Medical Device Daily National Editor
HealthTronics (Austin, Texas) is being a persistent bidder but showing the kind of persistence that doesn't require much in the way of an increased bid.
HealthTronics this week restated its commitment to acquire Endocare (also Austin), again making a $2.28-a-share bid for the company, in an attempt to combine the firms' offerings in urology and prostate cancer treatment.
HealthTronics sent a letter to the Endocare board, underlining its efforts to invest in technologies "that it endorses for use in its physician partnerships." And in an apparent attempt to address concerns about its focus, it said it is committed to "proactive measures to help support the continued success of a technology as a prior alternative to promoting a different technology."
HealthTronics early last month made the same offer for Endocare representing a value of $26.9 million (Medical Device Daily, Aug. 8, 2008) with Endocare's board then rejecting the combination, calling the bid "inadequate" (MDD, Aug. 14, 2008)
Though not sweetening its original offer, HealthTronics said in its letter that it is willing to modify its proposal to allow each of the Endocare shareholders to receive either cash or shares of HealthTronics common stock, "provided that the total stock portion of the purchase price does not exceed a negotiated percentage of the total purchase price."
In a statement commenting on the letter, James Whittenburg, president/CEO of HealthTronics, said that HealthTronics "believes that the flexibility of our proposal in allowing Endocare shareholders to receive stock consideration will provide an opportunity for them to participate in the benefits of the combined company and a stronger long-term investment."
In the letter, Whittenburg says that HealthTronics believes the $2.28-a-share offer represents "fair value." He goes on to say that HealthTronics has tried "to engage Endocare in a dialogue regarding our proposal," but that "there has been no such dialogue."
The result, he says, is that HealthTronics does not know why the Endocare board has judged the offer inadequate and that it does not know "what modifications" of the offer would be acceptable.
The letter goes on to indicate the modification of providing Endocare shareholders either cash or shares of HealthTronics stock.
Reinforcing the value of the option of receiving HealthTronics stock, the letter underlines the value of this opportunity by explaining the company's market strategy: essentially, providing "leading-edge" technologies to its urologist partners.
"In so doing, we invest our time and resources to promote technologies that we believe meet the high standards of our urologist partners," Whittenburg says in the letter. "When we promote the use of a particular technology, our reputation is linked to that product and, by association, the company that manufactures that product. For that reason, we are sensitive to perceptions concerning the longer term viability and financial backing of a technology we favor, and it is our first choice to proactively support the continued success of such a technology before seeking to replace that technology with one that is equally or more compelling."
The letter goes on to cite HealthTronics' relationship with Endocare through its subsidiary, Advanced Medical Partners (Columbia, South Carolina), a supplier of cryosurgical urology services to Endocare, demonstrating, it says, "a strong commitment to Endocare s technology and we believe that HealthTronics ownership of Endocare would maximize the value associated with the technology."
The letter goes on to say that the proposal "represents both immediate certainty of value in a volatile stock market environment and a stronger long-term opportunity for your shareholders." It concludes by urging the Endocare board to meet with HealthTronics to discuss the offer.
In other dealmaking activity:
• Aesthetic laser developer Thermage (Hayward, California) reported that its board, in consultation with advisors, has elected to reject an unsolicited proposal to acquire the company for $5.50 a share and that it is determined to close its acquisition of Reliant Technologies (Mountain View, California), it said, "as soon as possible."
An unnamed third party last month offered the $5.50 a share in cash or a combination of cash and stock for Thermage, subject to due diligence and negotiation of a definitive agreement making the deal $132 million (MDD, Aug. 22, 2008).
Thermage in July unveiled its plan to acquire Reliant, manufacturer of the Fraxel laser for treating fine lines, scars and skin, for about $95 million in cash and stock (MDD, July 8, 2008).
Stephen Fanning, president/CEO and chairman of Thermage, said, "We are fully committed to our pending merger with Reliant ... Our board believes that the Reliant transaction will enable the company to establish a global leadership position in the aesthetic device industry."
He cited "complementary business models and technologies" which will provide "significant revenue and cost saving synergies."
Thermage is a developer of technology designed to tighten and contour skin, as a key application in the "anti-aging" market.
• NeuroFocus (Berkeley, California), a developer of what it terms as "neuromarketing," said it has acquired the "core patent" underlying the use of neuroimaging as a marketing tool from its inventors, Dr. Gerald Zaltman and Dr. Stephen Kosslyn. Terms of the acquisition were not disclosed.
NeuroFlocus said that U. S. patent No. 6,099,319 is central to the application of neuroimaging for marketing, branding, and advertising testing. In addition, the acquisition confers legal rights regarding any past or future unlicensed use of the patent.
Dr. A.K. Pradeep, CEO of NeuroFocus, said, "This patent is the cornerstone of the entire field of neuromarketing that applies fMRI [functional MRI] technology ... It will allow us to offer clients a whole new and exclusive dimension of knowledge and insight into what consumers notice, like and remember best about their products and their messages."
NeuroFocus says that its testing regimen includes applying high-density arrays of EEG sensors, which capture brainwave activity many as 128 different sectors of the brain at 2,000 times a second. This neurological data is complemented with eye movement tracking technology and peripheral measures of re-activity. The combination of extremely precise brainwave activity monitoring, combined with biometric information, provides what the company describes as a "deep dive into the consumer's mind."
"The addition of this patent to the growing number of our own patents, with many more in active development, underscores our standing as the world's preeminent neurological testing company," Pradeep said. "It also indicates our mission for the future, which is to provide leading client companies all over the globe with the most scientifically-advanced, proven brain activity monitoring technologies to help them achieve the most effective, impactful marketing materials and other creative content."
• Invitrogen (Carlsbad, California), a provider of technologies for research, production and diagnostics, reported agreements with New England Biolabs (Ipswich, Massachusetts), Qiagen (Venlo, the Netherlands), and Kirkegaard & Perry Laboratories (Gaithersburg, Maryland) to license Invitrogen technology covering the random prime amplification of nucleic acids. Financial terms were not disclosed.
The technology covered involves methods and kits for amplifying nucleic acids, used in several laboratory techniques such as random primed labeling reactions, first-strand cDNA synthesis and whole genome amplification.
Amy Butler, VP of gene expression profiling for Invitrogen, said, "By making this technology broadly available to other companies through licensing, we can extend the benefit to a greater number of researchers and advance this rapidly growing field of research."