A Medical Device Daily

Atritech (Plymouth, Minnesota), describing itself as “a clinical-stage“ company, reported completing a $22.5 million round of financing and calling it the largest venture capital raise in the Minnesota medical device industry in the last 20 months.

Prism Venture Partners (Westwood, Massachusetts) led the round, with commitments also from the existing investors and Tullis-Dickerson, a new investor.

Atritech said the funding would be used to complete enrollment in its PROTECT AF clinical trial with its Watchman device. PROTECT AF is evaluating the Watchman vs. the current standard of care, warfarin, in patients with atrial fibrillation (AF) at 60 sites in the U.S. and Europe.

The Watchman is designed to keep blood clots from entering a patient's bloodstream and causing a stroke. Patients with AF require blood-thinning medications requiring frequent monitoring, and Atritech says that the Watchman may be a viable alternative for patients with AF who may not want to take these medications for life.

Jim Bullock, president and CEO, said, “Our focus is to continue the brisk pace of enrollment and center expansion with this additional capital.“

“The PROTECT AF clinical trial may prove to be one of the most important clinical trials in recent history,“ said Gordie Nye, general partner of Prism.

Other investors in Atritech include Split Rock Partners, The Vector Group, Thomas Cressey Funds, The Rahn Group, SightLine Partners and Affinity Capital. Founded in 1996, Prism Venture Partners reports having about $1.25 billion in capital under management across five funds.

AxoGen (Gainesville, Florida), an early-stage company, reported acquiring Series B financing of $7.75 million to finance the development of a human allograph for peripheral nerve repair and regeneration.

AxoGen, founded in 2002, is commercializing technology developed at the McKnight Brain Institute of the University of Florida (Gainesville). AxoGen provides a biological solution to repair and regenerate peripheral nerves, intended to restore functionality to patients who suffer peripheral nerve injuries.

“We are extremely excited about our opportunity to bring this biological solution to patients to restore both sensory and motor function caused by peripheral nerve injuries,“ said AxoGen CEO Jamie Grooms.

The Series B round was raised through a consortium of investors led by Cardinal Partners, Accuitive Medical Ventures and DeNovo Ventures.

In other financing activity:

• Elbit Medical Imaging (EMI; Tel Aviv, Israel) said it has agreed with Israeli investors to issue about NIS 102 million of unsecured non-convertible Series A debentures and about NIS 2 million of unsecured non-convertible Series B debentures.

Such debentures would be in addition to the NIS 298 million in principal amount of Series A Debentures and NIS 57 million in principal amount of Series B debentures, issued to Israeli investors in Israel on Feb. 23. Issuance of the new debentures was to have been completed yesterday.

The principal terms of the A and B debentures were announced by EMI on Feb. 21. They will be listed for trade on the Institutional Retzef, a trading system for institutional investors in Israel. The debentures may not be offered or sold in the U.S. absent registration or an application exemption from the registration requirements.

EMI is a subsidiary of Europe Israel . One of its three subsidiaries is InSightec (Haifa, Israel), doing R&D work in image-guided focused ultrasound.

• BSD Medical (Salt Lake City, Utah) reported receiving a payment of nearly $5.9 million as quarterly proceeds through the earnout from the sale of TherMatrx , bringing total receipts to about $33 million. BSD said it also anticipates further compensation in the settlement of the transaction. A prior quarterly payment was also received and reported.

BSD makes microwave/radio frequency systems that raise the temperature in diseased sites of the body. It developed the TherMatrx system for conditions associated with benign enlargement of the prostate.

• Sontra Medical (Franklin, Massachusetts) said it has received new financing of about $1.6 million. Investors purchased about 4.391 million shares of the company common stock in a private placement at 40 cents a share. The investors also received warrants to purchase about 4.391 million shares of stock.

Sontra is using its SonoPrep ultrasound-mediated skin permeation technology for continuous glucose monitoring and the delivery of large molecule drugs and vaccines. Sontra is marketing the SonoPrep device and procedure tray for use with topical lidocaine to achieve rapid skin anesthesia.

• Johnson & Johnson (J&J; New Brunswick, New Jersey) reported that its board approved a stock repurchase program, authorizing it to buy back up to $5 billion of company common stock. The repurchase program has no time limit and may be suspended for periods or discontinued. J&J's adjusted average number of shares outstanding at year-end 2005 was 3.0125 billion on a diluted basis.

Bioject to restructure, close NJ office, reduce headcount

Needle-free drug delivery systems developerBioject Technologies (Bedminster, New Jersey) yesterday reported restructuring its corporate organization, as well as proposals for new financing.

The company will close its New Jersey administrative office and reduce operations headcount and R&D costs at its Portland, Oregon, facility.

Jim O'Shea, Bioject president and CEO, now will be based out of the Portland location. John Gandolfo, company CFO, will be leaving the company in May, and Chris Farrell, vice president of administration and controller, will assume CFO responsibilities.

Farrell told Medical Device Daily that about 14 employees would be laid off, across manufacturing, sales and R&D positions. The company said it would take a charge of about $600,000 for severances, and a non-cash charge in connection with acceleration of non-vested stock awards.

Bioject said that the cost reductions would enable savings of more than $1.8 million annually.

The company also reported on proposed agreements for $4.5 million in financing with private equity funds managed by Sanders Morris Harris (SMH; Houston) and a term sheet for a $1.25 million debt financing with Partners For Growth (PFG; San Francisco).

It has received an initial bridge loan of $1.5 million in the form of convertible notes from SMH. Proceeds from the sale of the convertible notes will be used as working capital to fund operations until closing of the Series E preferred stock financing, Bioject said.

The funding proposals must be approved by stockholders at a meeting within the next 75 days. Farrell said the company was “very comfortable with the new issues getting approved“ and its relationships with SMH and PFG.

Approval is needed for the issuance to the SMH funds of about $4.5 million of Series E preferred stock. If approved, the balance of the convertible notes of $1.5 million, plus interest, will be converted into shares of Series E preferred stock at $1.37 a share. Each share of Series E preferred stock will be convertible into one share of Bioject stock.

In the PFG agreement, Bioject would receive $1.25 million and issue PFG a convertible note, due on the earlier of 60 months following issuance or on demand by PFG if the shareholders do not approve the issuance of the common stock. If Bioject's common stock trades at a price of $4.11 or higher for 20 consecutive trading days, Bioject can require PFG to convert that debt into common stock, subject to certain limitations.

O'Shea said that, assuming the approvals, “we are positioned to achieve operating profitability upon the commercial launch of products in connection with the closing of additional transactions in our business development pipeline“ without needing additional capital. “We remain optimistic that this will occur within the next 15 to 18 months.“

– Don Long, Managing Editor

No Comments