A Diagnostics & Imaging Week

Inverness Medical Innovations (IMI; Waltham, Massachusetts) said it has completed its previously reported planned acquisition of ParadigmHealth (Upper Saddle River, New Jersey), a provider of support technologies and expert coaching to facilitate better health choices for acutely ill and clinically complex patients, including neonatal intensive care and oncology patients.

The transaction was structured as an all-cash deal, with a purchase price of about $230 million. The company is operating profitably and the past 12 months’ revenues totaled about $58.5 million.

IMI was represented by Goodwin, Procter and advised by Covington Associates; ParadigmHealth was represented by Orrick, Herrington and advised by UBS Securities.

IMI is a developer of rapid point-of-care diagnostics.

In other dealmaking activity:

• Varian Medical Systems (Palo Alto, California) completed the acquisition of Pan-Pacific Enterprises (Beijing), which it said is one of the largest independent distributors of medical X-ray tubes in China, for the purpose of marketing, sales and distribution of Varian’s X-ray imaging products in that country.

Varian is acquiring the privately held business for about $2 million in cash, plus an additional amount based on achievement of specified milestones. Pan-Pacific has been an independent distributor of imaging components, including Varian X-ray tubes, in China since 1991.

“This acquisition significantly enhances the Varian sales channel for X-ray tubes and flat panel image detectors in China,” said Bob Kluge, president of Varian Medical Systems’ X-Ray Products business. “We intend to grow our X-Ray Products business in China and the experienced Pan-Pacific team will be instrumental in helping us achieve that objective. Our business specializes in delivering cost competitive, high performance components for X-ray imaging and they are well-suited to serve the growing market for high-quality imaging products in China.”

Pan-Pacific Enterprises, which has about 30 employees working at facilities in Beijing and Shanghai, will operate within Varian’s X-Ray Products business segment. Details of the financial transaction are not being disclosed, but Varian said it expects that Pan Pacific acquisition will be about neutral to earnings per diluted share in fiscal 2008.

Varian Manufactures medical devices and software for treating cancer and other conditions with radiotherapy, radiosurgery, proton therapy, and brachytherapy.

• NeuroMetrix (Waltham, Massachusetts), a developer of products used to diagnose and treat nervous system diseases, neurovascular disorders and pain, reported that it has acquired substantially all of the assets of EyeTel Imaging (Columbia, Maryland), including certain liabilities.

The deal price consisted of 1,050,295 newly issued shares of common stock of NeuroMetrix, with a value of about $9.9 million as of the closing of the acquisition, and $175,000 in cash.

NeuroMetrix originally obtained an exclusive license to sell EyeTel’s DigiScope to the physician office market in October 2006 and has been marketing the product since early 2007.

NeuroMetrix will own all EyeTel intellectual property, including an exclusive worldwide license with Johns Hopkins University (Baltimore) for the DigiScope. The acquisition secures all commercialization rights to the DigiScope, including the physician office market and an expanded opportunity in the eye specialist market, comprised primarily of vision centers supervised by optometrists. The acquisition will provide an opportunity to improve the gross margins realized by NeuroMetrix on sales of the DigiScope, it said.

The DigiScope is based on patented technology developed at the Wilmer Eye Institute of Johns Hopkins and sold under an exclusive licensing agreement with Johns Hopkins. The DigiScope is an FDA-cleared device used for the early detection of diabetic retinopathy and other eye diseases. The device works by capturing digital images of a patient’s retina through a dilated pupil and sending images via the internet to the EyeTel Reading Center. The center then processes the images and sends the results to the physician within two business days.

About 20 EyeTel employees and consultants will transition to NeuroMetrix.

Shai Gozani, MD, PHD, president/CEO of NeuroMetrix, termed the acquisition “consistent with the long-term vision of our company. The DigiScope represents an important diagnostic tool for physicians and optometrists [enabling] them to increase compliance with annual eye exams among patients with diabetes. This effort to detect diabetic retinopathy in physician offices and vision centers addresses a critical need among patients with diabetes and has the potential to help reduce diabetes related blindness through earlier detection.”

He added: “We have been marketing the DigiScope for nearly a year and believe that this product represents a very good fit with our neurotechnology oriented clinical mission and within our product development and sales and marketing organizations... . We believe that office based assessments of retinal and optic nerve pathology represent a significant market opportunity.”

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