A Diagnostics & Imaging Week

Bracco Diagnostics reported completing its $241 million merger ($21 a share) with E-Z-EM (Lake Success, New York), a maker of contrast agents for gastrointestinal radiology, a deal first reported in October.

Bracco Diagnostics is the U.S. subsidiary of Bracco Imaging and part of the Bracco Group (both Milan, Italy). E-Z-EM has had a long association with Bracco Group, as it makes one of its oral imaging products. Bracco also serves as a distributor of E-Z-EM products in Italy.

At the time it was first disclosed, E-Z-EM said the transaction represented "the culmination of a comprehensive strategic alternatives process" by its board over the past year to identify the best alternative to create shareholder value

RBC Capital Markets served as financial advisor to E-Z-EM on the merger and the review of strategic alternatives, and provided a fairness opinion. Credit Suisse Securities and Evercore Partners served as financial advisors to Bracco Diagnostics.

Ophthalmic Imaging Systems (OIS; Sacramento, California) reported that it has agreed to merge, in a stock transaction deal, with MediVision Medical Imaging (Yokneam, Israel), the majority shareholder of OIS, under which MediVision will become an OIS subsidiary.

Each MediVision ordinary share will convert to 1.66 shares of OIS common stock, for a total of about 11.3 million shares of OIS stock. OIS shares will be listed on the OTC Bulletin Board under the symbol OISI.

This ratio takes into account roughly 9.4 million OIS shares held by MediVision, and roughly 1.9 million OIS shares for MediVision's other assets and liabilities, including: MediVision's product pipeline; MediVision's R&D capabilities; MediVision's sales and distribution capabilities; MediVision's German-based subsidiary; and MediVision's debt of about $2.85 million

OIS shareholders will experience about 10% net dilution, taking into account MediVision's current outstanding share capital.

Yigal Berman, chairman of OIS, said that the merger "will strengthen OIS' operational capabilities and product offerings, while enhancing its capacity to continue to grow to serve the needs of both companies' existing customers."

OIS will remain based in Sacramento, with about 100 total employees, including its affiliate companies, and also have offices in Israel and Germany.

OIS said it will have improved control of its R&D and international marketing, currently handled on a contractual basis by MediVision.

It said MediVision's product pipeline will expand its footprint in the market, while the transfer of its strategic relationship with Agfa Gevaert (Mrtsel, Belgium) will deepen its PACs capabilities in ophthalmology.

In addition, it said that MediVision's German-based subsidiary "provides a significant share of the German market."

Gil Allon and Ariel Shenhar will continue as CEO and CFO of OIS; Noam Allon will retain his position and title as president/CEO of MediVision and will become chief technology officer of OIS.

The merger is expected to close by the end of 3Q08, subject to various closing conditions.

OIS manufactures digital imaging systems and informatics solutions for the eye care market. MediVision specializes in digital imaging devices for medical ophthalmic applications and says it is a market leader in the ophthalmic digital imaging field.

At the date of signing, the company owns 56% interest in OIS, and 63% interest in CCS Pawlowski (Jena, Germany).

• QuantRx Biomedical (Doylestown, Pennsylvania), a developer of diagnostic products, reported that its molecular imaging group, FluoroPharma, a developer of cardiovascular molecular imaging agents for PET, has entered into a license agreement with Massachusetts General Hospital (MGH; Boston) to develop agents for diagnosing and treating Alzheimer's disease (AD). The licensed technologies, co-developed by FluoroPharma and MGH, target multiple biological processes associated with Alzheimer's. Terms of the licensing were not disclosed.

Dr. David Elmaleh, FluoroPharma's chairman and scientific founder, said, "Our molecular imaging approach to treating AD includes multiple molecular compositions that target AD associated phenomena, low acetylcholine and amyloid plaque formation. With some agents, it may be possible to improve brain function by inhibiting the breakdown of acetylcholine, and with others we may be able to prevent the formation of amyloid plaque by inhibiting protein misfolding. As PET imaging tracers, these agents also have potential applications in both diagnosis of the disease and monitoring of the therapy by differentially accumulating in regions of the brain affected by the disease compared to normal brain tissue."

• DRI Capital (Toronto) and Nanogen (San Diego) have entered an agreement for DRI to acquire, for $10 million, all future royalties generated by Applied Biosystems (AB; Foster City, California) under a license AB has taken from Nanogen for minor groove binder (MGB) technology.

The royalties included in the agreement are related to Nanogen's MGB technology that has been licensed to AB for use in its TaqMan products.

Nanogen has a product and proprietary technology base of diagnostic solutions for two in vitro diagnostic (IVD) markets: molecular diagnostics and rapid point-of-care testing.

• Healthnostics (New York), a medical and biotech analytics information and technology company, said it has agreed to acquire a "significant interest" in Global Medical Direct (GMD; Lenexa, Kansas), a durable medical equipment provider specializing in direct-to-consumer diabetes supplies. GMD is forecast to generate $10 million in revenue by fiscal year end in June 2008.

The acquisition, to be paid for with Healthnostics restricted common stock, will constitute about 40% of the outstanding common stock on a fully diluted basis after acquisition completion. The company said this transaction will bring Healthnostics shareholders increased value by substantially improving the company's worth and offer a predictable revenue stream.

Alan Grofé, president of Healthnostics, will serve as CEO of GMD.

GMD's products include blood glucose meters, test strips and ancillary supplies, insulin pumps and supplies, diabetic shoes and orthopedic inserts and diabetes maintenance medications.

• HealthSouth (Birmingham, Alabama) reported that it has finalized the sale of its corporate campus, in Birmingham to Daniel Corp. (Birmingham), a real estate organization, for $43.5 million in cash and a 40% residual interest in the "Digital Hospital." HealthSouth also entered into a long-term lease arrangement with Daniel to maintain its headquarters on the property.

The sale includes the 103-acre corporate campus and all related buildings including a 200,000 square-foot corporate headquarters building, the Cahaba Grand Conference Center, and an incomplete 13-story building formerly called the "Digital Hospital."

The sale of the corporate campus is part of the strategic repositioning of HealthSouth, first reported in August 2006, to focus on inpatient rehabilitative and complementary services. It said that proceeds from this transaction will be used to pay down a portion of the company's long-term debt.