A $7.25 million investment in Biophan Technologies (Rochester, New York) from a group of institutional investors Thursday will help push the Myotech Myo-Vad closer to development. The investment was made as a private placement.

Biophan will use the money to move the Myotech Myo-Vad — which is now in pre-clinical study — into the clinical trial stage sometime in 2007, Carolyn Hotchkiss, a spokeswoman for Biophan, told Medical Device Daily.

The Myo-Vad is a new MRI-compatible cardiac recovery system intended to improve treatment of various forms of heart disease.

The Myo-Vad consists of a flexible polymer cup that can be installed around the heart in about three minutes, unlike traditional ventricular assist devices (VADs) that take 45 minutes to two hours to install with major surgery, according to Biophan. The device operates by compressing and expanding, providing the energy that allows the heart to restore the blood flow to normal.

The Myo-Vad is also designed to eliminate most of the common complications associated with VADs such as clotting, stroking, bleeding and infection because it does not contact circulating blood.

Some of the $7.25 million investment may also help Biophan continue to develop its MRI-safe and image-compatible technologies for pacemakers, implantable defibrillators, neurostimulators and other devices.

Biophan will issue $7.25 million in senior secured convertible notes, which will be repaid in 33 monthly payments. The notes are convertible into common shares at a conversion price of 67 cents a share, with principal and interest payable between 10% and 12% per annum. The investors will receive warrants equal to the amount of shares into which the notes may be converted, with 50% exercisable at $0.89.

The investors also have the option to purchase another $7.25 million of common stock at a price of 67 cents a share, with warrants for 50% of the amount of shares issued exercisable at 115% of the share price.

Biophan makes products that enable medical systems such as pacemakers, catheters, guidewires, and implants to be safely imaged under MRI.

The company holds 42% interest in Myotech (West Henrietta, New York) and has distribution rights to the Myo-Vad (Medical Device Daily, Sept. 15, 2005).

In other financing activity:

• Matria Healthcare (Marietta, Georgia) reported it has made an additional $10 million payment to further reduce its total debt. The cash payment was made Thursday, bringing Matria’s total 2006 debt prepayments to $135 million.

The company previously said it expects to reduce total debt by $175 million by the end of the year through the proceeds of its sale of Facet Technologies , its recent agreement to sell Dia Real and cash from operations (MDD, July 28, 2006).

“We remain on schedule to fulfill our goal of reducing total indebtedness by $175 million by year end, which would leave us with a total of approximately $280 million of acquisition debt outstanding at that time,” said Jeff Hinton, senior vice president/CFO.

“The Dia Real transaction remains on schedule to be completed by the end of October, generating gross proceeds of $33.4 million. As planned, the net proceeds from the transaction will also be used to reduce debt. We have very strong cash flows and plan to continue to aggressively reduce our debt from the CorSolutions acquisition,” Hinton said.

Matria provides health enhancement programs to health plans, employers and government agencies. Matria manages major chronic diseases and episodic conditions; delivers programs that address wellness, healthy living, productivity improvement, and patient advocacy; and provides case management of acute and catastrophic conditions.

eNotes opens Manhattan office

eNotes Systems (Los Angeles, California), a telemedicine company that connects healthcare providers with patients remotely via real-time two-way video/audio streaming, has opened its New York office in mid-town Manhattan.

The new East Coast base will be shared by eNotes’ joint venture partner, Jump Communications (Los Angeles, California), a telecommunications company.

Aksys to continue listing on Nasdaq

Aksys (Lincolnshire, Illinois) said that Nasdaq has granted the company’s request for continued listing on the Nasdaq Capital Market, the exception based upon the company’s plan to achieve compliance with Nasdaq’s $35 million market value of listed securities requirement. The company said that its largest stockholder, Durus Life Sciences Master Fund, will convert shares of Series B preferred stock of Aksys into shares of common stock as well as senior notes for shares of the company’s common stock to establish compliance.

The company also reported continued reductions in cash consumption in 2006 while increasing spending R&D through 2007. The company used cash of $4.23 million in operations during 3Q06 and estimates cash use in operations of $4.75 million in 4Q. Total cash used in operations for 2006 is expected to be about $19.15 million, a 34% reduction compared to 2005.

Aksys makes hemodialysis products and services for patients suffering from kidney failure.