A Medical Device Daily

Despite the admission last week during an earnings call that the company was facing stagnant growth in its flagship offering of cryotherapy services, Endocare's (Austin, Texas) board rejected a $2.28 a share offer from HealthTronics (also Austin), saying it was "inadequate" and not in the best interests of its stockholders.

The proposal by HealthTronics, to purchase Endocare, made last week (Medical Device Daily, Aug. 8, 2008), would merge the two companies' efforts in urology and prostate cancer treatment. The proposed deal had an implied value of $26.9 million, based on 11.8 million shares of Endocare stock as of June 30. The offer represented a 20% premium above Endocare's closing stock price on Aug. 6.

The two companies have an ongoing partnership.

Though Endocare said that HealthTronics' bid was unsolicited, in its earnings call last week it noted its partnership with AMPI/HealthTronics – AMPI (Advanced Medical Products Inc.), a provider of cryosurgical urology services was purchased by HealthTronics in April – and acknowledged discussions between the firms.

Importantly, that acknowledgement was linked to an admission of stagnant growth in its flagship offering of cryotherapy services.

Craig Davenport, CEO/chairman of Endocare, said during the earnings call, "Given the importance of the AMPI/HealthTronics partnership to Endocare, we've met with [HealthTronics] several times in the past two quarters to discuss how we can correct the current performance and get back growing again."

He added, "Their cryo business is flat also. Both sides agreed that we have to regain momentum and do it quickly."

Endocare specializes in cryotherapy technologies to treat tumors, its initial emphasis being on cryoablation to treat prostate cancers.

In other dealmaking news:

A special committee of the board of biotechnology powerhouse Genentech (South San Francisco, California) reported that, after careful consideration, it has unanimously concluded that Roche's (Basel, Switzerland) previously disclosed proposal to acquire the shares of Genentech not owned by Roche for $89 per share "substantially undervalues" the company (MDD, July 22, 2008).

While the special committee said it does not support the current proposal, it did allow that it would consider a proposal that it said "recognizes the value of the company and reflects the significant benefits that would accrue to Roche as a result of full ownership."

Dr. Charles Sanders, chairman of the special committee, said, "The special committee is confident in the company's strong financial and clinical momentum and its uniquely productive R&D capabilities, which will continue to enhance shareholder value. In addition, we look forward to the company maintaining its successful relationship with Roche, regardless of ownership structure."

In light of the importance of Genentech's employees to the company's success, the special committee said it has approved the implementation of a broad-based employee retention program to address any employee concerns created by the Roche proposal. Genentech's board, including the Roche representatives, had previously granted the special committee authority to implement such a program.

Roche currently owns nearly 55.9% of the outstanding shares of Genentech.

TeleHealth Services (Raleigh, North Carolina), a provider of integrated communications solutions for the healthcare market, has acquired substantially all Instant HealthLine assets of Pathware (Peoria, Illinois) and has assumed responsibility for servicing and supporting Pathware's Instant HealthLine (IHL) customers as of Aug. 11.

Pathware/SVI provided the IHL interactive on-demand video systems that deliver education, entertainment and other patient-oriented information to bedside televisions and computers in hospitals. TeleHealth will continue to service the customers through its industry-leading TIGR education-on-demand support personnel.

"We approached SVI following their decision in June to exit the business," said George Fleming, president/CEO of TeleHealth. "By providing ongoing support to IHL's interactive patient education systems, the hospitals can keep moving forward with their facility's quality initiatives and increasing patient satisfaction."

With the addition of Pathware/SVI's roughly 150 customers, TeleHealth Services said it will now service and support more than 400 patient interactive education systems in U.S. hospitals.

Sunnylife Global (Los Angeles) reported the acquisition of R&D company Heart Link Biomedical (San Diego) and a major restructuring of its management as part of the acquisition.

In a share-for-share transaction, Sunnylife has acquired all of the issued and outstanding shares of HeartLink, which has a research subsidiary in China.

Heart Link has filed worldwide patents on two medical products with a total of 153 claims. One of these products, the BVCS (Blood Vessel Cleaning System) is in the animal testing stage. Heart Link will continue to operate as a wholly owned subsidiary.

Additionally, Mark Chen has been appointed CEO/chairman, with Lily Lee as executive vice president.

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