Medical Device Daily
Applied Digital Solutions (Delray Beach, Florida), a maker of identification and security technology products, said it plans to spin off its VeriChip (also Delray Beach) unit with an offer of 4.3 million shares priced at $6.50-$8.50 a share. In its filing with the Securities and Exchange Commission, the company said it would make $27 million if the offering priced at the $7.50 mid-point price.
Underwriters are Merriman Curhan Ford & Co., C.E. Unterberg, Towbin and Kaufman Bros. They are allowed to buy up to 645,000 additional shares to cover any over-allotments.
VeriChip, which makes wearable and implantable identification and locating devices, will be headed by Scott Silverman, who was previously CEO of Applied Digital.
The locating devices are primarily used in the healthcare industry for nursing home and assisted living patients; the implantable device is about the size of a grain of rice and is implanted under the skin.
The company also makes other healthcare items and vibration monitoring instruments.
VeriChip is primarily marketing the chip as the most secure and reliable way to link people with their medical records because it cannot be lost and can identify patients even when they are not conscious or lucid.
According to its filing with the Securities and Exchange Commission, the company, which has not yet reported fourth-quarter data, lost $3.45 million on sales of $20.34 million in the first nine months of 2006. The revenue came primarily from businesses that make external radio tags for keeping track of babies in hospitals and elderly patients in nursing homes — businesses with plenty of competition.
While the idea of the chip's use in humans has been controversial to many privacy advocates, it appears that there should be no fear of widespread use since the implanted chips have gained almost no traction in the marketplace since the FDA approved their sale in 2004 (Medical Device Daily, Oct. 18, 2004).
The technology involves the injection of a rice-grain size capsule into a user's upper right arm. The chip inside contains a coded identifying number that is linked to whatever the user authorizes — whether his or her name, address, emergency contacts and important medical records. The chip can be energized and then scanned by a hand-held reader that has to be positioned within inches of the arm to work reliably.
For the most part, the company reportedly has been giving hospitals and doctors the instrumentation needed to read the chips and link their encoded numbers to patient information. In documents filed with the Securities and Exchange Commission, VeriChip said that total revenue from the device and the services tied to it was less than $100,000.
VeriChip said that more than 1,200 doctors have registered to take part in VeriMed — the name that the company has given to medical application of the implant — as of the end of 2006, and that close to 400 medical facilities had been equipped with scanners and supporting gear. However, it said that only 222 patients have had the device implanted thus far.
In its filing, VeriChip said that $7 million would go toward repaying money loaned to it by Applied Digital and that $8 million to $10 million would be invested in developing VeriChip over the next two years.
The company has filed to have its common stock quoted on the NASDAQ Global Market under the symbol CHIP.
In other financing news:
• TechniScan Medical Systems (Salt Lake City), a developer of ultrasound technology for breast imaging, reported completion of its Series D financing of $6.4 million. The recent funding is now added to a $2.8 million Small Business Innovation Research (SBIR) Program grant from the National Cancer Institute of the National Institutes of Health, awarded in late 2006.
TechniScan's UltraSound CT (USCT) technology provides diagnostic information that could help distinguish between cancers and benign conditions. Additionally, the technology uses a breast cancer exam that is not painful or uncomfortable, according to TMS.
The company said this new imaging system is intended to aid physicians in diagnosing breast cancer in conjunction with traditional mammography by providing information about the anatomy and tissue properties of the breast not previously possible and provide more effective management.
Founded in 1984, TMS uses an ultrasound technology called inverse scattering, which makes use of the entire spectrum of information available from the ultrasound signal. The resulting diagnostic information includes ultrasound transmission tomography images in a format similar to that provided by MRI and CT imaging, according to the company.
• Private equity firm Berkshire Partners (Boston) said it is providing growth capital to Masterplan (Chatsworth, California) and ReMedPar (Goodlettsville, Tennessee). Terms of the transaction were not disclosed.
Masterplan provides service, maintenance and asset management for a range of medical equipment to hospitals, integrated health systems and patient facilities. ReMedPar is an independent provider of sourced and refurbished medical equipment parts. Berkshire Partners has invested in mid-sized private companies for more than 20 years through seven investment funds with aggregate capital commitments of about $6.5 billion.
• AmeriPath (Palm Beach, Florida), a provider of physician-based anatomic pathology, reported that AmeriPath Intermediate Holdings, the newly formed subsidiary of AmeriPath Holdings and direct parent of AmeriPath, expects to commence an offering of $125 million principal amount of senior unsecured floating rate PIK toggle notes, due 2014, in a transaction exempt from the registration requirements of the Securities Act of 1933. The notes will be general unsecured obligations of the Issuer.
The net proceeds from the offering are expected be used to repay the amount outstanding under AmeriPath's revolving loan facility and for general corporate purposes, including consummating various contemplated acquisitions.
Subject to acceptable market and interest rate conditions, the consummation of an amendment to AmeriPath's credit facilities, and other customary conditions, the Issuer anticipates that the offering will be completed this month.