A Medical Device Daily

Orthocon (North Brunswick, New Jersey) reported the closing of a $25 million round of financing. Proceeds from the financing will support the lead clinical program and additional pipeline development, the company said.

The company also reported that Paul Sohmer, MD, has joined Orthocon as president/CEO.

Orthocon is developing implantable devices that deliver therapeutics to bone. The company's technology platform may be leveraged to deliver a variety of therapeutic agents. Its lead product is a novel extended release local anesthetic bone hemostat designed to stop bleeding and to provide local pain relief. The company expects to initiate a pivotal clinical trial with this product in the second half of 2009, it said.

The company funding round was co-led by ProQuest Investments and Canaan Partners. The round also included "significant participation" from existing stockholder BB Biotech Ventures. Joyce Tsang, PhD, general partner of ProQuest Investments, and Sohmer both joined the Orthocon board.

Orthocon said that since its inception in 2005, it has raised $35 million in venture capital funding.

Ivivi Technologies (Montvale, New Jersey), a developer of non-invasive, electrotherapy systems for both pain treatments and regenerative therapies, reported that it has closed on a $2.5 million loan with Emigrant Capital, a private investment firm and a subsidiary of New York-based Emigrant Bank. Proceeds from the financing will be used for general corporate purposes.

The company borrowed $1 million at closing and will have the right to borrow up to $500,000 per month through July 1. If the company elects to borrow less than $500,000 in any given month, the amount not borrowed can be carried forward and will be available for borrowing in any subsequent month prior to the maturity date of July 31.

Borrowings under the financing will be evidenced by a convertible note and shall bear interest at a rate of 12%.

In connection with the financing, Steven Gluckstern, Ivivi's chairman, president/CEO, entered into a participation arrangement with the lender under which he invested $425,000 with the lender and will have a right to participate with the lender in the note and the warrant.

In other financing news:

• Health Care REIT (Toledo, Ohio) reported that it closed a $133 million first mortgage loan secured by 12 senior housing properties with multiple levels of service. The 10-year debt has a fixed interest rate of 6.10%. KeyBank Capital Markets originated the loan and intends to sell it to Freddie Mac.

Health Care REIT is a real estate investment trust that invests across the full spectrum of senior housing and healthcare real estate. The company also provides an extensive array of property management and development services. As of Dec. 31, 2008, the company's portfolio consisted of 633 properties in 39 states.

• Zynex (Littleton, Colorado), a provider of pain management systems and electrotherapy products for medical patients with functional disability, reported that it and its subsidiary, Zynex Medical, have entered into a letter agreement with Marquette Healthcare Finance in which Marquette states its willingness to waive breaches of financial covenants by Zynex and Zynex Medical.

In the letter agreement, Marquette indicates that Zynex did not meet the EBITDA covenant and debt service coverage ratio covenant as of Dec. 31, 2008, and that Zynex would not meet the EBITDA covenant as of March 31, 2009. Marquette stated its willingness to forebear taking action on these financial covenant defaults for the quarters ended Dec. 31, 2008, and March 31, 2009, and to waive any default fee or default interest rate.

When available, financial projections for 2010 will be used to set future EBITDA covenant targets in Marquette's sole discretion.

With respect to Zynex's recently announced restatement of financial statements for the first three quarters of 2008, Marquette has waived any breach of a representation, warranty or covenant concerning the accuracy of the original unaudited financial statements for these quarterly periods.

Marquette reserved the right to declare a default, and any other claim, right or remedy with respect to the restated financial statements for these quarterly periods; and any fraud or intentional misrepresentation in connection with the original financial statements for these quarterly periods.

Marquette and Zynex will amend the line of credit to increase the margin to 3.25% and increase the collateral monitoring fee to $1,750 per month.

• InfuSystem (Madison Heights, Michigan), a provider of ambulatory infusion pumps and associated clinical services, reported that it has made a $5.3 million payment on its term loan in addition to its normal quarterly $818,000 payment. As a result of the combined payments year-to-date, the company said it has reduced the total amount outstanding on its term loan by $6.1 million, to $24.1 million.

The term loan was a result of the sale of InfuSystem from its former parent company, I-Flow (Lake Forest, California), completed in October 2007.

The term loan originally stood at $32.7 million as of October 2007, and in less than 18 months, we have reduced the principal amount due by over $8.5 million," said company CEO Steve Watkins. "We plan to continue aggressively paying down this loan, while maintaining a solid cash position on our balance sheet," he added.

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