A Diagnostics & Imaging Week

Resonant Medical (Montreal), a developer of 3-D ultra- sound (U/S) image-guided radiotherapy, reported receiving a Series B round of financing totaling $14 million.

The round was led by Ventures West and existing investor MDS Capital. Also participating were current investors BDC Venture Capital, Desjardins Venture Capital, MSBi Capital along with MMV Financial.

The company said the investment total raised is the largest equity amount garnered by a Canadian medical device firm this year and “the third-largest in Canadian history.”

Frederic Francis, CEO of Resonant, said, “We are now fully empowered to protect and increase our innovation and technology lead ... [for] continuing to deliver the best available image-guidance for prostate cancer but also dedicating ourselves to achieving the same impact with our upcoming head [and] neck, breast and gynecological applications.”

Resonant’s 3-D U/S technology is designed to assist clinicians in targeting tumors more accurately while safeguarding surrounding healthy tissues. Using Restitu, the company’s image guidance platform, tumor position, shape and volume can be visualized and analyzed during treatment.

The FDA 510(k)-cleared Restitu Platform is being used “in dozens of academic centers and cancer clinics throughout North America,” Resonant said.

The Restitu platform features include Mutual Referencing, which allows for patient position verification accuracy, and Implicit Registration, permitting the fusion of computed tomography and 3-D U/S images.

“Resonant’s progress has been remarkable since our original investments,” said Dr. Lewis Slotin, seed co-investor in the company. “[It] now has the opportunity and resources to realize our initial vision of bringing forward breakthrough technologies that will revolutionize the way cancer patients are treated.”

Sontra Medical (Franklin, Massachusetts) reported amending its license agreement with Bayer HealthCare’s Diabetes Care Division (Elkhart, Indiana). The terms call for Sontra to have worldwide co-exclusive rights to develop and market Sontra’s continuous transdermal glucose monitoring system utilizing the SonoPrep ultrasonic skin permeation technology for the hospital intensive care unit (ICU) market.

In exchange, Sontra has agreed to reduce Bayer’s milestone payment to Sontra due upon Bayer’s completion of the first phase of product development to $2 million, and will pay Bayer a royalty equal to 1% of Sontra’s net product sales in the hospital ICU market.

Thomas Davison, Sontra president and CEO, said that the company “is best positioned to accelerate the development and commercialization of Sontra’s continuous glucose monitor for the ICU [intensive care unit], as we have completed the first prototypes and expect to begin human clinical studies in early 2006 at leading Boston hospitals. Members of our clinical advisory board will serve as principal investigators. More importantly, we are on track to complete product development of the SonoPrep skin permeation and glucose sensing technology for the ICU by the end of 2006.”

Sandra Peterson, president of Bayer HealthCare’s Dia-betes Care Division, said that Sontra’s monitor “has shown promise in pilot clinical trials in patients, and the Sontra management team has identified a market opportunity for this technology in the hospital ICU market.”

Sontra develops transdermal technologies, in concert with its SonoPrep device and procedure tray for use with topical lidocaine to achieve rapid skin anesthesia.

In other financing activity:

• InSight Health Services (Lake Forest, California) reported commencing its offer to exchange up to an aggregate of $300 million principal amount of its senior secured floating rate notes due 2011, which were initially issued on Sept. 22, for a like principal amount of its registered senior secured floating rate notes due 2011.

InSight will accept for exchange any and all outstanding notes that are properly tendered in the exchange offer prior to 5 p.m., EST, on Jan. 19, 2006, unless extended by InSight.

InSight provides diagnostic imaging and information, treatment and related management services.

• Tm Bioscience (Toronto), a leader in the commercial genetic testing market, said it has closed its previously disclosed offering of 5.6 million common shares for gross proceeds of C$10.08 million.

The underwriting syndicate, led by Canaccord Capital and including Versant Partners and Westwind Partners, agreed to purchase 5.6 million common shares from Tm Bioscience, on a bought deal basis, and sell them to the public at $1.80 a common share, representing an aggregate amount of $10.08 million. After the closing, the company said it has 47,715,224 common shares issued and outstanding.

Net proceeds from the offering will be used for the advancement of the company’s pipeline of genetic tests for genetic disorders, drug metabolism and infectious diseases, and for general working capital purposes.