A Diagnostics & Imaging Week
Thermo Electron (Waltham, Massachusetts) reported on Monday that it has agreed to sell its point of care (POC) and rapid diagnostics business, Thermo BioStar (Louisville, Colorado), to Inverness Medical Innovations (also Waltham) for $52.5 million in cash.
BioStar manufactures rapid tests used to perform diagnoses of infectious diseases as well as for a range of screening applications. Closing of the acquisition – expected this quarter – is subject to Inverness obtaining the consent of its lenders and other customary conditions.
Thermo said in a statement that it has built its Life and Laboratory Sciences business "into a market leader through organic growth, acquisitions, alliances and select divestitures," achieving leadership positions "in laboratory equipment and scientific instrumentation, as well as informatics and services."
Marijn Dekkers, president and CEO of Thermo, said that despite strong performance by the POC and rapid diagnostics business, it did not fit the company's long-term growth strategy.
He added: "Our remaining clinical diagnostic products have excellent market positions. Thermo is a market leader in anatomical pathology, and through our alliance with DPC [Diagnostics Products Corp.; Los Angeles], we have a strong position in our European Clinical Chemistry and Automation business. We remain committed to growing Thermo's presence as the world leader in analytical instruments while creating greater value for our shareholders, customers, business partners and employees."
Inverness is focused on women's health and cancer diagnostics, and CEO Ron Zwanziger said, "In addition to bringing us a complementary and proprietary line of high- sensitivity, point-of-care rapid tests, we are acquiring one of the industry's leading direct sales teams of approximately 55 full-time-equivalent sales people with a long history of demonstrated success."
He said that this will provide access to physician offices, hospitals and laboratories and "will be especially beneficial when it comes time to educate the point –of-care marketplace on the cardiac products we have under development, such as the prothrombin test due out in the U.S. marketplace in 2006."
Zwanziger also predicted improved sales of the company's existing product lines.
Inverness said it is exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications.
Recom Managed Systems (Greenville, South Carolina) reported that it has entered two binding, definitive agreements with cardiac products company TZ Medical (Portland, Oregon), expanding a relationship that already includes a joint venture to develop a new intracardiac catheter line.
Both agreements involve the acquisition of existing products and devices that Recom said would enhance its market share during its rollout this quarter. By expanding its market share at this early stage, the company's noise-reduction technologies will receive maximum exposure, it said.
Showcased among its acquisitions, Recom acquired the OTC TZ Cardio Sentry event recorder, which is the size of a credit card and can be carried by patients in their shirt or pants pockets.
The event recorder has been cleared for sale by the FDA and is available without prescription for over-the-counter purchase. The company said it is negotiating with global, international partners to mass-distribute OTC Cardio Sentry. Recom said it anticipates that its amplifier will quickly be deployed for OTC Cardio Sentry.
Recom acquired other devices and technologies, such as TZ's prescription CardioSentry RX event recorder, as well as the FM Demodulator, which converts the signal from event recorders to an electrocardiograph (ECG). Both of these products are FDA-cleared as well.
"This two-pronged relationship with TZ Medical .... offers Recom yet another opportunity to use its unique, noise-reduction technology to help improve patient outcomes by providing physicians in the EP lab with better data during diagnostic and therapeutic procedures that utilize intracardiac catheters," Pamela Bunes, president and CEO of Recom, told Diagnostics & Imaging Week. "We also are pleased to create further value for our shareholders through the revenue that will be generated by these agreements."
She added: "Of particular interest is the OTC Cardio Sentry device, and now owned by Recom, which provides patients with access to their own cardiovascular information over the counter at drugstores and outlets nationwide."
Recom said these new technology buys expand and enhance its product suite as it proceeds to market and that the deal "fully expands and matures the company's product line."
Prior to the TZ Medical deals, the company's only product was the Model 100 Heart Monitor, a Holter monitor that was cleared by the FDA in January 2004 and is undergoing clinical trials at Duke University Medical Center (Durham, North Carolina).
"With my experience in the healthcare industry in the past [I felt] it was very important to have a full product suite, rather than just one product," said Bunes, who joined the company in April. "It was more important for us to be able to come to market with a full product suite. With only a Holter monitor, we felt we might be somewhat limited."
The asset purchase agreement also includes employment agreements with the founding partners of TZ Medical, Tom Tribou and Byron Zahler, who will continue marketing efforts for the current monitoring devices and for next-generation products that incorporate the Recom noise-reduction technology. Recom said these employment agreements are "incentive-oriented," with compensation based upon profitable sales for Recom as the rollout is ongoing.
The company also reported that it has completed its catheter j-v with TZ Medical in furtherance of the memorandum of understanding first disclosed in August. Recom said that not only does this enhance its immediate revenue base, but the company also will realize monitoring revenues from the devices.
As previously disclosed, TZ Medical is contributing its entire line of intracardiac catheters to the joint venture, and Recom is contributing its patented and patent-pending signal-amplification and noise-reduction technologies.
An intracardiac catheter is a flexible tube that is inserted through a vein in the leg and fed into the heart. When used for diagnostic purposes, the catheter is equipped with electrodes connected to an electrocardiographic monitor that allows physicians to evaluate cardiac function, including arrhythmia, or irregular heartbeat. The physician can then predict the patient's risk for future cardiac events and determine the best therapy.
With current technologies, the presence of interference – also called an artifact – in the reading makes the true reaction of the heart to the diagnostic or clinical procedure difficult to measure.
The companies said they would immediately begin development of a new catheter line incorporating Recom's technology, which is designed to allow physicians to make more accurate diagnoses and better therapeutic choices.
The company said the status of the intracardiac prototype testing will be reviewed in upcoming press releases, as Recom has "already begun, and made extraordinary progress, on that development with the assistance of its renowned scientific advisory panel."
The j-v for the manufacture, development and marketing of intracardiac catheters will be conducted through the creation of a limited liability corporation, to be managed and controlled by Recom.
For the first six months, TZ will receive 70% of profits, and Recom will receive the remainder. Profits will be split equally thereafter.
Bunes said the j-v was another avenue for the company to utilize its technology in new pusuits. "Basically, we have some technology that can do a lot of things. Intracardiac electrocardiograms are read differently, they have different frequencies that they're read on and this catheter just required some modifications to our existing device and it is an area where there is a tremendous amount of growth. We have technology that could basically revolutionize or change the catheter readings that [doctors] are able to get."
TZ Medical was founded in 1990 by Tribou and Zahler. The company sells intracardiac catheters, cardiac monitors, hemostatic products and defibrillation electrodes.
In other dealmaking news:
Clinical Data (Newton, Massachusetts) reported an agreement in which it will purchase biotech firm Icoria (Research Triangle Park, North Carolina) in an all-stock transaction valued at about $12.5 million, based on the closing price of Clinical Data's common stock on Sept. 16.
Icoria is focused on the discovery of "multi-parameter" biomarkers using a multi-platform approach. Icoria uses these biomarkers to develop multi-analyte diagnostics to define and grade pathology or disease state, and aid its collaborators and customers in developing drugs and diagnostics and identifying targets, leads and drug/diagnostic combinations for liver injury, metabolic disorders and cancer.
Israel Stein, president and CEO of Clinical Data, termed Icoria's biomarker technology "an excellent fit with our molecular diagnostics business model, while their metabolomics and genomics capabilities complement the pharmocogenomics capabilities we will be gaining in our pending acquisition of Genaissance Pharmaceuticals [New Haven, Connecticut]." He said that the deal also "strengthens our position in targeted diagnostics and theranostics. Like Genaissance, Icoria works with leading pharmaceutical and biotechnology companies as well as with government and academic institutions."
Icoria shareholders will receive 0.0139 shares of Clinical Data stock for each of their shares, representing a price of 32 cents per share of Icoria stock. Should the price of Clinical Data stock change before closing, in no case will it be below $10 million or exceed $12.5 million. Icoria shareholders will own about 7.6% of the merged company.
The acquisition is expected to close in late 2005 or early 2006, pending approval by Icoria shareholders and other customary conditions.
Needham & Co. served as financial advisor to Icoria. Douglas Morton, Icoria's interim CEO, said that the board "evaluated several ways to improve the company's cash position and build shareholder value and felt that this acquisition by a financially stronger company, with a track record of successfully developing and marketing healthcare products and services, is a positive outcome."
Clinical Data provides products and consulting services to the physicians' office laboratory market and offers blood chemistry instrumentation and diagnostic assays to clinics and small hospitals worldwide.
EncounterCare Solutions (Columbia, South Carolina) reported signing an agreement to license from CyberCare (Temple Terrace, Florida) its Electronic House Call (EHC) system. The license agreement gives EncounterCare the rights to the EHC brand and the rights to further develop and market the product throughout the U.S.
The EHC System monitors patient diagnostic information from a remote location and then transfers the data to caregivers. The Electronic Medical Data Exchange routes the information to the appropriate medical professional who is a subscriber to the exchange.
The Electronic House Call and its intelligent routing capability were developed by Georgia Institute of Technology (Atlanta).