A Medical Device Daily

Curon Medical (Fremont, California) said it has agreed to sell to the rights to U.S. patent No. 6,872,206 and a worldwide, exclusive license for certain patents for the treatment of Barrett's esophagus to Barrx Medical (Sunnyvale, California) for $2 million in cash and $1 million in the form of a note payable by Dec. 31, 2006.

Curon said that with the sale proceeds it believes it has regained compliance with Nasdaq's minimum stockholders' equity requirement. On Feb. 7, Nasdaq notified the company that it did not comply with this minimum requirement. In response to an appeal, Nasdaq granted Curon an extension of time to regain compliance and has notified the company that it will continue to monitor its compliance.

Larry Heaton II, president and CEO of Curon, said, “The intellectual property involved is complementary to Barrx Medical's IP portfolio and can now be utilized freely by the company to improve patient care for those with Barrett's esophagus. This intellectual property transfer has no adverse impact on Curon's business.“

Heaton said, “We have previously announced our intention to commercialize certain intellectual property that we have developed in-house that is unrelated to Curon's core products. This transaction arose from that effort, and provides a template for potential future arrangements of this type.“

He added, “We believe that Curon Medical has developed additional intellectual property that may provide other entities with an opportunity to expand their own portfolios for the benefit of the patients they serve, and will continue to explore opportunities to derive value for Curon stockholders in this manner.“

Curon manufactures products for the treatment of gastrointestinal disorders consisting of radio frequency generators and single-use disposable devices. Its flagship product is the FDA-cleared Stretta System for treating gastroesophageal reflux.

Barrx develops treatments for Barrett's esophagus, a precancerous condition of the lining of the esophagus caused by gastroesophageal reflux disease. Its flagship product is the HALO360 System.

In other dealmaking news:

• American Capital Strategies (Bethesda, Maryland) reported that it has invested $79.5 million in the buyout of Redwood Toxicology Laboratory , Redwood Biotech and PerMaxim (collectively Redwood; Santa Rosa, California), a provider of drugs-of-abuse lab testing services and on-site test kits to the correctional, rehabilitation and point-of-care markets.

The investment is in the form of a revolving credit facility, senior term debt, senior subordinated debt and preferred and common equity. Post-close, American Capital will own 67% of Redwood, with members of Redwood's management team owning the balance.

Redwood consists of three entities: Redwood Toxicology, a provider of drugs-of-abuse laboratory testing services to correctional and rehabilitation centers; Redwood Biotech, a distributor of on-site disposable drug testing kits; and PerMaxim, a distributor of rapid test kits for detection of drugs-of-abuse, pregnancy and infectious diseases.

Redwood “is a leading company in a niche market segment with exciting growth opportunities,“ said Darin Winn, regional managing director of American Capital, saying the deal represents his organization's ability “to provide the entire financing package in a transaction, including senior debt, mezzanine debt and equity, and to quickly bring a transaction to close.“

American Capital, a publicly traded buyout and mezzanine fund, reports about $7 million in capital resources.

• Lifeline Systems (Framingham, Massachusetts) reported that its shareholders voted to adopt the merger agreement under which Koninklijke Philips Electronics (Amsterdam, the Netherlands) will acquire Lifeline. About 75% of the shares held of record and entitled to vote were voted in favor of the merger, unveiled Jan. 19 (Medical Device Daily, Jan. 20, 2006).

Lifeline shareholders will receive $47.75 per share in cash, for a value of about $750 million (equaling an aggregate value of $690 million net of $60 million cash and cash equivalents).

The transaction was expected to close yesterday.

Lifeline describes itself as the leading provider of personal response services and emergency call systems in the U.S. and Canada. As of Dec. 31, 2005, the company said it supported 469,400 subscribers from its response centers in Massachusetts, Ontario and Quebec. Lifeline also supplies emergency response equipment and services to owners and developers of independent and assisted living and continuing care retirement communities across North America.

• GE Healthcare Financial Services (Chicago) reported that it has provided a five-year, $25 million revolver and a six-year, $85 million term loan to Global Healthcare Exchange (GHX; Westminster, Colorado), a company supply chain management services to increase efficiencies for healthcare buyers and sellers.

GHX used the financing to acquire Neoforma (San Jose, California), which offers products and services designed to improve the efficiency of healthcare providers. The acquisition broadens GHX's customer base to around 2,500 acute-care hospitals, 800 non-acute facilities and 200 supplier organizations.

The purchase of Neoforma was first disclosed late last year and completed earlier this month (MDD, Oct. 12, 2005/March 7, 2006).

GE Healthcare Financial reports that it has committed more than $13 billion in capital to the healthcare industry.