A Medical Device Daily

The Massachusetts Life Sciences Center (MLSC; Boston), a quasi-public agency which implements the state's $1 billion Life Sciences Initiative, said it began accepting on-line applications for the Life Sciences Tax Incentive Program and the Center's new Life Sciences Accelerator investment program on Jan. 1. Applications should be submitted via the MLSC web site at www.masslifesciences.com.

The center is authorized to offer a combination of nine different tax incentives totaling $250 million over 10 years to certified life sciences companies, to foster growth in the state's life sciences industry. The tax incentive program has a cumulative annual cap of $25 million. The incentives are intended to encourage growth in companies at all stages of development.

MLSC's Life Sciences Accelerator will invest in early-stage companies and translational research projects by matching grants and investments from the federal government, foundations, non-profit agencies, institutional investors, and other sources of capital. By leveraging third party resources, the Accelerator Program says it will provide support to companies at the most critical stages of their development cycle, enabling them to conduct vital research and proof of concept studies, thereby attracting subsequent investment. This stage of a company's life cycle is customarily where cutting-edge R&D is conducted.

Support for the Accelerator Program will be augmented by the Center's new Corporate Consortium Program, providing matching funds for MLSC's investment activities.

Charter member Johnson & Johnson (New Brunswick, New Jersey) will contribute $500,000 over two years, and MLSC said it will add additional members to the consortium. The consortium's strategic intent is to attract sector leadership and perspectives in health-related innovations in R&D, manufacturing, and commercialization.

MLSC President/CEO Dr. Susan Windham-Bannister said, "We recognize the essential and time-sensitive nature of this work during these difficult economic times. At the Life Sciences Center we are open for business, and ready to do our part to both create jobs and support important scientific research in order to improve the human condition."

In other financing news:

• Hercules Technology Growth Capital (Palo Alto, California), a specialty finance company, reported early repayments from four additional technology and life science portfolio companies totaling roughly $5.5 million, including Canadian firm Simpler Networks (Dorval, Quebec), which was previously identified as a Grade 5 credit quality.

Hercules said it also expects to receive an early repayment of about $12 million this month, upon the anticipated completed sale of Memory Pharmaceuticals (Montvale, New Jersey), and another $1.1 million of principal repayment during the 1Q09 from the sale of Simpler Networks.

"Hercules' increased liquidity position, thanks in part to all of the early repayment activities completed during the fourth quarter, affords Hercules the opportunity to accelerate our de-leveraging by using significant portions of the early repayments to pay down our existing Citibank and Deutsche Bank credit facility as well as provide Hercules with the ability to continue to commit and fund new and existing portfolio companies with additional growth capital, while reducing our overall cost of leverage," said Manuel Henriquez, co-founder, CEO and chairman of Hercules.

Additional early repayments are expected from medical device firm Crux Biomedical (Menlo Park, California), the developer of an implantable vascular device used to prevent often fatal pulmonary embolism. Crux arranged a repayment of about $1.2 million.

• International Stem Cell (ISCO; Oceanside, California) reported receiving the first $1 million tranche of an anticipated private financing of up to $5 million, to be funded over the next several months.

The company said that the total financing is intended to allow it to retire its existing secured debt and fund operations as it moves to planned pre-clinical trials in 1Q09.

"This is an important vote of confidence by a sophisticated investor group and we believe it is a major first step on the path to making our company financially independent," said Kenneth Aldrich, CEO.

The financing is in the form of a new class of convertible preferred stock, convertible into common stock at $0.25 a share, a 25% premium over the closing price on the day of signing the agreement.

ISCO describes itself as the developer of a class of stem cells that remove two barriers to the therapeutic use of stem cells: immune rejection and the ethical issues that surround the use of embryonic stem cells. ISCO makes its cells available to researchers worldwide, and says the technology, called Parthenogenesis, results in the creation of cell lines that may allow cells to be matched to millions of people without destroying a viable human embryo.

• Emeritus (Seattle, Washington), a provider of assisted living and related services to senior citizens, reported completing the refinancing of seven communities with Freddie Mac for $36.3 million at a rate of 6.05% and a term of 10 years.

In addition, the company paid down $20.1 million of existing debt with Capmark, using the proceeds from the Freddie Mac refinancing and extended the remaining balance of $72.7 million from September 2009 to January 2012. The initial interest rate for the Capmark debt will be 6.5% and will require initial annual principal reductions of $3 million.

Emeritus said that annual interest expense will increase about $3 million as a result of these transactions.