Orthovita (Malvern, Pennsylvania), a spine and orthopedic biosurgery company, has priced a firm commitment underwritten offering of 7.7 million shares of its common stock at a price of $3.25 per share. The company has also granted to the underwriters a 30-day option to buy an additional 1.155 million shares of common stock for the purchase of any over-allotments. The closing of the offering is expected to take place Wednesday subject to the satisfaction of customary closing conditions.
Orthovita expects to receive net proceeds from the offering of about $23.1 million after deducting underwriting commissions and expenses. Joseph Paiva, Orthovita CFO, said the company plans to use $9 million of the proceeds to complete the purchase of profit-sharing royalty rights for the Vitagel Surgical Hemostat and Cellpaker Collection Device products that it sells under its license agreement with Angiotech Pharmaceuticals (Vancouver, British Columbia).
“We’re excited about being able to complete that purchase,” Paiva told Medical Device Daily. “We plan to use the rest of the proceeds for general corporate purposes ... we wanted to do some expansion of our manufacturing capabilities [with the Vitagel product].”
Orthovita entered into a letter of intent with Angiotech to buy the profit-sharing royalty rights for the Vitagel and Cellpaker products earlier this month (Medical Device Daily, Nov. 9, 2006).
Vitagel is approved for use only in conjunction with Cellpaker, a plasma collections system. Orthovita has been distributing Vitagel and Cellpaker since January 2005 under its distribution agreement with Angiotech.
UBS Securities acted as the sole book-running manager for the offering and First Albany Capital acted as co-manager for the offering.
Orthovita develops synthetic-based biomaterials products for spine surgery, the repair of fractures and a broad range of clinical needs in the trauma, joint reconstruction, revision and extremities markets.
In other financing news: Health Hero Network (Redwood City, California) said it has secured $16 million in an oversubscribed Series B financing to underwrite ongoing new product development and marketing for its Health Buddy System. The investment was led by existing investor Psilos Group and new investors California Technology Ventures, Integral Capital Partners and Boston Scientific (Natick, Massachusetts). Existing investors Artal Services, Shoreline Venture Partners and ZG Ventures provided additional support.
The Health Buddy System is designed to improve patient outcomes and reduce the cost of care for patients with chronic diseases by educating and monitoring patients at home through easy-to-use home devices. Healthcare professionals access data transmitted from the patient at home using web-based health management programs. Studies have shown that the Health Buddy System produces results by modifying patient behavior and improving therapy compliance, while enabling healthcare professionals to identify problems earlier and prevent acute complications of chronic illnesses, the company said. The system is being used by more than 16,000 patients and is deployed in 120 Veteran Health Administration facilities.
About 133 million Americans have one or more chronic health conditions such as diabetes, heart failure or chronic obstructive pulmonary disorder (COPD), Health Hero Network said. According to a 2004 study by the Robert Wood Foundation and John Hopkins University, spending for chronic illnesses represents 83% of total healthcare costs in the U.S.
“Automated patient behavior monitoring and modification systems are essential to meeting the growing needs of patients, health care providers, and payers. The Health Buddy System serves as a critical interface among these parties and has proven to have a positive effect on patient outcomes and cost containment,” said Brian Stansky, managing director for Integral Capital Partners. “We look forward to working with the Health Hero Network team and the other investors to bring this technology to an expanding set of patient needs and care settings.”
• Isonics (Golden, Colorado), a provider of products and solutions for the homeland security and semiconductor markets, reported that it has received the final $3 million tranche ($2.84 million in net proceeds) which completes the $16 million convertible debenture and warrant financing previously reported on May 31.
Isonics’ Life Sciences division markets and sells isotopes to the healthcare industry for the imaging and treatment of cancer.
• Emdeon (Elmwood Park, New Jersey) reported that it has completed the sale of 52% of its Emdeon Business Services (EBS) segment to an affiliate of global private equity firm General Atlantic. This transaction was previously reported in late September (Medical Device Daily, Sept. 27, 2006).
ViPS and its subsidiaries are not part of this transaction and will remain subsidiaries of Emdeon.
The company received about $1.2 billion in cash and retained a 48% interest in EBS.
The acquisition was financed with about $925 million in bank debt and an investment of roughly $319 million by General Atlantic.
EBS will continue its strategic relationships withWebMD (New York) and will market WebMD’s online decision-support platform and tools that support consumer directed health plans (CDHP) and health savings accounts to its payer customers for integration into their CDHP offerings.