A Medical Device Daily

MedicalCV (Minneapolis) reported that it has sold $4.5 million of 11% senior secured debt to certain accredited investors in an unregistered transaction. Prior to the transaction, certain of the investors beneficially owned in excess of 5% of MedicalCV's common stock.

At closing, MedicalCV issued to each investor a five-year warrant to purchase a number of shares of common stock equal to 60% of the principal amount invested by such investor divided by $4. The closing warrants have an exercise price of $4 per share and full-ratchet anti-dilution protection for a period of 12 months. If MedicalCV is not permitted to register for resale all of the shares underlying the closing warrants, the excluded portion of the warrants will be exercisable on a cashless basis.

The debt, which is secured by substantially all of MedicalCV's assets, has a three-year term. Interest will be paid at 11% per year. During the first year, interest will accrue and be added to the principal balance. At the end of the first year, the company will issue a five-year warrant to each investor to purchase a number of shares equal to the quotient obtained by dividing 60% of the accrued interest owed to that investor for the first year by $4.

During the second and third years, the company has the option to pay interest in cash, or have the interest accrue and be added to the principal balance, on a quarterly basis. For each quarter in which MedicalCV determines that the accrued interest should be added to principal, it will issue additional five-year warrants to purchase a number of shares equal to the quotient obtained by dividing 60% of the accrued interest for the quarter by $4. Each of the interest accrual warrants is exercisable at $4 per share, contains a cashless exercise provision, and has full-ratchet anti-dilution protection for a period of 12 months from each warrant's respective date of issuance.

The company may prepay the notes in part or in full, subject to a prepayment premium of 8% in the first year, 6% in the second year and 3% in the third year. It has also covenanted and agreed that it will not issue any additional 11% senior secured debt.

MedicalCV makes surgical ablation systems that utilize a laser energy technology platform to create precise lesions, or scars, on soft and cardiac tissue.

In other financing news:

• Minrad International (Orchard Park, New York) reported that it has closed upon a line of credit with First Niagara Bank for $5 million. The line will be used to fund the working capital needs of the company.

Minrad International is an interventional pain management company with real-time image guidance and anesthesia and analgesia product lines. It also manufactures generic inhalation anesthetics for use in connection with human and veterinary surgical procedures. The company is developing a drug/drug delivery system for conscious sedation, which, similar to nitrous oxide in dental surgery, provides a patient with pain relief without loss of consciousness.

• Acusphere (Watertown, Massachusetts) reported that it closed its previously disclosed $20 million registered direct offering of an aggregate of 7,694,220 units, each unit consisting of one share of common stock and one warrant to purchase 0.4 shares of common stock at an exercise price of $3.10 per share, for a purchase price of $2.60 per unit.

The warrants will be exercisable beginning on Dec. 15 and until June 15, 2012. Cowen and Co. acted as exclusive placement agent for the offering.

Acusphere is a specialty pharmaceutical company that develops new drugs and improved formulations of existing drugs using its microsphere technology. Acusphere's lead product candidate, Imagify (perflubutane polymer microspheres) injectable suspension, is a cardiovascular drug which has completed pivotal Phase III clinical trials for the detection of coronary artery disease.

• Fresenius Medical Care (Bad Homburg, Germany), a provider of dialysis products and services, reported that it intends to sell about $500 million senior unsecured notes. The notes will be offered mainly to U.S. institutional investors.

Proceeds from the offering will be used to reduce indebtedness under the company's senior secured bank credit facility and other, short-term debt, and for general corporate purposes.

• Zars (Salt Lake City) reported that it has filed a registration statement with the U.S. Securities and Exchange Commission relating to the proposed initial public offering of its common stock.

All shares of the common stock to be sold in the offering will be offered by the company. The number of shares of common stock and price per share to be sold have not yet been determined.

Cowen and Company and CIBC World Markets are joint book running managers for the offering. Leerink Swann & Co. and Susquehanna Financial Group are co-managers.

Zars is a specialty pharmaceutical company focused on the development of topically applied drugs using its drug delivery technologies, with an initial focus on pain management. It has developed a portfolio of products and product candidates based on its Controlled Heat-Assisted Drug Delivery (CHADD) and its phase-changing cream (Peel and DuraPeel) technologies.