A Diagnostics & Imaging Week
CardioDynamics (San Diego), a developer of impedance cardiography (ICG) technology, reported that it has reached an agreement to sell the company’s Vermed (Bellows Falls, Vermont) unit to the subsidiary’s management team for a cash purchase price of $8 million. Additionally, as a condition of closing, the company will enter into a five-year fixed price supplier agreement with Vermed for the company’s ICG sensors.
The transaction is contingent on various legal and business conditions and isubject to approval by CardioDynamic shareholders, with the sale is anticipated to close in the latter part of the company’s fiscal third quarter ending Aug. 31.
The company said the decision to sell Vermed would allow CardioDynamics to focus its resources on its ICG business, which management believes continues to hold the highest growth potential, while maintaining a long-term preferential relationship with Vermed for ICG sensors.
“Through this strategic transaction, we derive two essential benefits for CardioDynamics’ shareholders,” said Michael Perry, CEO of CardioDynamics. “First, we inject needed cash into the ICG business that will be utilized for continued expansion of our sales and clinical application specialist team, further investment in clinical trial research, and investment in core technology improvement. Our objective through these investments is to establish ICG in the treatment guidelines for heart failure and hypertension over the next five years.”
Perry added, “Secondly, it is very important for us to continue the excellent working relationship with the Vermed organization through a long-term supplier agreement. Not only will we receive a stable supply of ICG sensors for five years, but we will continue to partner with Vermed’s engineering team to develop enhancements to our proprietary sensors and also explore opportunities to continually lower sensor costs through design improvements. Within the next three to five years, we believe ICG sensors will likely comprise over 50% of revenue for the ICG business, and it is essential that we continue to enhance our proprietary position and drive cost efficiencies in this important recurring revenue stream.”
Vermed is a supplier of disposable electrodes and related supplies used in electrocardiograph (ECG) and other diagnostic procedures. The division has 85 employees that design, manufacture and package electrodes from its 45,000 square foot facility in Bellows Falls.
In other dealmaking news:
• Inverness Medical Innovations (IMI; Waltham, Massachusetts) reported that it has successfully completed its tender offer for the outstanding shares of Biosite (San Diego), which it agreed to acquire for $92.50 a share back in May.
In the initial tender period which expired at midnight, EDT, on Monday, 15,759,794 shares representing about 87.6% of Biosite’s outstanding common stock were tendered and not withdrawn prior to the expiration of the initial tender offer period, including 2,045,999 shares representing about 11.4% of Biosite’s outstanding common stock which were tendered by notice of guaranteed delivery.
The tendered shares, together with the 750,000 shares that IMI currently owns represent about 91.7% of Biosite common stock. All shares that were validly tendered and not withdrawn have been accepted for purchase.
IMI will provide a subsequent offering period, which will expire at midnight, EST on Thursday, unless further extended. During this subsequent offering period, Biosite stockholders who did not previously tender their shares into the offer may do so and will promptly receive the same $92.50 per share cash consideration paid during the initial offering period.
In order to facilitate its purchase of Biosite shares, IMI accepted for purchase $150 million of its 8.75% senior subordinated notes due 2012 pursuant to its previously reported cash tender offer and consent solicitation IMI said it anticipates that it will purchase the notes for a purchase price of about $164.1 million, which includes accrued interest.
Inverness financed the Biosite tender offer, and expects to finance the short-form merger, with cash and the proceeds from a $1.05 billion first lien loan facility, consisting of a $900 million term loan and a $150 million revolving credit line, and a $200 million second lien term loan, both of which were consummated yesterday. The loan facilities were syndicated by General Electric Capital Corp. and UBS Securities.
IMI is a developer of advanced diagnostic devices.
• Avid Radiopharmaceuticals (Philadelphia), a molecular imaging company, and Bayer Schering Pharma (Berlin), a diagnostic imaging pharmaceutical company, reported that Bayer Schering Pharma has exercised its right to license Avid’s 18F-AV1/ZK compound, a molecular imaging agent that targets amyloid plaques in the brain.
When used with positron emission tomography (PET) imaging, the AV1/ZK compound may enable earlier and more accurate diagnosis of Alzheimer’s Disease (AD), a disease that currently affects an estimated 5 million Americans and is expected to potentially affect up to 16 million Americans by the year 2050, according to the company.
AV1/ZK is one of a series of compounds discovered in the laboratory of Dr. Hank Kung from the University of Pennsylvania (Philadelphia) and licensed to Avid for development. Avid entered into an exclusive option agreement with Schering (now Bayer Schering Pharma) in December 2005 for the development of AV1/ZK and related compounds referred to as 18F-stilbenes for positron emission tomography (PET) imaging of Alzheimer’s.
• CAS Medical Systems (Branford, Connecticut), focused on non-invasive vital signs monitoring, has entered into agreements with Davis Marcus Partners (DMP; Connecticut) for the sale and leaseback of its headquarters and manufacturing facility at 44 East Industrial Road, Branford. The agreement provides for a purchase price of $3 million and a long-term leaseback of the property. The completion is expected to take place during the third quarter of 2007.
Upon completion of the sale of the property, CAS Medical will lease the property for a 10-year initial term with the option to extend the term for two additional successive periods of five years, subject to certain notice and financial covenants requirements. The lease provides for an annual base rent in years 1-5 of $244,800, and years 6-10 of $268,800, payable monthly. In addition, CAS Medical will have a right of first offer to lease any additional space or building built by DMP on the property, subject to certain restrictions.
CAS manufactures cerebral oximeters, blood pressure measurement technology, vital signs monitors, blood pressure cuffs, cardio-respiratory and apnea monitors and products for neonatal intensive care.