A Medical Device Daily

Software maker Merge Healthcare (Milwaukee) said it has completed its acquisition of Confirma (Seattle) in a stock transaction first disclosed last month. The total value of the deal is estimated to be $22 million (Medical Device Daily, Aug. 11, 2009).

"This has been a straightforward transaction with a clear value proposition," said Justin Dearborn, Merge CEO. "The Merge and Confirma teams both understand medical imaging technology at a very granular level and have a shared vision in ensuring that clinicians use it for faster and more efficient decision making. All stakeholders are anticipating that positive results will flow quickly from this newly combined business."

Merge said that with the completion of the acquisition it has "enhanced its medical imaging capabilities to become a market leader in MRI computer-aided detection (CAD) applications." The combined business now has the capability to widen the global adoption of CAD technology through Merge's international distribution network, as well as provide broader interoperability of this important tool within the health IT enterprise, according to the company. Merge added that the two companies also have many common customers.

Merge issued about 5.4 million shares of its common stock as part of this transaction. In addition, Merge will add roughly $2 million to Confirma's existing cash balance in order to retire the outstanding debt and fund transaction-related costs. Confirma shareholders approved the merger on Aug. 28.

Confirma will be renamed Merge CAD and operated as a business unit of Merge led by Paul Budak, a four-year Confirma veteran who most recently served as the VP of Research, Development and Operations.

In other dealmaking activity, DxS (Manchester, UK), a personalized medicine company, said it has entered into a collaboration agreement with Bristol-Myers Squibb (New York), and ImClone Systems (New York), a subsidiary of Eli Lilly (Indianapolis), to further develop a K-RAS companion diagnostic for Erbitux (cetuximab) in the U.S. and Canada.

If approved by FDA, the DxS TheraScreen K-RAS Mutation Kit would become a companion diagnostic for use with Erbitux in metastatic colorectal cancer (mCRC) to determine which patients have wild-type K-RAS status in the U.S., the company said. The DxS TheraScreen: K-RAS Mutation Kit is designed to detect K-RAS mutations in codons 12 and 13. The use of monoclonal antibody EGFR inhibitors is not recommended for the treatment of colorectal cancer with mutations in codon 12 or 13, the company noted. It is estimated that 40% of patients with mCRC have K-RAS mutations while the majority, 60%, have the wild-type K-RAS gene.

Financial terms of the agreement are not disclosed.

In other dealmaking news, Transcend Services (Atlanta) the third largest provider of medical transcription services to the U.S. healthcare market, reported that it has completed the acquisition of Medical Dictation Services (MDI; Gaithersburg, Maryland) as of Aug. 31, 2009 and entered into a new credit facility with Regions Bank.

The company first reported the transaction last week (MDD, Aug. 28, 2009).

In order to fund a portion of the purchase price and to provide general corporate liquidity, Transcend entered into a new credit facility with Regions Bank which consists of a revolving loan of up to $5 million (which can be increased to $8 million at the bank's option) and a four-year, $7 million term loan to help fund the MDI acquisition. The new credit facility replaces a credit facility which was to expire in December 2009.