A Medical Device Daily
Fresenius Medical Care (Bad Homburg, Germany) has acquired Renal Solutions (Warrendale, Pennsylvania), the first portfolio company of the Pittsburgh Life Sciences Greenhouse (PLSG; Pittsburgh), for up to $190 million.
The deal consists of $100 million at closing, $60 million after the first year, and up to $30 million in milestone payments over the next three years. Renal Solutions had about $10 million of debt outstanding at closing.
Renal Solutions said it would continue operations as a wholly owned subsidiary of Fresenius, a provider of dialysis products and services and that Peter DeComo will continue to lead its operations in Warrendale, Pennsylvania, and Oklahoma City.
Renal Solutions provides sortbent-based hemodialysis products and services and has recently launched its Sorbent Management for Advanced Renal Replacement Therapy (SMARRT) platform. The company is commercializing the Allient Sorbent Hemodialysis System, which it says is returning sorbent-based technology (SORB) to the dialysis field.
The sorbent technology is designed to purify tap water to dialysate quality and allows dialysate to be regenerated. This reduces the water volume requirement for a typical hemodialysis treatment from 120 liters / 37 gallons of reverse osmosis water to just 6 liters / 1.5 gallons of drinking water per treatment, according to Renal Solutions.
Fresenius said it sees the current size of the home therapy market (peritoneal dialysis and home hemodialysis) at about $2 billion, representing about 11% of the overall worldwide dialysis market. The company said it believes the market has the potential to grow to $4 billion within the next 10 years.
Fresinus says it has about a 30% market share in this segment.
Ben Lipps, CEO of Fresenius, said the acquisition "is an important step to advance the technology required for strong future growth in this field. The combination offers us the long-term opportunity to extend our leadership to home and acute dialysis products. Furthermore, by combining our equipment and membrane technology with the SORB technology, we can provide innovative solutions in the future such as a possible wearable kidney."
With the acquisition, Lipps said the company expects to boost its annual R&D spending by about $10 million starting in 2008. The company's mid-term financial targets for 2007 through 2010 remain unchanged.
Fresenius is a provider of products and services for individuals undergoing dialysis because of chronic kidney failure.
PLSG, a public/private partnership created to support the growth of life sciences in Pennsylvania, said its return on investment from this acquisition would be used for new investments into early-stage life sciences technologies and companies through its PLSG Concept to Commercialization investment model.
"Renal Solutions is the perfect example of a complete success story for the Pittsburgh Life Sciences Greenhouse model of taking technologies from Concept to Commercialization," said John Manzetti, PLSG president/CEO. "Not only were they the first company to receive an investment from the PLSG, in 2002, they were the first of 10 companies that the PLSG has helped relocate to southwestern Pennsylvania."
In other dealmaking activity:
- Beckman Coulter (Fullerton, California) reported an agreement to acquire the remaining 80.1% of NexGen Diagnostics (Southfield, Michigan). NexGen is a spin off of Lumigen (Southfield, Michigan), which Beckman bought last year for $185 million in cash (Medical Device Daily, Oct. 4, 2006). Because NexGen's assets consist of intellectual property unrelated to Beckman Coulter's current products, the company expects to take a charge of about $36 million for in-process R&D when the acquisition closes in 4Q07. The technologies have the potential to revolutionize high sensitivity testing, including immunoassay and nucleic acid, due to their inherently superior speed and simplicity, according to Beckman Coulter. Beckman Coulter makes products designed to simplify, automate and innovate complex biomedical tests.
- MDS Nordion (Ottawa, Ontario), a provider of medical isotopes and radiopharmaceuticals, said it has agreed to sell its external beam therapy and self-contained irradiator product lines to Best Medical International (Fairfax, Virginia). Financial terms were not disclosed. External beam therapy equipment is used in the treatment of cancer, and self-contained irradiators are used for the irradiation of blood to prevent disease and for research purposes. Best Medical will acquire these two product lines with combined yearly revenues of $32 million and about 150 employees. The transaction is expected to close over the next three months.
- Hanger Orthopedic Group (Bethesda, Maryland) reported acquiring Stagner Orthopedic Services (Nashville, Tennessee), Specialized Prosthetic & Orthotic Technologies (Salt Lake City, Utah), and MHC Prosthetics (Leonardtown, Maryland). Hanger provides orthotic and prosthetic patient care services, owning and operating 629 patient care centers in 45 states and the District of Columbia.
- OPKO Health (Miami) reported completing the acquisition of Ophthalmic Technologies (Toronto), a private Canadian company providing ocular imaging systems to eye care professionals. OPKO says it is developing a preclinical pipeline of agents for ophthalmic diseases and markets diagnostic systems that complement its therapeutic products.
- Healthnostics (New York) reported an agreement to acquire MedNets.com, an Internet portal providing information resources to consumers and healthcare professionals. The deal is expected to close by the end of the year. MedNets.com had nearly 400,000 visitors in the past year with a concentration in consumers. Healthnostics provides patient clinical monitoring and risk management systems to acute care hospitals and uses its Internet portals to deliver medical and biotech resource information to industry professionals and the general public.