A Medical Device Daily
Aksys (Lincolnshire, Illinois), a developer of dialysis systems, said it has signed a $20 million common stock purchase agreement with Fusion Capital Fund II (Chicago).
The agreement will help provide Aksys with capital to support its operations. The arrangement will allow Aksys to sell its common shares at its discretion over a 25-month period on a “when and if needed“ basis.
Bill Dow, president and CEO of Aksys, said the financing agreement with Fusion “represents an important source of financing for Aksys to execute its business plan,“ but added that the company still needs to arrange, and is still pursuing, additional funding.
Under the agreement, Aksys is permitted to sell to Fusion Capital up to $40,000 of its shares on each trading day subject to increases under certain circumstances. The company has the right to control the timing of the sale of the shares.
Funding under the agreement will commence upon completion of the Securities and Exchange Commission registration process.
Aksys' lead product, the PHD System, is a hemodialysis system designed for home use to improve clinical outcomes of patients and reduce mortality, morbidity and the associated high cost of patient care.
In December, the company said it was laying off staff and making additional adjustments to “realign“ its operating model “with the current home dialysis market“ (Medical Device Daily, Dec. 7, 2005).
Dow told MDD the company was laying off 39 of 128 employees in an attempt to reduce its burn rate, but he emphasized that the long-term prospect for the company is strong.
The major barrier for the company is to work through the large dialysis centers that determine the use and placement of home dialysis equipment. “The adoption rate is obviously controlled by large providers,“ Dow said, and he called that rate “a nice, steady growth but not fast enough.“
He said the company was projecting 190 patients in the U.S. would be using the PHD System by year-end 2005. Dow declined projecting the numbers of patient users in 2006, but said the company's expectations, long-term, are for 15,000 patients using its equipment.
The system was FDA-cleared for home use in early 2002 (MDD, April 2, 2002).
“As with other innovative products within the healthcare industry, adopting change is difficult in a space that is dependent on existing structures and conventional therapies,“ Dow said in a company statement at the time the job cuts were reported. “As CMS [the Centers for Medicare & Medicaid Services] continues to move the current reimbursement structure towards an expanded bundle, and clinics further understand the financial and logistical benefit of daily home dialysis, we want to be in a position to take advantage of this ever-changing market.“
He added: “We believe our more narrowed, focused strategy will enable us to use our capital in a more effective manner, while also maintaining our long-term competitive position.“
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 news:
• OrthoHelix Surgical Designs (Akron, Ohio), a developer of innovative surgical instruments and implants for use in foot, hand and ankle surgery, reported the receipt of what it said was “several million dollars“ in new venture funding.
The round was led by Mutual Capital Partners (Cleveland) and will allow the company to accelerate marketing efforts of its FDA-cleared product lines, complete development of additional products and support the growth of the business.
G. Martin Wynkoop, chief operating officer of OrthoHelix and an orthopedic industry veteran, said, “This is another milestone in [our] development from an idea by a well-known Akron surgeon, David Kay, MD, into an operating company. The money will allow us move closer to our goal of becoming a market leader in the hand and foot orthopedic market segment.“
“We are very impressed by the quality of the products, the targeted sales and marketing approach, and the caliber of OrthoHelix's management and clinical teams,“ said Bill Trainor, managing director of Mutual Capital. “Our firm focuses investments in companies that are ready for rapid sales growth, and that's precisely where OrthoHelix is right now. In our diligence, we received strong, positive feedback from the company's customers, which gives us confidence as OrthoHelix begins selling nationally.“
• Regenerative medicine company Theregen (San Francisco) has received $1.5 million from Sanderling Ventures (San Mateo, California) to fund clinical development of Anginera, its lead heart therapy product.
The FDA has approved Theregen's investigational new drug application to conduct a Phase I safety trial of Anginera in patients with acute myocardial ischemia. The product is an epicardial, cell-based therapy designed to promote angiogenesis and arteriogenesis (blood vessel formation) in ischemic areas of the human heart. Theregen plans to initiate the Phase I study early this year.
Sanderling has purchased $1.5 million of Series A preferred stock from Theregen and will close a second round of funding as Theregen achieves specified development milestones. Timothy Mills, PhD, managing director of Sanderling Ventures, joins the company's board of directors as executive chairman.
Theregen has research and development facilities in Tucson, Arizona.