A Medical Device Daily

Two medical device companies reported different results from the initial public offering (IPO) battlefields, with Volcano (Rancho Cordova, California) citing its offering of 6.8 million shares of common stock at a price of $8 per share (about $54.4M), while MedicalCV (Inver Grove Heights, Minnesota) said it was delaying its planned IPO.

The offering from Volcano was less than the company's previously disclosed range of $10 and $12 per share, which would have valued the IPO between $68 million and $81.6 million.

Volcano has granted the underwriters an option to purchase up to an additional 1.02 million shares at the initial public offering price to cover over-allotments. The stock will trade on the Nasdaq National Market under the symbol VOLC.

JP Morgan Securities and Piper Jaffray & Co. are serving as joint book-running managers for the offering, with Bear, Stearns & Co. and Cowen and Co. serving as co-managers.

Volcano manufactures a broad line of intravascular ultrasound and functional measurement products that enhance the diagnosis and treatment of vascular and structural heart disease.

For its part, MedicalCV said that recent market conditions, coupled with the age of the financial statements included in its SEC filing, have delayed its proposed public offering. As previously disclosed in May, the company filed a registration statement on Form SB-2 with the SEC relating to a proposed public offering of about $30 million of common stock (Medical Device Daily, May 23, 2006).

A registration statement relating to these securities has been filed with the SEC, but has not yet become effective.

MedicalCV's Atrilaze surgical ablation system uses laser energy in cardiac tissue ablation procedures in open-heart surgery. The system currently is being used as a potential means to treat atrial fibrillation in concomitant open-heart surgical procedures.

In other financing activity:

• HealthSouth (Birmingham, Alabama) reported the completion of its private offering of $1 billion aggregate principal amount of its senior notes, which included $375 million in aggregate principal amount of its floating rate senior notes due 2014 at par and $625 million aggregate principal amount of its 10.75% senior notes due 2016 at 98.505% of par.

The floating rate notes will bear interest at an annual rate equal to six-month LIBOR plus 6%.

The company used the proceeds from the issue, along with cash on hand, to repay all outstanding borrowings under the interim loan agreement which it entered into on March 10.

“This is the last step in our debt refinancing effort, which positions us to better execute on key operational initiatives as we move forward,” said Jay Grinney, president and CEO. “We are pleased to have completed this transaction, especially in light of the current challenges in the high-yield market.”

He said the company's new capital structure, announced in March, “provides us with improved operational flexibility, increases our liquidity by providing greater access to our revolving credit facility, reduces our refinancing risk by extending our debt maturities and reduces our exposure to interest rate fluctuations.”

The notes were issued in a private placement to qualified institutional buyers.

HealthSouth is one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services.

• Acacia Research (Newport Beach, California) said it has executed a standby equity distribution agreement for up to $50 million in common stock equity financing from Cornell Capital Partners for its CombiMatrix (Mukilteo, Washington) group.

Subject to the terms and conditions of the agreement between Acacia Research and Cornell, over the next 24 months Acacia may sell registered shares of its AR-CombiMatrix common stock at its discretion to Cornell at a 2.5% discount from the market price. The shares are being offered pursuant to an effective registration statement filed with the SEC on April 25.

“This funding structure provides us the flexibility to access additional capital at our discretion,” said Dr. Amit Kumar, president and CEO of CombiMatrix. “This commitment will enable us to finance the company for the next two years, during which time we hope to become the leading company in molecular diagnostics.”

The CombiMatrix group is developing a platform technology to rapidly produce customizable arrays for use in identifying and determining the roles of genes, gene mutations and proteins. The technology has a wide range of potential applications in the areas of genomics, proteomics, biosensors, drug discovery, drug development, diagnostics, combinatorial chemistry, material sciences and nanotechnology.

• North American Scientific (NAS; Chatsworth, California) said Dr. Wilfred Jaeger and Roderick Young were elected to its board of directors after being nominated by Three Arch Partners, which recently invested $10 million as part of a $24 million private placement of the company's common stock.

The private placement of common stock and the concurrent issuance of warrants for the purchase of additional shares closed June 7.

NAS said it has received gross proceeds of $24 million from the financing, which will be used for new product development, including the company's breast brachytherapy product, and for working capital.

CIBC World Markets Corp. acted as the sole placement agent for the transaction.

The investors have been issued about 12.29 million shares of the company's common stock at $1.95 a share, as well as warrants to purchase close to 6.15 million shares of common stock at an exercise price of $2.08 a share, which are exercisable beginning 180 days after the date of closing until seven years after the date of closing.

North American Scientific is a developer of radiation therapy products and services. Its products provide physicians with a set of tools for the treatment of various types of cancers.