A Medical Device Daily

Paramount Acquisition (New York) and BioValve Technologies (Westborough, Massachusetts), yesterday reported that they have mutually terminated the previously disclosed $140 million contribution agreement among Paramount, BioValve and its subsidiary, BTI Tech, and BioValve spin-out Valeritas (Ramsey, New Jersey), maker of the h-Patch insulin delivery system.

The companies said they have determined that it will not be possible to consummate the transaction, first disclosed in August (Medical Device Daily, Aug. 31, 2006) by the outside date provided for in the contribution agreement. As a result, they said it is “in each of their respective best interests to terminate the arrangement.”

Paramount said it still intends to “aggressively seek a suitable operating business in the healthcare industry for a merger, capital stock exchange, asset acquisition or other similar business combination.”

Paramount also reported that Lindsay Rosenwald, MD, chairman of the board of directors, J. Jay Lobell, CEO and member of the board, and Isaac Kier, a member of the board, intend to establish personal warrant purchase plans.

Under the plans, Rosenwald, Lobell and Kier will collectively purchase an additional 1 million warrants at prevailing market prices up to 64 cents per warrant, the last sale price of the warrants on Jan. 19. The warrant purchase plans will be subject to certain limitations, including that the men will not acquire more than 100,000 warrants in any one day or 250,000 warrants in any single week.

The plans terminate upon the purchase by any of the men, collectively, of 1 million warrants under the plan or on March 30, whichever occurs first.

Paramount is a specified purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, or other similar combination with an operating business in the healthcare industry.

It raised net proceeds of about $53 million through its initial public offering in October 2005 and exercise of the over-allotment option, and it says it has dedicated its attention since the offering to seeking and evaluating combination opportunities.

In other dealmaking news:

• Following a public comment period, the Federal Trade Commission (FTC) has approved the issuance of a final consent order in the matter concerning Johnson & Johnson’s (J&J; New Brunswick, New Jersey) $16.6 billion acquisition of Pfizer’s (New York) consumer healthcare business. The vote to approve the final consent order was 2-0, with commissioners Pamela Jones Harbour, William Kovacic, and J. Thomas Rosch recused.

The FTC had alleged that the transaction as originally proposed would reduce competition in the U.S. markets for over-the-counter (OTC) H-2 blockers used to prevent and relieve heartburn, OTC hydrocortisone anti-itch products, OTC night-time sleep aids, and OTC diaper rash treatments.

In settling the FTC’s charges, the companies agreed to sell Pfizer’s Zantac H-2 blocker business to Boehringer Ingelheim (Ingelheim, Germany), and Pfizer’s Cortizone hydrocortisone anti-itch business, Pfizer’s Unisom night-time sleep aid business, and J&J’s Balmex diaper rash treatment business to Chattem (Chattanooga, Tennessee).

The FTC said that the $360 million U.S. market for OTC H-2 blockers is highly concentrated. J&J and Pfizer are the largest U.S. suppliers, and after the transaction as proposed, J&J would have over 70% of all OTC H-2 blocker sales in the country.

It also noted that Pfizer’s Cortizone products and J&J’s Cortaid products are the two leading brands in the $120 million U.S. market.

As for night-time sleep aid, the FTC noted that J&J and Pfizer are the two largest manufacturers and suppliers. Pfizer, which sells Unisom, is the leading supplier and J&J, which sells Simply Sleep, is the second-leading supplier in the $100 million nationwide market.

The FTC also noted that absent the consent order, J&J would have had nearly half of the entire $84 million diaper U.S. rash treatment market

The consent order had been agreed upon by the FTC in December and had been awaiting the end of the mandatory 30-day public comment period for final approval.

• RehabCare Group (St. Louis) and Methodist Medical Center (Peoria, Illinois) reported their intention to form a joint venture that would develop, own and operate a new 50-bed long-term acute care hospital (LTACH) near downtown Peoria, Illinois.

The proposed partners are applying for a certificate of need (CON) through the state of Illinois and would begin construction of the new hospital following CON approval, as well as necessary licensure through the Illinois Department of Health. Financial terms were not disclosed.

The 56,000 square-foot LTACH, to be called the Greater Peoria Specialty Hospital, will be located in the three-block area bordered by Richard Pryor Place, Romeo B. Garrett Avenue and Hightower Street in Peoria. An early 2009 opening is projected. Once fully operational, the LTACH will provide jobs for an estimated 150 full-time employees.

LTACHs provide specialized, around-the-clock care for extended stay patients with chronic or medically complex conditions, such as ventilator dependency, brain injury, cardiopulmonary disease, chronic pain and neuropathy.

RehabCare is one of the nation’s leading providers of rehabilitation program management, servicing more than 24,000 patient visits each day in conjunction with more than 1,400 hospitals and skilled nursing facilities in 42 states, the District of Columbia and Puerto Rico.