A Medical Device Daily

Medtronic (Minneapolis) reported its intention to offer, subject to market conditions, $2 billion principal amount of convertible senior notes, due 2011, and $2 billion principal amount of convertible senior notes, due 2013, through offerings to institutional buyers.

The company said the notes may be convertible into cash up to the principal amount. Any conversion value above the principal amount may be convertible into cash, shares of Medtronic common stock or a combination of cash and Medtronic common stock, at Medtronic's option.

The interest rate, conversion price and other terms of the notes will be determined by negotiations between Medtronic and the initial purchasers of the notes, and the company said it expects to grant the initial purchasers an option to purchase up to $400 million amount of notes to cover overallotments.

Medtronic said it expects to use the net proceeds from the offering, and the proceeds of a subsequent warrant transaction, to repurchase about $2.5 billion worth of its common stock.

At the time of the note sale, the company said it will buy back a portion of the stock through block trades. The remainder of the shares will be bought back through an accelerated repurchase plan.

Besides the buyback, Medtronic said it plans to use a portion of the note proceeds to fund hedge transactions with the note purchasers in order to offset potential share dilution upon the future conversion of the notes.

Medtronic has about 1.2 billion shares outstanding. The company has 36 million shares available for repurchase under its current buyback program, but said the new plan will exceed that amount.

In other financing news:

• Auxilio (Mission Viejo, California), a provider of document image management services for healthcare facilities, reported entering into an agreement with Laurus Master Fund to issue a secured convertible term note of $3 million and a seven-year warrant to purchase up to 478,527 shares of the company common stock at a $1.96 a share.

The principal amount of the convertible note carries a minimum monthly interest rate of 8%. The monthly principal payments will commence on July 7.

The principal amount of the convertible note and accrued interest is convertible into shares of Auxilio common stock at prices between $1.68 and $1.92 a share.

• CryoFluor Therapeutics (Tucson, Arizona), a developer of cryosurgical technology, reported receiving an additional investment that extends its second round of financing. The amount was not disclosed.

The company said the additional funds will allow it to complete a feasibility clinical trial of its device to treat abnormal uterine bleeding. Research Corporation Technologies (RCT; Tucson),Endocare (Irvine, California) and Temple University (Philadelphia) participated in the investment.

The CryoFluor technology uses uncontained, cold, fluid perfluorochemicals as the cryogenic medium. The liquid cryogenic technology performs, the company said, “rapid, complete and controllable cryoablation of tissues,“ thereby overcoming the limitations of conventional probe-based cryosurgery devices and creating possibilities for new minimally invasive surgeries.

CryoFluor reported completing engineering and preclinical activities for its first product, a device for endometrial ablation to prevent abnormal uterine bleeding.

Endocare is providing engineering, manufacturing, regulatory documentation, clinical oversight and marketing strategy support.

For the next 10 months, CryoFluor said it will focus on initial clinical cases in Mexico to determine safety and feasibility and prepare for a pivotal clinical trial in the U.S.

“This investment will provide CryoFluor with the resources to complete safety and efficacy studies of our lead device for endometrial ablation and prove the superiority of our technology to treat abnormal uterine bleeding,“ said David Jackson, PhD, CryoFluor president and CEO. “The data from this trial will allow the company to initiate a multicenter trial in the United States and ultimately bring improved care to patients with this condition.“

RCT formed CryoFluor with Temple University to develop the work of Temple researchers, Thomas Shaffer, PhD, Marla Wolfson, PhD, and Robert Stern, PhD.

• Windrose Medical Properties Trust (Indianapolis), a real estate investment trust, has priced its offering of 2.3 million common shares at $14.80 per share. As part of the offering, Windrose granted its underwriters a 30-day option to purchase up to an another 345,000 shares to cover over-allotments. It said that net proceeds of the offering will be about $32.3 million.

The company said the proceeds will be used to pay down indebtedness and for general corporate purposes, including possible future acquisitions of specialty medical properties.

Closing of the offering is expected to occur on April 18, subject to customary closing conditions.

Windrose was formed to acquire and manage specialty medical properties.

• Kindred Healthcare (Louisville, Kentucky) reported authorizing the voluntary delisting of its Series A warrants to purchase common stock and its Series B warrants to purchase common stock from the Nasdaq, effective at the close of trading April 17. Both series of warrants will expire on April 20.

The company said the delisting will permit pending trades through the Nasdaq to settle, prior to the April 20 expiration date.

Each Series A warrant and Series B warrant entitles the holder to purchase two shares of the company's common stock for $30 and $33.33 per warrant, respectively.

Kindred Healthcare, through its subsidiaries operates hospitals, nursing centers, institutional pharmacies and contract rehabilitation services across the U.S.