A Medical Device Daily
Biofield (King of Prussia, Pennsylvania) reported that on July 27 it signed a master license agreement granting the MacKay Group (MKG; Hong Kong) an exclusive, sublicensable royalty-bearing license to distribute, manufacture, develop, and otherwise commercialize Biofield’s breast cancer technology worldwide.
MKG assumes from Biofield the sole responsibility and expense to market, manufacture, further technically and clinically develop, and otherwise commercialize the technology. In addition, MKG assumes from Biofield the sole responsibility and expense to secure additional regulatory approvals and to conduct additional clinical trials and R&D. MKG will further make “commercially reasonable” efforts to further develop the technology for screening, as opposed to purely diagnostic, purposes and for cancers other than breast cancer.
In return for the exclusive worldwide license, MKG will pay Biofield royalties based on gross receipts received by MKG and its affiliates in connection with Biofield’s technology: 10% of gross receipts up to S$100 million; 7.5% of gross receipts from $100,000,001 to $200 million; and 5% of gross receipts over $200 million.
MKG must pay minimum royalties in the amount of $3 million per year beginning 12 months after regulatory approval in China and the first commercial sale of the next prototype of the Biofield diagnostic device in China. The initial $3 million minimal royalty payment shall increase to $6 million per year one year after the China launch date and shall thereafter increase by 10% each year for all subsequent years of the agreement.
In addition to royalties, MKG will pay Biofield $1 million in licensing fees, $150,000 of which MKG already paid in connection with the execution of the agreement, the balance to be paid upon the China launch date.
The term of the agreement is 10 years with automatic renewals for additional 10 year terms unless terminated by one of the parties.
Biofield said it intends to use the $150,000 received from MKG to help complete required financial audits and SEC filings, to complete the regulatory audits of its new office in King of Prussia, Pennsylvania and to further the development of the new generation device. Previously, MKG advanced $75,000 to Biofield to engage new auditors and securities counsel to help bring Biofield’s regulatory filings current, to move the contents of Biofield’s former facility in Alpharetta, Georgia, to its new King of Prussia office, and to set up demonstrations in China, the Philippines, and Mexico.
Biofield develops non-invasive diagnostic medical devices to assist in detecting breast cancer. It offers Biofield Diagnostic System, a breast cancer diagnostic device, which employs single-use sensors to measure and analyze changes in cellular electrical charge distributions associated with the development of epithelial cancers, such as breast, ovaries, skin, prostate, and colon cancers. The company’s device is intended for palpable breast lesions, in women under 55 years of age.
In other dealmaking news: Bausch & Lomb (B&L; Rochester, New York) said yesterday that it was giving Advanced Medical Optics (AMO; Santa Ana, California) limited permission to discuss its $4.2 billion bid with key shareholders, although the company said it was sticking with its $3.67 billion buyout deal with private equity firm Warburg Pincus.
In a regulatory filing, B&L again expressed “substantial uncertainty” that its smaller competitor could win shareholder approval for its cash-and-stock counter bid. AMO’s third-largest shareholder, ValueAct Capital, has opposed the takeover move.
In mid-May, buyout and venture capital firm Warburg Pincus and B&L’s board agreed on a $65 a share all-cash deal for the company which makes contact lenses, ophthalmic drugs and vision-correction surgical instruments (Medical Device Daily , May 25, 2007).
On July 5, the final day of a 50-day period set aside for other buyers to make a better bid, AMO put in a $75-a-share offer of $45 in cash and $30 in AMO stock for each B&L share (MDD, July 9, 2007).
B&L “continues to recommend the pending merger” with Warburg Pincus, its board said in a letter dated Sunday to AMO’s CEO, James Mazzo.
But it agreed to relax a confidentiality agreement to allow AMO to discuss publicly available aspects of its offer with some of its largest shareholders, including the deal’s potential boost to earnings. AMO has already said a deal would bring an estimated $180 million in annual cost savings.
“The limited waiver does not permit AMO to provide any non-public information concerning Bausch & Lomb,” the board said. It gave Advanced Medical until noon Friday to provide “concrete, credible evidence” of its ability to secure approval from its stockholders.
AMO makes artificial lenses and other medical devices for the eye. In the lens solution market, it is a No. 3 player behind AlconLaboratories (Fort Worth, Texas) and B&L.
B&L posted $2.3 billion in sales last year and employs about 13,000 employees, while AMO recorded $998 million in sales in 2006 and had 3,300 employees.