the medical, telecommunications, aerospace, electrical and power, semiconductor and laser markets.
Amanda Pedersen; 229-471-4212