A Medical Device Daily Staff Report

Uroplasty (Minneapolis) reported an agreement to purchase from CystoMedix (Andover, Massachusetts) certain intellectual property assets related to its Urgent PC neuromodulation system.

Uroplasty will issue CystoMedix $4.9 million of its common stock, at a per-share price equal to the greater of $3 or 15% in excess of the average closing price during the 20 trading days prior to the closing date, plus another 20,000 common shares.

The agreement also provides for the termination, upon closing of the transaction, of the April 2005 exclusive manufacturing and distribution agreement with CystoMedix.

Transaction close — expected this month — is subject to satisfaction of certain customary conditions, including approval by CystoMedix shareholders.

On Feb. 28, Uroplasty had 11,065,716 common shares issued and outstanding.

David Kaysen, president/CEO of Uroplasty, said, "We believe this all-stock purchase transaction, at a per-share price in excess of the recent average closing share price, is beneficial for our shareholders. Under the April 2005 agreement, we had the option to acquire CystoMedix's entire business and assets for $4.9 million. However, we would have had to pay $1.1 million in cash and the balance in our common shares valued at the then average of the 20 trading days' closing price.

"Further, had we delayed the acquisition, the purchase price payable in our common shares would have increased at the rate of approximately $350,000 per year effective April 18, 2007 through June 2008, at which time our purchase option would expire. We also avoid the potential payment of royalties to CystoMedix in the future."

He added, "Over 30 million people suffer from overactive bladder in the U.S. We believe the Urgent PC, a minimally-invasive device designed for office-based treatment, is a cost-effective treatment alternative for overactive bladder symptoms of urge incontinence, urinary urgency and urinary frequency. We expect this product to be a significant revenue contributor for our next fiscal year."

Uroplasty, with subsidiaries in the Netherlands and the UK, manufactures products for the treatment of voiding dysfunctions: urinary and fecal incontinence, symptoms of overactive bladder and vesicoureteral reflux. Additionally, some of its soft-tissue bulking agent products are used for the treatment of vocal cord rehabilitation and for augmentation or restoration of soft tissue defects in plastic surgery.

In other dealmaking activity: Netsmart Technologies (Great River, New York), a provider of software and services for health and human services organizations, reported that the Delaware Court of Chancery has permitted it to proceed with its merger with affiliates of Insight Venture Partners and Bessemer Venture Partners.

The Court has permitted a shareholder vote on the merger to be held after Netsmart makes supplemental disclosures, consisting of financial projections underlying the discounted cash flow analysis by the Special Committee's financial advisor, William Blair, and the text of the legal opinion issued by the Court.

Netsmart said: "We look forward to obtaining shareholder approval at the special meeting of shareholders scheduled to be held on April 5, 2007, and promptly closing the merger."

Netsmart's clients include health and human services organizations, public health agencies, mental health and substance abuse clinics, psychiatric hospitals, and managed care organizations. Netsmart's products are full-featured information systems that operate on a variety of operating systems, hardware platforms, and mobile devices, and offer unlimited scalability.

Caremark Rx (Nashville, Tennessee) reported that its shareholders have approved the merger with CVS, based on a preliminary vote count by its proxy solicitor. A substantial majority of outstanding shares were cast in favor of the merger.

"We are gratified that Caremark shareholders have recognized the compelling strategic and financial benefits of this groundbreaking merger," said Mac Crawford, president/CEO and chairman. "Caremark and CVS now have an historic opportunity to define and lead the continuing evolution of the pharmaceutical services industry and build on both companies' records of creating value for our shareholders and customers."

The merger is expected to close shortly, subject to official certification of the voting results by the independent inspectors of election, IVS Associates.

Caremark is a leading pharmaceutical services company, providing through its affiliates comprehensive drug benefit services to over 2,000 health plan sponsors and their plan participants throughout the U.S.