From BB&Ts

While on the previous page BB&T offers its monthly list of acquisitions, there were several other deals over the past month of rather significant proportions.

The biggest deal was a blockbuster: Royal Philips Electronics (Amsterdam, the Netherlands), continued to expand its reach into the clinical healthcare arena with its purchase of Respironics (Murrysville, Pennsylvania), the transaction valued at $5.1 billion.

Inverness Medical Innovations (IMI; Waltham, Massachusetts) also continued on its 2007 brisk acquisition path with multiple buys.

And Boston Scientific (Natick, Massachusetts) continued its de-acquisition ways in 2007 as well.

• In the deal for Respironics, Philips commenced a tender offer to acquire all of the outstanding shares of the company for $66 a share in cash, or about $5.1 billion, a premium of about 31% over Respironics' average closing share price for the 30 trading days ended Dec 20.

The tender offer for Respironics, approved by that company's board, was expected to commence by Jan. 8 and is subject to customary conditions. The transaction is expected to be completed in 1Q08.

Respironics develops systems to treat obstructive sleep apnea (OSA), estimating 18 million to 20 million sufferers of moderate or severe OSA in the U.S., but only 15% to 20% of these are diagnosed. It also cites research demonstrating a link between OSA, heart disease, stroke and diabetes.

The company says it has a leading position in non-invasive ventilation and has recently introduced new home oxygen technologies to treat respiratory-impaired patients in the home. The remainder of the company's business is focused on the hospital channel, including noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug delivery technologies. Respironics markets its products in 141 countries and employs more than 5,300 associates worldwide.

Philips said that Respironics will become the centerpiece of Home Healthcare Solutions, and form part of Philips Healthcare as of Jan. 1. It said that Philips Home Healthcare Solutions will support almost 1 million at-risk seniors, either in their own homes or in senior living facilities throughout the U.S. and Canada.

Respironics' senior leadership is expected to remain with the organization.

Philips has made a number of recent acquisitions in the home healthcare sector, including Lifeline Systems, Health Watch and Raytel Cardiac Services.

John Miclot, president/CEO of Respironics, said that the addition of Respironics "will allow us to continue to provide exceptional products and services to our customers and allow Respironics to expand its leadership in the global sleep and respiratory markets. Philips is the right partner to create additional growth opportunities for our company."

"A core part of Philips' healthcare strategy is to achieve a leading position in the high growth sector of home healthcare," said Steve Rusckowski, CEO of Philips Healthcare and member of the board of management of Philips.

• IMI in December finished off a round of purchases, closing on two deals. It completed its acquisition of of Matritech (Newton, Massachusetts), valued at $36 million, that deal first disclosed in late August; and it completed its ParadigmHealth (Upper Saddle River, New Jersey), for 230 million in cash.

The deal for Matritech — a developer of protein-based diagnostic products for the early detection of cancer — was structured as an asset purchase under which a newly formed subsidiary of IMI acquired substantially all of Matritech assets of Matritech for 616,713 shares of IMI common stock. In addition, IMI agreed to pay Matritech up to $2 million in cash in "incremental consideration" and/or IMI common stock, upon the achievement of certain revenue targets for the upcoming 12-month period. Matritech develops of protein-based diagnostic products for the early detection of cancer.

Then in late December IMI reported closing the acquisition of ParadigmHealth, 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. IMI ssaid that ParadigmHealth is operating profitably, its past 12 months' revenues totaling about $58.5 million.

• As it closed out the year Boston Scientific completed a group of spin-offs that it said, in July, would be necessary to get rid of non-strategic assets and provide better focus on its core activities.

In early August, the company reported the sale of the auditory assets of Advanced Bionics (Valencia, California), though retaining the pain management assets of that company, after a protracted legal struggle with that company's management.In August, the company reported plans to sell the cardiac and vascular surgery units. And later in the month it reported plans to sell its cardiac and vascular surgery units. Earlier

In October Boston Scientific said that it would eliminate about 2,300 positions worldwide, or about 13% of an 18,000-person, non-manufacturing workforce baseline, by June 30, 2008. In addition, the company said it expects another 2,000 employees to leave the company in connection with the aforementioned divestitures.

Then in December it agreed to sell its fluid management and venous access businesses for $425 million in cash to private equity firm Avista Capital Partners. The transaction is expected to close this quarter, subject to regulatory approvals and customary conditions.

The fluid management franchise, formerly named North American Medical Instruments Corp., produces a range of products used to manage fluid and measure pressure during angiography and angioplasty procedures. The fluid management franchise employs about 750 people in its Glens Falls, New York, manufacturing facility.

The venous access franchise, whose products are also manufactured in Glens Falls, offers a portfolio of implantable devices designed to provide access to the blood stream for patients requiring intravenous antibiotics, nutrition, chemotherapy and blood sampling. It is part of Boston Scientific's oncology business, and employs about 150 people in locations around the U.S.

With these sell-offs, the company has divested all five non-strategic units it had previously planned to divest, and it is "well under way" with its cost cutting and head count reduction plan, CEO Jim Tobin said in a statement. He said the divestitures, coupled with the headcount reduction "should help us further our overall goals of restoring profitable growth, increasing shareholder value and continuing to strengthen Boston Scientific for the future."

According to Bear Stearns analyst Rick Wise, the divestiture of the five non-core businesses could generate around $1.3 billion in net proceeds that should cover the company debt payments. He issued a research note saying that the company has no obligation in 2008 and that the 2009 debt has largely been prepaid ($300,000 remaining).

Avista said the combined fluid management and venous access businesses will operate as an independent company under a new name when the deal closes. Revenue for the two divisions is expected to be about $170 million in 2007.

Ron Sparks, an Avista healthcare industry advisor, will become CEO and chairman of the new company. Dave McClellan, president of Boston Scientific's oncology business, will become the new company's president.

In another deal involving Avista, Bristol-Myers Squibb (BMS; New York) reported that it will sell its Medical Imaging (MI) unit in Billerica, Massachusetts, to that firm for $525 million in cash.

The news came just two weeks after the pharma giant presented a massive restructuring plan that would cut nearly 4,300 jobs worldwide, one-10th of its workforce; close more than half its manufacturing plants by 2010; and explore selling two other divisions — ConvaTec (Skillman, New Jersey), a wound-care products supplier, and its Mead Johnson Nutritionals (Evansville, Indiana) business.

"As Bristol-Myers Squibb continues to focus on evolving into a next-generation BioPharma company, we determined the best way to maximize the value of Medical Imaging for shareholders was to sell this business and reinvest the proceeds into our pharmaceutical research, development and commercialization efforts," said James Cornelius, CEO of BMS. "At the same time, we believe that Medical Imaging can maximize its potential under new ownership, and Avista has a proven track record of success in the healthcare field."

The transaction is expected to be complete by the end of January, at which time BMS MI will operate as an independent company under a new name.

Don Kiepert, the founder and former president/CEO and chairman of Point Therapeutics (Wellesley Hills, Massachuestts), will become the CEO of the company.

$130 million for new healthcare-focused fund

Santé Ventures (Austin, Texas/Brentwood, Tennessee) reported in mid-December that it has closed its debut venture capital fund with $130 million in capital, the maximum amount permitted in the original offering, targeted at $100 million. The fund invests primarily in seed and early-stage companies developing new medical technologies and healthcare services. The firm said it plans to invest $2 million-$6 million of seed money into individual companies in the healthcare services and information technology sectors and in medical technologies

Santé is targeting the mid-U.S. region because it said those areas receive far less venture capital than the coasts and opportunities to invest exceed available capital, said Douglas French, a managing director and a past president/CEO of Ascension Health (St. Louis).

"From an investing standpoint, healthcare is a place where there's a lot of innovation is occurring," French told the Nashville Tennessean. "There are a lot of entrepreneurs that are working to fix what doesn't work in healthcare and also create new opportunities." French told The Tennessean that he sees Santé making 15 to 20 investments in the next five years, a process that involves reviewing hundreds of proposals for prospects that fit its criteria.

Santé said it already has made its first investment, committing $5.5 million as the lead investor in a $16 million financing of Spinal Restoration (Austin), a company developing the Biostat disc augmentation system, a minimally invasive, biologic treatment for discogenic low back pain. "The way this works, we'll look at probably 400 companies a year to make four or five investments," he said. "We're very selective. We look for opportunities that have the potential to be a real breakthrough."

Collectively, Santé said that its team has invested more than $100 million in venture capital in two dozen healthcare companies over the last decade, yielding to date four IPOs totaling $2.8 billion in first-day market capitalization, four trade sales, and 15 remaining privately held companies.

Thermo Fisher to be part of Olympic doping control effort

Thermo Fisher Scientific (Waltham, Massachusetts) said the China Doping Control Center (CDCC) has selected the company as one of its major suppliers of instrumentation and software for the testing of athletes at the 29th Summer Olympic Games in Beijing next year.

The CDCC has been accredited by the Chinese government and the International Olympic Committee (IOC) to conduct all doping control analyses during the 2008 Olympics.

The company said it will provide the CDCC with a range of "high-precision and high-performance Thermo Scientific brand mass spectrometry (MS) instruments," including DFS Sector Field GC/MS systems, the Delta V isotope ratio mass spectrometer and triple-quadrupole TSQ Quantum Access LC/MS systems.

"These instruments and associated software will enable the CDCC to respond to the high volume of samples expected at the Summer Olympics," Thermo Fisher said in a statement, adding that it also will provide technical and application assistance to the CDCC to ensure "uninterrupted operation and secure handing of athlete samples throughout the event."

Marijn Dekkers, president/CEO of Thermo, said, "Identifying illegal performance-enhancing substances that are used in sports competition is a growing global challenge — one made even more difficult by the development of sophisticated drugs that are increasingly difficult to detect. Our analytical instrumentation is ideally suited to meet this challenge, providing the high specificity and sensitivity, high throughput and reliability required in today's sports environment."

The CDCC testing program will start before the opening of the competition, and continue from the athlete check-in at the Olympic Village until the end of the games. All samples will be analyzed in accordance with the IOC anti-doping rules for banned substances.

Thermo Fisher is a provider of products and services for scientific purposes worldwide. It has an annual revenue rate of more than $9 billion, employs 30,000 and serves more than 350,000 customers within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as environmental and industrial process control settings.

Its primary brand names are Thermo Scientific and Fisher Scientific, covering a range of high-end analytical instruments, laboratory equipment, software, services, consumables and reagents.

CMS says 'no' to FDG-PET coverage, for lack of assessment criteria

CMS has the unenviable task of deciding which treatments and diagnostics it will reimburse, and the agency recently decided to decline a request to cover the use of positron-emission tomography (PET) using the radiotracer fluorodeoxyglucose (FDG-PET), to detect three conditions.

The original request, made in February, asked that CMS reimburse the use of FDG-PET to detect chronic osteomyelitis, infections associated with hip arthoplasty, and "fever of unknown origin."

According to a May 18 letter to the agency from Abass Alavi, MD, professor of radiology at the University of Pennsylvania (Philadelphia), the images acquired by this technology "are superior to those provided by conventional nuclear medicine techniques for assessment of infection," including scintigraphy with 67~acitrate or technetium 99-labeled leukocytes.

Alavi also makes the case that FDG-PET images "allow direct comparison with corresponding structural imaging modalities, such as CT and MRI," which gives clinicians the ability to "determine the precise location of the sites of infection or inflammation."