A Medical Device Daily

ArthroCare (Austin, Texas), a maker of minimally invasive surgical products, said it has entered into a $100 million, five-year, secured revolving credit facility.

The company said it plans to use the credit facility to fund earn-out payments associated with its Opus Medical (San Juan Capistrano, California) acquisition and general corporate purposes.

A syndicate of lenders led by Bank of America, serving as the administrative agent, and Wells Fargo Bank, serving as the syndication agent, arranged the credit facility, which can be increased to $175 million to meet additional growth needs of the company should additional financing be required in the future, ArthroCare said.

Fernando Sanchez, senior vice president and CFO, said, “The capital this facility provides will support the company's growth as we further solidify our position in minimally invasive sports medicine, spine and ENT surgery.“

Founded in 1993, ArthroCare's products are based on its Coblation technology, which uses low-temperature radio frequency energy to gently dissolve rather than burn soft tissue, minimizing damage to healthy tissue. Used in more than 4 million surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; ear, nose and throat; cosmetic; urologic and gynecologic procedures.

Archus Orthopedics (Redmond, Washington) said it has closed a Series C financing with total proceeds of $35 million. Johnson & Johnson Development Corp. (JJDC), in cooperation with DePuy Spine (Warsaw, Indiana), a John-son & Johnson company, made the principal investment.

Other participants included current investors MPM Capital, InterWest Partners and Polaris Venture Partners.

While specific details were not disclosed, Archus said the investment by JJDC “establishes a framework for future collaboration“ between the company and DePuy Spine.

Archus is conducting a U.S. clinical trial of its Total Facet Arthroplasty System (TFAS), a spinal implant designed to treat spinal stenosis, a condition in which degenerative changes in the facet joints result in compression of spinal nerves, producing neurological symptoms in the legs.

Spinal stenosis patients traditionally undergo decompressive laminectomy surgery, which often is accompanied by spinal fusion. The TFAS replaces the degenerative facet joints with a prosthetic joint implant intended to restore stability and normal motion to the spine, eliminating the need for fusion.

Archus said it currently is the only company with FDA approval to conduct clinical trials of a facet replacement device in the U.S.

Jim Fitzsimmons, chairman and CEO of Archus, said, “it is a natural fit for [us] to work with DePuy Spine, the leader in disc arthroplasty.“ He said the company is “very excited about capitalizing on the tremendous synergistic opportunities with DePuy Spine.“

DePuy Spine markets the only lumbar artificial disc approved for use in the U.S. In addition to the TFAS, Archus is developing facet replacement technology intended to work in harmony with artificial disc replacement. The company said it is hoped that the two technologies together will result in the opportunity for true total reconstruction of degenerative spine segments, much as with a total hip or a total knee replacement procedure.

Fitzsimmons said, “We are clearly experiencing a shift in spine care from fusion to motion restoration and joint replacement, which is why spine is the fastest-growing segment of the orthopedic market.“

In other financing news:

• Biopure (Cambridge, Massachusetts) reported the closing of an underwritten public offering of stock and warrants that raised net proceeds to the company of about $3 million, assuming no exercise of the warrants. Biopure said it intends to use the proceeds from the offering for general corporate and working capital purposes.

The company sold to institutional and individual investors 4.11 million new shares of its common stock and warrants to acquire an additional 4.11 million new shares. The price for one share and one warrant was 82 cents, and the exercise price of each warrant is $1.03.

All of the warrants issued in the offering are callable by Biopure after six months provided that the weighted average price of the company's common stock for 10 consecutive days is more than $1.54.

Dawson James Securities and Noble International In-vestments were managing underwriters for the public offering.

Biopure manufactures oxygen therapeutics that are intravenously administered to transport oxygen to the body's tissues. The company is developing Hemopure [hemoglobin glutamer - 250 (bovine)], or HBOC-201, for a potential indication in cardiovascular ischemia and, in collaboration with the U.S. Naval Medical Research Center, for a potential out-of-hospital trauma indication.

The product is approved in South Africa for treating surgery patients who are acutely anemic and for eliminating, delaying or reducing allogeneic red blood cell transfusions in those patients. Hemopure has not been approved for sale in other markets.

• Tutogen Medical (Alachua, Florida), a manufacturer of sterile biological implant products made from human (allograft) and animal (xenograft) tissue, reported a four-year exclusive worldwide distribution agreement with Davol (Cranston, Rhode Island), a subsidiary of C. R. Bard (Murray Hill, New Jersey), to promote, market and distribute Tutogen Medical's line of allograft biologic tissues for hernia repair and the reconstruction of the chest and abdominal wall.

In addition to purchasing the product, Davol will pay Tutogen about $3.3 million in fees. Tutogen said it would recognize in earnings about $825,000 each year over the four-year term of the agreement.

Tutogen CEO Guy Mayer said, “Davol is widely recognized as the market leader for hernia repair products in the U.S. Our products are [allograft] human tissues and are the only hernia repair products on the market today that offer rapid rehydration and the safety profile offered by our Tutoplast process. We believe that these attributes provide surgeons with expanded options that can lead to improved patient outcomes.“

The company said it is estimated that, in the U.S., some 1 million hernia repair procedures are performed each year, creating an estimated $150 million market.