A Diagnostics & Imaging Week

Ventana Medical Systems (Tucson, Arizona), a developer of tissue-based cancer diagnostics, reported that it has acquired Spring BioScience (Fremont, California), a developer and supplier of next -eneration rabbit monoclonal antibodies and other reagents, for $28.9 million in cash.

Ventana will also pay Spring shareholders up to $11.7 million over the next two years as Spring achieves specific scientific milestones. Spring BioScience, will remain in its Fremont location and be operated as a wholly-owned subsidiary of Ventana.

According to Ventana, the acquisition complements and solidifies its ability to rapidly develop world-class diagnostic antibody reagents, required components of its advanced staining technologies and critical to its long term companion diagnostics initiatives. It added that the acquisition will also streamline the company’s supply chain thereby reducing its reliance on external suppliers along with adding incremental gross margin on the replacement of current advanced staining antibodies. Spring’s expertise in antibody development provides Ventana significant synergies within its SISH and Quantum Dots development programs, it added.

The transaction is expected to be accretive to Ventana’s GAAP earnings per share, including 5 cents in 2008, and 9 cents in 2009. Ventana will also record a non-cash charge for in-process R&D and transaction related expenses in 3Q07.

“Adding Spring’s world-class team and capabilities to Ventana represents the achievement of our goal to establish and grow resources for product development and antibody design within our organization,” said Christopher Gleeson, Ventana’s president/CEO. “We now have the full range of internal capabilities to develop and distribute tissue-based cancer diagnostics to pathologists and patients around the world. In addition, because antibody development is a principle component of almost all companion diagnostics programs, the acquisition of Spring BioScience further enhances Ventana’s global leadership in the rapidly emerging area of companion diagnostics — the future of personalized medicine.”

P&M Corporate Finance acted as financial advisor and Snell & Wilmer acted as legal counsel to Ventana.

Ventana is still the target of a $75-a-share hostile takeover bid from Roche (Basel, Switzerland). The hostile takeover bid, valued at about $3 billion, was first disclosed publicly at the end of June, after months of what Rocher said were fruitless private advances.

SafeStitch (Miami), a private company developing endoscopic and minimally invasive surgery devices, has been acquired by Cellular Technical Services (CTS; Valley Stream, New York), a publicly-traded company with no active operations.

SafeStitch has an R&D office in Omaha, Nebraska.

CTS said it intends to apply to have its shares listed on the American Stock Exchange.

SafeStitch’s portfolio includes a device for endoscopic bariatric surgery (obesity surgery) and endoscopic repair of gastroesophageal reflux disorder (GERD), as well as an endoscopic device for excision and diagnosis of Barrett’s esophagus. The company also plans to market a standard bite block, as well as the first airway bite block, to be used during endoscopy, and is pioneering the Smart Dilator for esophageal strictures. SafeStitch also intends to develop products for hernia repair and natural orifice transluminal endoscopic surgery.

Dr. Phillip Frost, former CEO and chairman of IVAX (Miami) and Dr. Jane Hsiao, former vice-chairman and chief technology officer of IVAX, along with Dr. Charles Filipi, professor of surgery at Creighton University Medical School (Omaha, Nebraska), and Jeffrey Spragens, one of the founders of North American Vaccine (Beltsville, Maryland) are the principal investors in SafeStitch. Hsiao will become chairman of the board; Spragens, the president/CEO; Dr. Stewart Davis, formerly of Innovia (Miami), the COO; and Filipi, medical director.

The Frost Group, a private equity group headed by Frost, along with Spragens, will provide the company with a $4 million line of credit. These proceeds, along with about $3 million in cash held by CTS, are expected to be sufficient to fund the company’s continued development and upcoming clinical trials, it said.

In other dealmaking news:

• Affymetrix (Santa Clara, California) reported that Empire Genomics (Buffalo, New York) has obtained a non-exclusive, worldwide license to a number of Affymetrix patents covering the manufacturing, use and sales of nucleic acid microarrays and related products and services for comparative genomic hybridization (CGH). The arrays and services may be used for research or diagnostic purposes. Financial details of the license were not disclosed.

“Affymetrix continues to establish mutually beneficial licensing relationships with companies such as Empire Genomics to help stimulate the broad commercialization of genome analysis technologies,” said Alan Sherr, VP and chief counsel for licensing at Affymetrix.

“This agreement with Affymetrix enables Empire Genomics to bring its innovative genomics platform to market while continuing the advancement of personalized medicine. We fully expect that focusing in the field of copy number variation will lead to the discovery of the genomic causes of multiple diseases, as well as advanced therapeutic treatment strategies,” said Anthony Johnson, president/CEO of Empire Genomics.

Empire Genomics is active in the field of molecular diagnostics and genomic-based testing. Its molecular karyotyping platform technology is used to identify and quantify chromosomal abnormalities.

Affymetrix technology is used by pharmaceutical, diagnostic and biotechnology companies, as well as academic, government and not-for-profit research institutes. More than 1,600 systems have been shipped around the world and more than 9,500 peer-reviewed papers have been published using the technology.

• RadNet (Los Angeles), a provider of diagnostic imaging services through a network of owned and operated outpatient imaging centers, has acquired three multimodality imaging centers in Victorville, California, for $3.3 million plus assumption of about $1.2 million of debt.

The centers, previously owned by Valley Imaging Center, will increase RadNet’s presence in a market where, prior to the acquisition, RadNet had a single-modality open MRI location which it acquired as part of its acquisition of Radiologix (Dallas).

With about $6 million of annual revenues, Valley Imaging has revenues of about $6 million. The acquired centers offer a combination of MRI, CT, X-ray, mammography, fluoroscopy and ultrasound.

• NationsHealth (Sunrise, Florida) said it has acquired Diabetes Care & Education (DC&E), a provider of insulin pumps, pump supplies and blood glucose monitoring equipment.

NationsHealth purchased all of the issued and outstanding capital stock of DC&E for $2.5 million in cash and $500,000 in shares of unregistered common stock of the company. NationsHealth may also pay additional cash amounts based on annual revenue targets associated with DC&E’s pump and education operations in 2008, 2009 and 2010.

NationsHealth provides home delivery of diabetes supplies, medications and other medical products to patients across the nation.

DC&E is a provider of insulin pumps, pump supplies and blood glucose monitoring equipment through its three facilities in Louisville, Kentucky, Morehead City, North Carolina and Greenville, South Carolina.