A Diagnostics & Imaging Week

TomoTherapy (Madison, Wisconsin) reported that it raised $14 million of new equity capital in late December. The company said the new capital would boost its accelerating growth and expand operations as it meets what it termed "worldwide demand" for its cancer treatment system. The funding also will be used to increase manufacturing capacity.

"Our shareholders understand our growth story and the need to further invest in expansion," said Dr. Frederick Robertson, CEO of TomoTherapy. "Our growth has been dramatic. Revenue increased almost 70% in 2005, while the number of orders for our system more than doubled between years."

To keep pace, Robertson said the company has ramped up its hiring, growing from 171 employees at the end of 2004 to 327 employees as of Dec. 31, 2005. He said the additional capital will help solidify the balance sheet while providing more funds for growth, especially in the international markets.

"This could very well be our last round of private financing," Robertson said.

The company said that the Series E financing was completed by its current investor group and the company's board of directors. Significant investors included: The Endeavors Group, Open Prairie Ventures, State of Wisconsin Investment Board, Advantage Capital Wisconsin Partners and Ascension Health Ventures.

The company said it has now raised a total of $42 million of outside equity capital in five rounds.

TomoTherapy has developed a system combining on-board CT imaging with conformal radiation therapy to provide precision in the treatment of cancer. The TomoTherapy Hi-Art System is designed to target radiation treatment to the patient's tumor while helping to limit damage to the surrounding tissues. The TomoTherapy technology was born out of collaboration with the University of Wisconsin.

Matritech (Newton, Massachusetts), a developer of protein-based diagnostic products for the early detection of cancer, said it has closed a $7 million private placement of 15% secured convertible promissory notes maturing Jan. 13, 2009.

The financing was led by current investor SDS Capital Partners, joined by H&Q Life Science Investors, along with other current investors.

The company's net proceeds from the closing are about $6.25 million after deducting the estimated expenses and commissions in connection with the transaction.

CEO Stephen Chubb said, "We are pleased to have the support of such sophisticated healthcare investors as we expand our BladderChek Test franchise and general NMP technology platform. These funds should help reassure our investors that we will be able to sustain our current momentum."

Matritech said it intends to use the net proceeds from the placement for research and development, selling and marketing expenses, working capital and for general corporate purposes.

The notes are currently convertible into 10,766,092 shares of common stock and allow for payment of interest and principal in cash or, provided certain conditions are met, by issuing stock.

Issued to the purchasers of the notes were five-year warrants to purchase 6,459,655 shares of common stock at an exercise price of 67 cents a share, and placement agents received warrants to purchase 1,036,609 shares of common stock at an exercise price of 65 cents a share.

Until stockholder approval of certain provisions in the notes and warrants is received by the company, stock issuances may not be made at an effective conversion price below 61 cents, the closing price of Matritech's common stock on Jan. 12. Certain anti-dilution provisions of both the notes and the warrants also are subject to stockholder approval.

The company said it intends to present these matters, including a request for an increase in authorized shares, to its shareholders for approval on or before June 15.

The private placement triggered the anti-dilution provisions in the company's 7.5% convertible debentures due March 31 so that such debentures have an adjusted conversion price of 73 cents a share, thus making the debentures convertible into an additional 269,822 shares of Matritech common stock.

It also triggered similar anti-dilution provisions in the company's Series A convertible preferred stock, with that stock having a conversion price of 70 cents a share, making it convertible into an additional 1,463,788 shares of common stock, and in various warrants previously issued by the company, covering an aggregate of some 6,538,489 shares of common stock, so that the warrants have revised exercise prices ranging from 65 cents to $1.34 a share.

In other financing activity, NanoLogix (Sharon, Pennsylvania) reported receiving a financing commitment "fostered" by The Nutmeg Group.

The company said that an initial commitment of $750,000 will enable it to reach key milestones in rolling out its hydrogen generation system technologies to be deployed at Welch's (Concord, Massachusetts), as well as the commercialization of its medical diagnostic products, it said.

NanoLogix is a nanobiotechnology company that develops technologies for the production of bacteria, disease testing kits, alternative sources of fuel, cancer therapy and remediation of toxic materials.

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