A Medical Device Daily

Inverness Medical Innovations (Waltham, Massachusetts) said it has agreed to acquire Free & Clear (Seattle) through a merger transaction for $100 million cash and up to $30 million in future contingent payments based on 2010 revenues.

Free & Clear specializes in evidence-based programs which address the four key modifiable health risks that contribute to chronic disease: tobacco use, poor nutrition, physical inactivity and stress. The company recognized $47.1 million in 2008 revenues. The acquisition is subject to customary closing conditions but is expected to close on or about Sept. 28.

In other dealmaking activity:

• Brennen Medical (St. Paul, Minnesota) reported the sale of its XenMatrix device to Davol (Warwick, Rhode Island), a subsidiary of C.R. Bard (Murray Hill, New Jersey). The agreement provides Davol with the worldwide rights and related assets of the hernia products business of Brennen. This acquisition includes technology for a non crosslinked xenograft device for use in soft tissue repair including hernia and abdominal wall reconstruction, the companies noted.

According to Brennen, XenMatrix employs a technology that maintains an acellular structurally intact, non-crosslinked porcine dermal matrix for enhanced biocompatibility in host tissue. This dermal matrix supports revascularization, remodeling and regeneration for abdominal wall and hernia repairs, the company said. Recently published data in the American Journal of Surgery from the Brigham and Women's Hospital studied the use of XenMatrix in complex abdominal wall defects and reported a 93% success rate with over 16 months follow-up.

"We are extremely pleased with the successful clinical outcomes of XenMatrix. Now with the acquisition by C.R. Bard, this product will reach a far greater number of patients worldwide who will truly benefit from this device," said Phillip Lawin, PhD, president of Brennen Medical.

• On Friday, the shareholders of Zila (Scottsdale, Arizona), a dental products company providing products for use in the prevention, detection and treatment of oral disease, approved the company's merger with a subsidiary of Tolmar Holding (Fort Collins, Colorado), a private pharmaceutical company.

Pursuant to the merger agreement, at the effective time of the merger all outstanding shares of Zila's common stock were converted into the right to receive $0.45 a share in cash, the company noted.

Dental professionals will continue to have access to the Zila products they are already familiar with such as the Rotadent automatic toothbrush, the Pro-Select Platinum scaler and its line of products surrounding the Zila Soft Tissue Management program.

In addition, the company said it would offer Atridox, a locally applied antimicrobial. Also, the company said it would continue the growth and market acceptance for its oral cancer screening product, ViziLite Plus.

• Covidien (Dublin), a provider of healthcare products, said it has completed the sale of its Sleep Diagnostics assets to Embla Systems (Ottawa). Financial terms of the deal were not disclosed.

The sale of the Sleep Diagnostics product line, which includes several products sold under the Sandman brand, was made following a thorough review and evaluation of a number of strategic alternatives, Covidien said. The deal was first disclosed earlier this month (Medical Device Daily, Sept. 4, 2009).

• Biogen (Cambridge, Massachusetts) reported that FBC Acquisition, its subsidiary, has commenced a tender offer to acquire all of the outstanding shares of Facet Biotech (Redwood City, California) for $14.50 a share in cash, in connection with its previously disclosed acquisition proposal. The tender offer is scheduled to expire on Oct. 19, unless extended or terminated.

The tender offer follows a written proposal made by Biogen to Facet's board of directors on Sept. 4 to acquire all of the outstanding shares of Facet in a negotiated transaction. Biogen's all-cash offer represented a premium of about 64% over the $8.82 a share closing price of Facet's common stock on Sept. 3, the last trading day before Biogen publicly reported its acquisition proposal. In light of the rejection of the proposal by Facet's board of directors on Sept. 8, and its refusal to discuss a business combination of the two companies on the terms proposed, Biogen said it has decided to present its offer directly to Facet's stockholders.

"We believe this proposed transaction makes compelling business sense for both Facet Biotech and Biogen Idec and is in the best interest of our respective stockholders," said Biogen Idec's president/CEO James Mullen. "Our $14.50 per share, all-cash offer ascribes meaningful and appropriate value to Facet Biotech and represents an extremely attractive opportunity for Facet Biotech's shareholders to realize today the future value of their company. In addition, we believe the transaction would enable the important multiple sclerosis and solid tumor clinical programs that the companies have been working on in collaboration for nearly four years to have the best chance of reaching the market and improving patients' lives."

In commencing the tender offer, Biogen said it also sent a letter to the board of Facet addressing several statements in Facet's letter and press release of Sept. 8, in which it rejected Biogen's $14.50 a share, all-cash offer. Among other things, Biogen said its letter explains that, on the basis of Facet's own disclosures, Facet's available cash is considerably below the Biogen offer price when the following factors are included in the analysis: Facet Biotech's cash burn rate of $8 million a month for the remainder of 2009; the $30 million in cash spent as part of the Trubion collaboration, as well as future development costs and milestone payments under the terms of that agreement; Facet's total lease obligations of roughly $208 million on an undiscounted basis, as well as additional obligations of nearly $19 million; and, inclusion of shares underlying Facet's outstanding options.

According to Biogen, the letter also points out, contrary to Facet's assertions, that because Facet's net cash per share is considerably below Biogen's offer price, the offer ascribes meaningful value to daclizumab, which Biogen is jointly developing for the treatment of relapsing multiple sclerosis, additional programs in its pipeline, its technology platform, related milestone payments, and synergies.

Biogen has engaged Leerink Swann as financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel in connection with the proposed transaction.

• Mednax (Fort Lauderdale, Florida) said it has completed the acquisition of Children's Health Network (CHN), a physician group practice that provides a variety of inpatient pediatric physician services at 11 hospitals in four states.

CHN was started in 1996 as a pediatric critical care practice providing services at a Las Vegas hospital. Today, physicians practicing as part of CHN provide patient care at neonatal and pediatric intensive care units, pediatric emergency departments and through pediatric hospitalist programs at hospitals in California, Nevada, Montana and Louisiana.

CHN physicians staff two neonatal intensive care units in Las Vegas, Nevada, and one in southern California that have combined annual patient volume of about 25,000 patient days. The 12 neonatologists will practice as part of Pediatrix's national physician group practice, which now consists of more than 850 neonatologists.

In addition, CHN includes 28 pediatric critical care physicians who staff the pediatric intensive care units at eight hospitals, and 24 pediatric hospitalists in 10 hospitals in California, Nevada, Montana and Louisiana. As a result of this deal, Pediatrix now has more than 80 pediatric hospitalists and more than 65 pediatric critical care physicians who practice as part of its national group practice.

CHN also has 17 pediatric emergency medicine specialists who staff one hospital in Las Vegas and one in Lafayette, Louisiana. Pediatric emergency medicine is a new clinical service for Pediatrix.

Mednax acquired CHN for cash, and the transaction is expected to be immediately accretive to its earnings. Financial terms were not disclosed.