A Medical Device Daily
Cardiology device maker Cardica (Redwood City, California) has obtained commitments from institutional and individual investors to purchase about $10.2 million of its common stock and warrants to purchase common stock in a private placement.
Cardica has entered into a securities purchase agreement with the investors pursuant to which the company will sell an aggregate of 8,142,082 shares of its common stock, and warrants to purchase up to 4,071,046 additional shares of common stock. Each unit, consisting of one share of common stock and a warrant to purchase 0.5 of a share of common stock, will be sold for a purchase price of $1.2525. The private placement is subject to customary closing conditions and is expected to close this week.
Proceeds from the private placement are expected to be used to develop the Cardica Microcutter as well as for other general corporate and working capital purposes.
The warrants will be exercisable at an exercise price equal to $1.45, which represents a 22% premium over the consolidated closing bid price of the common stock as reported on the Nasdaq Global Market on Sept. 25, 2009. The warrants are exercisable commencing on the six-month anniversary of the closing and will expire five years from the date of issuance.
In connection with the private placement, Cardica has agreed, subject to certain terms and conditions, to file a registration statement under the Securities Act covering the registration of the common stock and warrants acquired at closing within 30 days after the closing.
Last week the company reported that its previously filed consolidated financial statements for the fiscal year ended June 30, 2009, included in an Annual Report on Form 10-K filed with the Securities and Exchange Commission on Sept. 18, 2009, contained a going concern qualification from its independent registered public accounting firm. Nasdaq Marketplace Rule 5250(b)(2) requires separate public disclosure of a previously issued audit opinion that contains a going concern qualification.
Cardica makes automated anastomosis systems for coronary artery bypass graft (CABG) surgery. By replacing hand-sewn sutures with automated systems, Cardica's products provide cardiovascular surgeons with rapid, reliable and consistently reproducible anastomoses, or connections of blood vessels, often considered the most critical aspect of the CABG procedure.
Cardica's C-Port Distal Anastomosis Systems are marketed in the U.S. and Europe and its PAS-Port Proximal Anastomosis System is marketed in the U.S., Europe and Japan. In addition, the company is developing the Cardica Microcutter, a true multi-fire endoscopic stapling device designed to be used in a variety of settings including bariatric, thoracic and general surgery.
In other financing news:
• Ionix Medical (Minneapolis), which is developing a medical device to treat enlarged prostates, has raised $1.8 million in preparation for a clinical trial early next year. Ionix's product, the Neuflo System, includes a catheter that inserts electrodes into the prostate, kills cells and relieves pressure on the urethra a process as known as ablation. The company said the process is a one-time, 30-minute treatment that can take place in the doctor's office.
"We believe this is the first minimally invasive device that can compete and take market share away from drug treatments," CEO Kai Kroll said.
The clinical trial should be done by the end of next year. Kroll expects Ionix to seek regulatory approval and begin selling the Neuflo System in 2011.
• Biomagnetics Diagnostics (Geneva) a producer of diagnostic systems and technology for malaria, tuberculosis, HIV and hepatitis testing has received a equity-based financing commitment up to $1 million from investors and an anonymous philanthropic source. These funds will be used to further develop the company's handheld testing platform targeting the areas of malaria and bovine tuberculosis testing.
• NovoCure (New York), a privately held medical device company focused on developing the Novo-TTF device, a non-invasive portable medical device for the treatment of cancer, has completed a new funding round. Key investors included Pfizer (New York), Johnson & Johnson (Langhorne, Pennsylvania) and Index Ventures. The amount of the funding was not disclosed.
• ProUroCare Medical (Minneapolis) has commenced a tender offer to holders of certain outstanding warrants to provide additional consideration for the exercise of such warrants. The warrants subject to the tender offer are 3,050,000 publicly traded warrants and 3,058,381 unregistered warrants to purchase common stock that were issued on Jan. 12, 2009. The tender offer commenced on Sept. 25, 2009.
ProUroCare is offering to holders of the subject warrants the opportunity to exercise their existing warrants and receive, in addition to the shares of common stock purchased upon exercise, new, three-year replacement warrants. The replacement warrants will be redeemable at ProUroCare's discretion at any time after the last sales price of its common stock equals or exceeds $4 for 10 consecutive trading days, compared to the $1.82 redemption trigger for the existing warrants. The exercise price of both the existing warrant and the replacement warrant is $1.30 per share. The offer is scheduled to expire on Oct. 30, 2009, unless ProUroCare elects to earlier withdraw or extend the offer.
Lynn Yoffee, 770-361-4789;