A Diagnostics & Imaging Week

Escalon Medical (Wayne, Pennsylvania) reported that it has completed the previously disclosed acquisition of the hematology business of Biocode Hycel, the French subsidiary of Immunodiagnostic Systems (Fountain Hills, Arizona), a provider of in vitro diagnostic products.

The acquired hematology business will continue to operate under the name Biocode Hycel and has operations near Rennes, France. The acquired hematology business had 2008 annual revenues of about €4.2 million ($5.8 million). The business will be vertically integrated into Escalon's clinical diagnostics business and its growing portfolio of brands, which also includes Drew Scientific (Wayne) and JAS Diagnostics (Miami).

The purchase price for the acquisition was €$4.2 million, of which €25,000 was paid up-front, with the balance paid in scheduled installments over the next four years.

"This acquisition of hematology assets from Biocode Hycel is a natural extension of Drew's business model and provides an immediate and significant presence in the French diagnostic market," said Richard DePiano Jr. president of Escalon. "Furthermore, the addition of proprietary hematology equipment, technology, and reagent formulas strategically broadens Drew's well-recognized product offering and enhances our strategy to leverage cross-selling and revenue growth opportunities."

Escalon develops ophthalmic diagnostic, surgical and pharmaceutical products as well as vascular access devices.

Bio-Imaging Technologies (Newtown, Massachusetts) reported the sale of its CapMed (Newtown) division to Metavante Technologies (Milwaukee).

Metavante will pay Bio-Imaging $500,000 in cash plus an earn-out over a two-year period. Additional terms of the agreement will be disclosed on a Form 8-K to be filed shortly.

Mark Weinstein, president/CEO of Bio-Imaging said, "With the sale of CapMed, we can now focus all of our efforts on Bio-Imaging's core business of providing clinical trial services, including medical image management and eClinical data services to support the product development process for the pharmaceutical, biotechnology and medical device companies.

Weinstein said that while his company believes CapMed's business of providing consumer centric interoperable personal health management solutions will be an integral component in the evolving healthcare system, "we believe that it is beneficial for all parties that CapMed will be a part of an organization that is more closely aligned with healthcare information and payment processing for consumers"

For the fourth quarter and full year 2008, Bio-Imaging said it expects to incur a one-time charge of $2.5 million to $2.7 million, primarily due to a non-cash impairment charge related to the write-down of assets of the CapMed division. The one-time charge, net of taxes, is expected to reduce reported earnings per share for the fourth quarter and full-year 2008 by about 10 cents to 12 cents a share.

Bio-Imaging is a healthcare contract service organization providing services that support the product development process of the pharmaceutical, biotechnology and medical device industries.

In other dealmaking activity:

• Volcano (San Diego), a maker of products for the diagnosis and treatment of coronary and peripheral artery disease, said it has closed its previously reported $21.5 million cash acquisition of Axsun Technologies (Boston).

Axsun is a developer of lasers and optical engines used in medical Optical Coherence Tomography (OCT) imaging systems and advanced photonic components and subsystems used in other industrial applications.

Axsun will operate as a wholly-owned subsidiary of Volcano. Volcano said it believes Axsun's OCT technology will accelerate its OCT product development programs and provide the company competitive advantages in the invasive imaging sector.

Axsun has development partnerships with companies serving the cardiology and dental markets and said that it expects the launch of the first medical imaging systems using its technology during the first half of 2009. Volcano said it plans to use new integrated versions of Axsun's advanced tunable laser and optical engine technology in the development of new OCT imaging systems.

Axsun also offers devices for industrial applications and the telecommunications network sector. The company reports having more than 90 U.S. patents issued, another 40 pending, and about 85 employees. It recorded 2007 revenues from operations in excess of $18 million.

Scott Huennekens, president/CEO of Volcano, said that Axsun "is another complementary and important transaction for Volcano as it provides us proprietary OCT technology that we believe will both accelerate our OCT product development efforts and provide us significant and sustainable competitive advantages in the invasive imaging arena. We believe OCT technology will extend Volcano's reach to clinical indications and research opportunities that represent sizeable market opportunities ... beyond those served by our current offerings."

"The Axsun laser and optical engine technology is a key building block in our strategy to cement our already strong position in invasive imaging," Huennekens said. "The company's core technologies are truly leading-edge and will advance our programs to both enhance system performance and achieve lower manufacturing costs ..."

Volcano said it expects the transaction to be neutral to consolidated EPS in FY09 and that, with transaction close, it will have more than $145 million in cash, with no debt.

• Iris International (Chatsworth, California), a manufacturer of urinalysis systems and consumables for use in hospitals and commercial laboratories, reported that its Iris Sample Processing Business unit has entered into a manufacturing and supply agreement with Idexx Laboratories (Westbrook, Maine).

The agreement is for internal centrifugal drive systems and related whole blood separators developed by Iris for use in the new Idexx Catalyst Dx Chemistry Analyzer for the veterinary market, which Idexx has begun selling worldwide.

In exchange for a $1.5 million upfront payment and future royalties starting in 2014, Iris Sample Processing has granted Idexx an exclusive worldwide license to manufacture the whole blood separator technology developed for the Idexx Catalyst Dx Chemistry Analyzer. Idexx will assume manufacturing for the whole blood separator.

Additionally, running through the end of 2020, Iris will exclusively manufacture and sell to Idexx the internal centrifugal drive system it developed for the Catalyst Dx analyzer. Idexx may assume manufacturing for the drive systems starting in 2016 by paying Iris a per-unit royalty for the remaining term of the agreement.

"After a prolonged research and development effort, we are pleased to have developed the internal centrifugal drive systems and related disposable whole blood separators for the newest generation of Idexx chemistry analyzers," said Robert Mello, Iris corporate VP and president of the Sample Processing business unit. "We have had a long standing working relationship with Idexx dating back to the late 1980s as the sole provider of standalone veterinary centrifuges for all of Idexx's in-clinic needs.