Edwards Lifesciences (Irvine, California) has been fairly quiet of late — apparently in planning mode.

Yesterday, it revealed some of those plans, unveiling an effort to sharpen its focus and apply resources to its primary and traditional strengths, such as its core heart valve business and transcatheter aortic valve opportunities. Edwards reported selling the U.S. distribution rights and inventory related to the transmyocardial revascularization (TMR) laser product line to Novadaq Technologies (Toronto) for $8 million to $9 million.

For the exclusive U.S. distribution rights, Novadaq will pay Edwards $1 million in cash at closing, an earn-out for the balance of 2007, estimated to be $3 million, and a final payment of $3 million which is deferred under a one-year secured promissory note. Edwards said the sale price also includes the purchase of inventory valued at about $1.4 million.

"We are sharpening our focus on unique and less invasive technologies that advance the field of cardiac surgery," said Michael Mussallem, Edwards' CEO and chairman.

The company said the sale of the TMR distribution rights "supports Edwards' strategy to focus on proprietary, physician-preference products."

The sale of the TMR system rights comes on the heels of Edwards' discontinuation of its Optiwave 980 Cardiac Ablation Laser System in December (Medical Device Daily, Dec. 6, 2006) coupled with the sale of its angiogenesis program to Sangamo BioSciences (Richmond, California) in a share transaction worth about $7.5 million (MDD, Dec. 5, 2006).

Both the TMR system and the Optiwave are made by PLC Medical Systems (Franklin, Massachusetts), and Edwards acquired the sales and marketing rights to the TMR line from PLC in 2002 (MDD, Jan. 16, 2002).

TMR is designed to offer a treatment for patients with severe angina or chest pain and are not candidates for bypass surgery, stents or angioplasty. It involves the use of a laser to create small channels in the heart muscle which it is believed promote the growth of small blood vessels that will help supply blood to the heart muscle, a process know as angiogenesis.

TMR procedures are currently FDA approved for treating areas of the myocardium not amenable to traditional methods of revascularization, and Edwards reported sales of the product, which is Medicare reimburseable, were about $12 million in 2006.

Novadaq, which said it would begin marketing the TMR system "immediately," appeared excited about taking over the business

"The combination of our SPY System and TMR not only holds the promise of improving the effective delivery of TMR, but will also potentially improve the quality of life for many patients," said Arun Menawat, president/CEO of Novadaq. "TMR fits well with our current corporate strategy to provide and enable image guided therapies in the operating room and further validates our vision that real-time image guidance in the operating room can improve the effectiveness of therapeutic surgical procedures."

Launched with much promise nearly 10 years ago, the technology was shadowed by critics saying that the system simply offered mainly a placebo response, and it has never reached the potential that was promised.

Edwards, with all its marketing muscle, couldn't make TMR a huge success. But Novadaq said it can reach more of the projected 30,000 patients in the U.S. that could benefit from the technology. The company noted that currently, only about 7,000 patients are actually treated with the system.

Novadaq believes its SPY intra-operative imaging system may enable cardiac surgeons to visually identify the most suitable area for TMR treatment by assessing blood flow which is indicative of tissue perfusion and potentially guide TMR delivery in real-time making the procedure potentially more effective and offered more frequently to patients in need.

"Based upon Edwards' historical revenues and margins for its distribution of TMR, this transaction will be immediately accretive to our bottom line and synergistic to our sales strategy as we can now offer cardiac surgeons a total revascularization solution," said Menawat.

PLC also said it was pleased with the new arrangement and that Novadaq has the focus to make TMR a more successful product.

"Today, we are taking a major step for our TMR business by naming a new partner in Novadaq," said Mark Tauscher, president/CEO of PLC. "We, and Novadaq, see strong synergistic opportunities for our TMR products used in real-time in conjunction with Novadaq's SPY intra-operative imaging system, for which Novadaq recently built a direct U.S. sales team that targets the same end user as we do, the cardiac surgeon."

He added: PLC "appreciate[s] the support of Edwards throughout the launch and building of our TMR business, but recognize[s] that its focus has now moved in other directions, and we are pleased to find a new and able partner in Novadaq to make this a seamless transition for our growing customer base."

Edwards said it has committed to assist in transitioning the TMR distribution to Novadaq, and as a result of the sale, its Cardiac Surgery Systems product line, which includes Edwards Research Medical cannula and Embol-X technologies, is now expected to contribute revenues of $55-60 million in 2007.

The transaction will result in a slight gain in the first quarter, but is not expected to have a material impact on its 2007 earnings, Edwards said.

In other dealmaking news: Tripos (St. Louis), reported completing the sale of the assets of its Discovery Informatics business to affiliates of Vector Capital. (San Francisco), a private equity boutique specializing in buyouts, spinouts and recapitalizations of established technology businesses.

Tripos received $26.2 million for the Discovery Informatics business, representing an increased purchase price of about $575,000 due to improved working capital of the business since the signing of the asset purchase agreement in November.

Tripos used a portion of the proceeds to retire existing debt with LaSalle Bank and Horizon Technology Finance. Liquidation of the company will occur following resolution of all remaining corporate debts and obligations, and will commence approximately six months from now.

Tripos said that efforts to sell its Discovery Research business are ongoing, giving no assurance that a transaction will be completed.

Tripos provides drug discovery informatics products and services and chemistry research.

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