A Diagnostics & Imaging Week

North American Scientific (NAS; Chatsworth, California) reported that it has entered into a definitive agreement to sell its Nomos Radiation Oncology (Cranberry Township, Pennsylvania) business to privately-held Best Medical International (Springfield, Virginia) in a transaction valued at about $3.6 million. The transaction is subject to customary conditions.

Best will purchase the Nomos assets for a purchase price is $500,000 cash at closing, plus assumption of certain obligations and liabilities, including about $3.1 million of liabilities for warranty and maintenance agreements, as well as the Nomos facility lease in Cranberry Township, Pennsylvania. CIBC World Markets acted as the company’s financial advisor.

NAS first reported its intention to sell the Nomos assets last month.

“Our agreement with Best Medical represents the achievement of a major milestone in our strategy to build shareholder value through the focus on our core brachytherapy business,” said John Rush, president/CEO of NAS. “The transaction will allow us to focus our resources on the marketing and development of innovative brachytherapy products for the treatment of cancer, including the ClearPath HDR and ClearPath CR for the treatment of breast cancer. Our goal is to increase our participation in the growing breast and prostate cancer markets, which we believe represent a total U.S. addressable market opportunity of more than $800 million. We also believe this transaction will benefit the customers and employees of Nomos in the long-term. Best Medical is expected to continue operation of the Nomos business, and to invest in the development of next-generation products. This transaction represents a win-win outcome for all involved.”

Krishnan Suthanthiran, president of Best, said here company was “very excited about this acquisition. The acquisition of the Nomos Radiation Oncology business fits our strategy of expanding our product line in diagnostic and therapeutic radiology.”

NAS develops radiation therapy products and services for the treatment of cancer. Its products include Prospera brachytherapy seeds and SurTRAK needles and strands used primarily in the treatment of prostate cancer. In addition the company plans to commercialize its ClearPath multi-channel catheter breast brachytherapy devices in 2007, which are the only devices approved for both high dose and continuous release, or low dose radiation treatments.

Originally known as a brachytherapy company, Best Medical said it now offers a range of diagnostic and therapeutic services and products.

In other dealmaking news:

• Nanogen (San Diego) reported that it is evaluating strategic alternatives for its microarray business as part of an aggressive plan to achieve profitability. The microarray business includes the company’s NanoChip instrument system and related multiplexed reagents and consumables. The company said it has retained Credit Suisse to assist in the evaluation of alternatives which may include a sale, partnering or closure of the array business. The company expects to complete its evaluation of strategic alternatives within sixty to ninety days.

The goal of the strategic evaluation, the company said, is to create a restructured business at Nanogen that can reach profitability faster and with greater predictability. The restructured business will continue to focus on clinical diagnostic markets with emphasis on real-time molecular and rapid point of care products. The company said it has a strong intellectual property and technology base in both of these areas and that its products are widely adopted and well accepted by customers.

“Financial expectations for the restructured business have not been completed and are dependent on the outcome of the strategic evaluation,” said Robert Saltmarsh, Nanogen’s CFO. “While specific goals will be discussed after the conclusion of our evaluation process, we expect that sale or closure of the microarray business will decrease expenses and improve cash flow by at least $15 million annually. We also expect the restructured business will show revenue growth on a year over year basis.”

“In taking this course of action, we recognize that our microarray technology is very good and customer reception is positive. However, multiplex molecular testing remains an early stage market with slower growth and lower testing volumes than we expected,” said Howard Birndorf, Nanogen’s chairman and CEO. “The cost and effort to develop the broad product menu needed to be successful while also working to develop the clinical market over the next several years are large efforts and are expenses that Nanogen can no longer afford on its own.”

“In the past year, we have begun to build a solid business with our real-time PCR products and Point of Care rapid testing solutions. By focusing on these businesses, we expect to significantly grow our presence in the diagnostics market and improve our business performance,” said David Ludvigson, Nanogen’s president /COO. “We hold significant intellectual property in the molecular and point of care areas and intend to continue developing proprietary, technology based products that add value in the clinical diagnostic market and are well accepted by customers.”

Nanogen’s products include real-time PCR reagents, the NanoChip400 electronic microarray platform and a line of rapid, point-of-care diagnostic tests.

• NanoSensors (Santa Clara, California) reported that it is parting ways with Dr. Ted Wong, its CEO/president, CFO and chairman and will become a shell company as the vehicle for the possible acquisition a new operating business.

The company said it entered into a separation agreement with Wong dated Sept. 9, 2007 in which he agreed to resign from all positions with the company effective Aug. 31.

Wong’s departure coincides with a decision by the company’s board to terminate its current business operations and to position the company as a shell company and to utilize its corporate assets as a vehicle for the acquisition of an operating business.

The company said it does not have any specific merger, stock exchange, asset acquisition, reorganization or other business combination under consideration or contemplation other than what it termed “two initial, exploratory conversations.” The company said it will not limit itself to any particular industry or geographic location in its efforts to identify prospective target businesses.

The board also dissolved the company’s Technical Advisory Board and terminated certain of the company’s consulting and license agreements. In addition, its non-binding letter of intent to acquire DKL International (Vienna, Virginia) expired Aug. 31.

The restructured company will now be led by Robert Baron as acting CEO/president and chairman. In addition, Josh Moser has been appointed interim CFO.

NanoSensors agreed to pay Wong a severance payment equal to six months of his base salary, which amount to about $72,000 plus an additional amount of $5,125 for unused vacation benefits. The company also granted him a restricted stock award of 1,364,629 shares of common stock

NanoSensors is a nanotechnology development company that develops instruments and sensors to detect explosives, chemical and biological agents, principally a sensor device to detect e.coli and salmonella in food and water.

Sontra Medical (Franklin, Massachusetts), a developer of transdermal technology, and Echo Therapeutics (Durham, North Carolina), a privately held specialty transdermal therapeutics company, reported that they have merged to form a single, publicly held company to operate under the name Echo Therapeutics.

Sontra acquired all of the outstanding shares of Echo common stock in exchange for an aggregate of 6.25 million shares of Sontra common stock. The stockholders of Sontra and former stockholders of Echo hold about 65% and 35% of the combined company’s outstanding common stock, respectively.

The companies said the merger creates a platform-enabled transdermal therapeutics and diagnostics company focused on multiple large markets for improved formulations of specialty pharmaceuticals and new applications of next generation transdermal diagnostics.

The newly combined company will have corporate offices in Philadelphia and research and development facilities in Franklin, Massachusetts and Durham, North Carolina. Patrick Mooney, MD, and Shawn K. Singh, both formerly of Echo, will serve as CEO and interim president of the combined company, respectively. Harry Mitchell, CPA, of Sontra, will continue to serve as COO and CFO of the combined company.

Burnham Hill Partners, a division of Pali Capital, served as financial advisor to Sontra in connection with the merger and in connection with a separate $1.325 million bridge note financing to a limited group of strategic institutional and accredited investors.

Sontra owns technology in ultrasound and skin permeation methods used in transdermal science for therapeutic and diagnostic applications, and are developing a non-invasive CTGM for use in the large diabetes home use and hospital intensive and critical care markets. Sontra’s CTGM device leverages its FDA-approved SonoPrep ultrasound-mediated skin permeation system.

Echo Therapeutics is a platform-enabled specialty transdermal therapeutics company developing a portfolio of advanced topical formulations using its Azone dermal penetration technology.

• Guardian Technologies International (Herndon, Virginia), developers of medical imaging and threat detection technology with applications for the healthcare and homeland security markets, reported entering an agreement to acquire exclusive rights to software technology expected to significantly speed the company’s scheduled release of medical imaging Signature Mapping products. These products are designed to materially improve a radiologist’s ability to detect and treat targeted diseases.

Terms of the acquisition were not disclosed.

Guardian has agreed to acquire iC Works software technology from Virginia-based Zinon, in a move that is expected to accelerate the company’s planned FDA clinical trials, potentially advancing by as much as one year federal approval for a broad range of healthcare applications.

Guardian believes the Zinon software technologies – clinical interface visualization technology and recall database structure — will enable it to accelerate the time to market for its Signature Mapping products.

The company said the Zinon software technology will enable Signature Mapping to be seamlessly integrated into existing imaging systems and conform to industry standards required by the OEMs and medical service providers. Additionally, iC Works contributes specialized archival capabilities that will allow physicians to more efficiently and easily recall and view images produced by Guardian’s Signature Mapping product line.

Signature Mapping is an advanced analysis and visualization technology that can be installed to read images from any medical imaging device, including MRIs, CT-scans and X-rays, to detect disease states in the brain, lungs, heart and prostate. It can even visualize difficult-to-distinguish breast cancer in dense breast tissue that might otherwise have gone undetected.

Siemens (Munich, Germany) reported that the U.S. antitrust waiting period for its $7 billion cash tender offer for all of the issued and outstanding shares of common stock of Dade Behring (Deerfield, Illinois) has been terminated.

The company initiated a tender offer on Aug. 8 for all of the outstanding shares of common stock of Dade Behring for $77 per share, net to the seller in cash. On Sept. 5, the tender offer was extended to midnight, EST, on Sept. 26, 2007.

Siemens has submitted a draft of the required merger control filing with the European Commission and has since been in discussions with the authority. The company said it believes that it is possible that it might obtain competition law clearance, and therefore be able to close the transaction, during calendar 2007, earlier than the projected time frame of the second quarter of FY08, which it disclosed when the merger was first announced in July.

Once the merger is closed, Dade will become a unit of the Siemens Medical Solutions (SMS; Malvern, Pennsylvania) business.

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