A Medical Device Daily

Alcon (Huenenberg, Switzerland) said it has agreed to acquire ESBATech (Zurich, Switzerland), a Swiss biotechnology company. Alcon will pay ESBATech shareholders $150 million in cash at closing, plus contingent payments of up to $439 million based upon the achievement of future research and development milestones that would be expected to create value for Alcon. ESBATech is a clinical-stage company that has been developing a pipeline of single-chain antibody fragment therapeutics for topical and local delivery for safe and convenient therapy.

"Biotechnology offers significant growth opportunities in ophthalmology because it has the potential to deliver therapies with superior efficacy and safety relative to existing approaches," said Sabri Markabi, MD, Alcon's senior VP of R&D and its chief medical officer. "Combining ESBATech's proprietary antibody fragment technology with our expertise in ophthalmic formulation and capabilities in global development will strengthen Alcon's leadership position in ophthalmology."

ESBATech has advanced its antibody fragment technology to preclinical and clinical stages in the eye for various diseases. The company has several stable and soluble single-chain antibody fragments in development, with its most advanced product candidate progressed into Phase I and II studies relating to the treatment of inflammatory ocular diseases, according to Alcon.

"I am very proud of what our team has achieved in proving clinically that our platform delivers therapeutic antibody fragments with required drug-like properties," said Dr. Dominik Escher, CEO of ESBATech. "All of us at ESBATech are excited to join with Alcon to advance this technology further and to develop products to treat serious eye diseases so that more patients can see better."

The agreement to acquire ESBATech includes all rights to its technology for therapeutic application to the eye, including age-related macular degeneration, diabetic macular edema, glaucoma, dry eye and uveitis. Substantially all of the employees of ESBATech will join Alcon upon the finalization of the acquisition, the company said. The rights to the technology and products for application outside of ophthalmology will be retained by the previous shareholders of ESBATech and spun off into a separate new company, Delenex Therapeutics.

"This acquisition is part of our ongoing strategy to enhance access to multiple sources of technologies and compounds that bolster our total research platform in support of innovative products to treat eye disease," said Kevin Buehler, Alcon's president/CEO. "We welcome Dr. Escher and his highly qualified team of biotechnology experts who will become the foundation of Alcon's biologics capability in the future."

In other dealmaking activity:

• Natus Medical (San Carlos, California) said it has agreed to acquire Alpine Biomed Holdings (Fountain Valley, California). Alpine makes devices for the diagnosis of neurological disorders. Its products include advanced electromyography systems for the diagnoses of peripheral nervous system dysfunctions as well as devices for routine EEG and long term epilepsy monitoring. Water Street Healthcare Partners, a private equity firm focused exclusively on the healthcare industry, was the majority stockholder of Alpine.

Alpine has three neurology product divisions: diagnostic neurology devices under the Dantec brand, in Copenhagen, Denmark; spike and seizure detection software applications and associated devices under the Stellate brand, located in Montreal; and neurology disposable products and accessories sold through the Alpine Biomed brand.

Natus acquired all outstanding shares of Alpine Biomed capital stock for $43.2 million in cash, exclusive of direct costs of the acquisition. Alpine reported revenue of about $35 million in the twelve months ended June 30 through the neurology product divisions acquired by Natus; however, due to cross selling of Alpine and Natus products, Natus says it believes that third-party revenue was nearly $33 million during the period. Natus believes the acquisition will be accretive to earnings in 4Q09, exclusive of potential restructuring and other one-time charges.

Natus said it funded the acquisition through available cash.

• SunLink Health Systems (Atlanta) said it sold three of its home health businesses to subsidiaries of SunCrest Healthcare (Nashville) for about $3.3 million.

The home health businesses are in Adel, Georgia, Clanton, Alabama and Fulton, Missouri. Net proceeds of the sale will be used to repay a portion of SunLink's debt under its existing credit facility. The sale is expected to result in a pre-tax gain of roughly $2 million, which will be reported in its second fiscal quarter ending Dec. 31, 2009.

• Zounds Hearing (Phoenix), a hearing aid manufacturer, has been acquired by a group of its previous investors headed by Derwood Chase and Michael Stewart. Zounds now has 26 neighborhood hearing center locations in operation in Arizona, Florida, Massachusetts, Missouri, New Jersey, Oregon, Pennsylvania, Texas, and Washington. Zounds founder Sam Thomasson will remain as president/CEO.

• American Scientific Resources (ASR; Weston, Florida) reported that it has acquired the intellectual property to the only FDA-approved home needle destruction device (NDD), the Disintegrator and Disintegrator Plus, from Safeguard Medical Technologies (Berlin Center, Ohio). ASR now holds the rights to the patent, which includes the device technology patent and all present and future developed information, knowledge, experience and results. Safeguard will receive stock, warrants, a convertible note and cash payments based on sales performance. It will also provide ongoing production engineering and quality control services to ASR for a fee.