A Medical Device Daily

TherOx (Irvine, California), developer of the Downstream SuperSaturated oxygen therapy system, reported closing a $30 million equity financing.

DAG Ventures led the round, which included investments from previous investors Kleiner Perkins Caufield & Byers, New Science Ventures, Integral Capital Partners, Aperture Venture Partners and Cross Creek Capital.

SuperSaturated oxygen is an adjunctive therapy being evaluated for myocardial salvage intervention (MSI) performed immediately after percutaneous coronary intervention (PCI) in acute myocardial infarction (AMI) patients. According to TherOx, MSI is a new treatment category for AMI patients intended to salvage the jeopardized myocardium and thus reduce infarct size.

TherOx’s Downstream system to treat heart attacks is designed to deliver aqueous oxygen (AO), oxygen dissolved in physiologic solution at high concentrations. It contains hyperbaric levels of oxygen and can be delivered through a catheter to targeted locations in the bloodstream (MDD, Oct. 14, 2004). The company says it expects FDA approval of the device in 2Q08, based on results of its 301-patient AMIHOT II trial, which demonstrated that the system reduced infarct size by an average of 6.5%.

“We believe SuperSaturated oxygen therapy will provide interventional cardiologists with the first treatment option following a successful intervention with a balloon angioplasty and stent that salvages the heart muscle in heart attack patients,” said Kevin Larkin, CEO of TherOx.

In other financing activity:

• NuVasive (San Diego), developing products for minimally disruptive surgical spine treatments, reported the pricing of $200 million of 2.25% convertible senior notes, due 2013, through an offering to institutional buyers.

The company also granted the initial buyers an option to purchase up to $30 million of notes solely to cover over-allotments. The offering is scheduled to close on March 7, subject to satisfaction of customary conditions.

The notes will pay interest semi-annually at 2.25% per annum and will be convertible into shares of NuVasive common stock at a rate of 22.3515 shares of common stock per $1,000 principal amount of notes, equal to a conversion price of about $44.74 a share.

NuVasive estimates that net proceeds from the offering will be about $193.4 million, assuming no exercise of the initial purchasers’ over-allotment option.

NuVasive intends to use the net proceeds from the offering for general corporate purposes, including acquisitions. The company also said it has entered into convertible note hedge transactions with the initial buyers or their affiliates and intends to use a portion of the net proceeds from this offering to pay for the cost of the convertible note hedge transactions.

Also, NuVasive plans to enter into separate warrant transactions, which would provide additional proceeds and would partially offset the cost of the convertible note hedge transactions, the company said.

• VeriChip (Delray Beach, Florida), a provider of radio frequency identification (RFID) systems for healthcare, reported entering an $8 million debt financing with Valens Offshore II. The financing is a 13-mont, non-convertible term loan bearing interest at 12% annually. VeriChip issued to Valens 120,000 shares of its common stock.

The company said it would use $5.3 million of the proceeds to prepay debt owed to Digital Angel so that it will not have to make any further debt service payments to Digital Angel until September 2009. By eliminating ‘08 debt payments, the financing will provide more than $3.6 million in working capital for VeriChip in 2008, the company said.

“This new financing not only enables us to eliminate more than $5 million in debt owed to Digital Angel, but also provides us sufficient working capital to fund our business plan, which includes a new consumer marketing initiative, through early 2009,” said Scott Silverman, CEO and chairman of VeriChip.

VeriChip recently began marketing its VeriMed patient identification system designed for identifying people who arrive in an emergency room and are unable to communicate. The system uses a human-implanted passive RFID microchip, the implantable VeriChip, FDA-cleared for medical use in October 2004.

• Vermillion (Freemont, California), a molecular diagnostics company, said it has filed its third amended and restated certification of incorporation, which effects a 1-for-10 reverse split of its outstanding common stock.

The common stock began trading on the Nasdaq Capital Market under the symbol VRMLD for 20 trading days as of yesterday, designating that it is trading on a post-reverse split basis, and will resume trading under the symbol VRML after the 20-day period.

“With this reverse stock split now effective, we believe that a broader group of potential investors can purchase our shares and will recognize the value of our diagnostic programs ... ,” said Gail Page, president/CEO of Vermillion.

As a result of the stock split, each 10 shares of common stock will be combined and reclassified into one share, and the total number of shares outstanding will be reduced from roughly 63.8 million shares to about 6.4 million.

Vermillion reports having ongoing diagnostic programs in oncology, hematology, cardiology and women’s health, with an initial focus in ovarian cancer.