A Medical Device Daily

DexCom (San Diego) reported the pricing of $40 million of convertible senior notes, due 2027, in a private offering to institutional buyers.

The notes are convertible into shares of common stock based on an initial conversion rate of 128.2051 shares of common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of roughly $7.80 a share. The company granted to the initial purchaser a 30-day option to buy up to $20 million aggregate principal amount of additional notes.

The company said it will use the proceeds of the offering for working capital and general corporate purposes. If the initial purchaser buys the additional notes, the company said it intends to use a portion of the proceeds from the sale to enter into call spread transactions on its common stock that will relate to the entire amount of notes that DexCom issues in order to reduce the potential dilution from conversion of the notes.

Interest on the notes will be paid semi-annually at 4.75% a year, DexCom said. The notes will be redeemable by DexCom beginning in March 20, 2010, at a price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest. Holders of the notes may require the company to repurchase the notes for cash equal to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the occurrence of certain designated events, including a change of control.

DexCom will have the right to automatically convert the notes if the closing price of its common stock exceeds 150% of the conversion price for at least 20 trading days during any 30-day period. If such an automatic conversion occurs before March 15, 2010, the company would be required to pay additional interest in cash or in shares of its common stock. The holders of the notes may require DexCom to repurchase the notes for cash on March 15, 2012, March 15, 2017 and March 15, 2022 at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest.

DexCom has developed a short-term continuous glucose monitoring system for diabetes patients, the DexCom STS System, which includes the STS Sensor, the STS Transmitter, and the STS Receiver. The tiny probe-like STS Sensor is inserted by the patient under the skin and is held in place by an adhesive. Once inserted, the STS Sensor begins continuously monitoring glucose. The STS Transmitter sends the glucose signal from the STS Sensor and wirelessly transmits the data to the hand-held STS Receiver. The STS Receiver processes the glucose signal and the Receiver displays the patient’s current glucose value, as well as 1-hr, 3-hr, and 9-hr trends. The Receiver also sounds an alert when a high or low glucose excursion is detected.

In other financing news, ReGen Biologics (Franklin Lakes, New Jersey) reported that it has completed an additional $3 million private equity placement, providing the company with a total of about $10 million in equity financing when combined with an earlier $6.95 million private placement reported in December (Medical Device Daily, Dec. 5, 2006).

Regen said it could get up to about $10 million more upon exercise of options that would become exercisable within 15 days of FDA clearance of the company’s collagen scaffold device.

The company sold 71,429 shares of restricted Series D convertible preferred stock at $42 a share, for gross proceeds of roughly $3 million. The transaction includes 30% warrant coverage with a five-year term for 21,429 shares of restricted Series D convertible preferred stock exercisable at $63 a share, as well as options to buy the number of preferred shares purchased at closing, exercisable for cash at $42 a share within 15 days of FDA clearance of the collagen scaffold device.

Each preferred share purchased at closing, as well as each preferred share underlying the warrants and options will automatically convert into 100 shares of restricted common stock upon the filing of a certificate of incorporation by the company making available adequate common shares to support such conversion. Once converted to common shares on a one preferred to one hundred common share ratio, the pricing per share of $42 for the purchase and option exercise, and the warrant exercise price of $63 convert to 42 cents and 63 cents respectively.

The company’s December financing also included a 30% warrant coverage with a five-year term and an exercise price of 55 cents a share, and an option to each buyer to purchase the number of common shares bought at closing, for 37 cents a share within 15 days of FDA clearance of the collagen scaffold device (MDD, Dec. 5, 2006).

ReGen makes tissue growth and repair products. Its collagen scaffold technology includes applications in orthopedics, general surgery, spine, cardiovascular and drug delivery. Its first approved product using its collagen scaffold technology is the CMI, a meniscus application, which is cleared for sale in Europe.

ReGen said it has submitted an application to the FDA for 510(k) clearance of the CMI.