A Medical Device Daily
Adnavance (Vancouver, British Columbia), a developer of direct detection molecular diagnostic tests, said it will receive an additional C$1.8 million as part of its Series B financing, because it has met a milestone in progressing its metalized DNA (M-DNA) technology platform toward a new methicillin-resistant Staphylococcus aureus (MRSA) diagnostic test.
The company reported completing its Series B financing in February, raising C$3.7 million ($3.78 million) (Medical Device Daily, Feb. 27, 2008). Investors include GrowthWorks Working Opportunity Fund, Canadian Medical Discoveries Fund and Business Development Bank of Canada.
Adnavance said it would use the additional funding to further develop the platform and move toward the launch of its first test for MRSA, which may be as early as 2010. The milestone required discrimination of MRSA in a background of non-MRSA competing targets. Additionally, the company said it completed development of a functioning pre-prototype instrument for its M-DNA platform.
"The potential for this technology to open molecular diagnostic testing to laboratories not licensed for PCR amplification is very exciting," said Randy White, CEO of Adnavance Technologies. "It's a large market and the progress our team has made in developing the platform is significant. We look forward to reporting sensitivity and specificity data over the coming months as we move closer to commercialization."
Adnavance's ultra-sensitive M-DNA direct detection technology uses metal ions to produce a highly conductive form of DNA that allows discrimination of "perfect match" hybridized DNA from non-matching DNA, and may eliminate the need for target amplification for a large number of molecular diagnostic tests, according to the company.
Only about 10% of all hospital laboratories and only 35% of all independent laboratories in the U.S. are licensed for high-complexity testing and can use polymerase chain reaction (PCR) to perform molecular diagnostic testing, the company said.
Adnavance says its technology has the potential to de-centralize molecular testing and open the market to roughly 30,000 new customers who cannot currently perform these medical tests.
In other financing activity:
• Crdentia (Dallas), a healthcare staffing company, said it has expanded its accounts receivable-based revolving credit facility to $7.5 million from $5.2 million and revised and expanded existing term loans including a new $1.5 million debt investment in the company.
Separately, Crdentia also reported completing a private placement equity offering for aggregate proceeds of $1 million. Proceeds will be used for general working capital purposes, the company said.
Crdentia signed agreements with Capital TempFunds, a division of Capital Business, to have it take over from ComVest Capital a majority of Crdentia's existing accounts receivable-based revolving credit facility and to increase the facility to $7.5 million from $5.2 million. In addition, the term debt presently in place from ComVest (two tranches of three-year term debt of $2.5 million each) was revised.
The principal payments on the Tranche A note were delayed and amortization will begin in September 2009, $1.5 million was added to the principal amount of Tranche B to increase the balance to $4 million, and Tranche B is now convertible at the option of ComVest upon certain triggering events at the same price of the equity financing.
In addition, the original warrant to ComVest to buy 8 million shares has been redeemed in exchange for a Trance C note in the amount of $2.4 million thereby retiring this warrant.
The expanded revolving credit facility bears interest at the greater of either the prime rate of interest quoted in the Wall Street Journal plus 2% or 8.5%. The term loans bear interest at 12.5% annually. Also, Crdentia issued a common stock purchase warrant to ComVest to buy up to 525,000 shares of common stock at 35 cents a share.
The private placement is comprised of about 3.3 million shares of common stock at 30 cents a share and warrants to buy up to 1.67 million shares of common stock, for aggregate proceeds of $1 million. The warrants are immediately exercisable and have an exercise price of 35 cents a share with a five-year term.
• NorthStar Realty Finance Corp. (New York) reported that its majority owned healthcare real estate venture, Wakefield Capital, has sold a $100 million convertible preferred equity interest to Inland American Real Estate Trust. NorthStar said it will receive about $90 million of the net proceeds from the transaction.
Prior to conversion, the convertible preferred investment will yield a dividend of 10.5%. The convertible preferred equity may be converted or redeemed, at Inland's option, upon the sale or recapitalization of the Wakefield venture. Wakefield may, at its option, redeem the convertible preferred interests at any time following the first anniversary of the closing, subject to payment of a call premium that declines over time. In addition, at any time after the second anniversary of the closing, Inland may convert its preferred equity interests into common equity in Wakefield.
Based on the current investment amount and capital accounts of the Wakefield members, the convertible preferred equity interests would represent, upon conversion, about a 42% common equity ownership interest in Wakefield. Inland will have the option of contributing additional preferred equity and participating in new Wakefield investment opportunities in proportion to its percentage ownership interest, assuming it were to convert its interests to common equity.