A Medical Device Daily

On the verge of closing down its business, Sontra Medical (Franklin, Massachusetts), a developer of transdermal technology, yesterday reported new funding allowing it to continue operations, along with changes of executive management.

Sontra reported an agreement with Sherbrooke Partners (New York) and certain members of the company’s board and management to issue 6 million shares of common stock for 10 cents a share and two-year warrants to purchase 1.5 million shares of common stock at 21 cents a share (closing price of its common stock on the NASDAQ Capital Market as of Dec. 29, 2006) in exchange for $600,000.

The company recently reported the inability to raise additional capital and that it would cease all operations (Medical Device Daily, Dec. 29, 2006).

The new funding is subject to completion of delisting of the company’s common stock from the NASDAQ Capital Market (expected Jan. 18); completion of due diligence of the company by Sherbrooke; and participation in the financing by certain members of the management team and board (Michael Wrigley, the company’s largest current stockholder and company chairman, along with other members of the board and management will invest about $120,000, as required by Sherbrooke). The purchasers will own about two-thirds of the company’s stock upon financing completion.

With the transaction, Thomas Davison, PhD, acting CEO and a board member, tendered his resignation from all positions with the company. Harry Mitchell, acting CFO, will become interim CEO. And it is expected that Walter Witoshkin, CEO of Quantrx Biomedical (Portland, Oregon), an acquirer and developer of diagnostic products, will be elected to the board.

Witoshkin said, “Sherbrooke Partners has an excellent record of investing in promising medical and pharmaceutical technologies, including the company that I lead, Quantrx Biomedical Corporation.”

Wrigley said, “We are excited that Sherbrooke Partners sees the strength of our technology and that we have this opportunity to continue Sontra’s business and to remain focused on the development and ongoing clinical evaluations of our Symphony Continuous Transdermal Glucose Monitor. Harry G. Mitchell will lead the Sontra team to further develop our technology, continue our clinical studies, and obtain the necessary financing that we will require in the future.”

He said that the company has developed a plan enabling it to continue operations for another year, as a result of the new funding, but that it will need more financing in 2008.