A Diagnostics & Imaging Week

Ophthalmic diagnostics, therapeutics and drug-delivery firm InSite Vision (Alameda, California) said it has completed its previously reported $9 million private financing of common stock and warrants for stock.

Terms of the agreements provide for the sale of about 16.4 million newly issued shares of common stock at 55 cents a share and the issuance of warrants to purchase around 4.9 million shares of common stock at a price of $0.6325 a share. The warrants have a term of five years and will not be exercisable or transferable for six months.

InSite Vision is focused on ocular infections, glaucoma and retinal diseases. The company's lead product, AzaSite, targets infections of the eye. AzaSite contains the drug azithromycin, an antibiotic formulated with DuraSite, InSite Vision's drug-delivery vehicle, which offers the benefit of a less frequent, low-dosing regimen, attractive to both the eye care patient and physician.

"With this financing completed, we are now able to more fully concentrate on completing our Phase III pivotal trials with AzaSite, as well as our other programs," said S. Kumar Chandrasekaran, PhD, InSite Vision's president and CEO. The company said it would seek to expand the AzaSite platform to include other indications and products for the worldwide market.

In the glaucoma area, the company said it has continued focus in genomic research on the TIGR gene, among others. It said a portion of this research has been incorporated into its commercially available OcuGene glaucoma genetic test designed to detect a genetic marker, mt-1, in the "promoter" region of the glaucoma-related TIGR gene.

Paramount BioCapital (New York) served as the placement agent.

PolyMedica (Woburn, Massachusetts) reported setting a range of $30.75 to $34.50 for its previously reported modified Dutch auction tender offer. The midpoint of the range represents a 5.9% premium to the closing price per share of company stock of $30.80, as of May 25, it noted.

PolyMedica said that, through the tender offer, it would repurchase from 4.35 million to 4.88 million shares, or 15.6% to 17.5% of its outstanding common stock, for a price of up to $150 million.

As stated in a year-end earnings release, shareholders may offer to sell all or a portion of the company shares they own at a price not more than the maximum price nor less than the minimum price specified in the offer. Upon the expiration of the offer, the company will select the lowest purchase price within the stated range that will allow it to buy $150 million of its common stock. If the number of shares tendered is greater than the number sought, purchases will be made on a pro rata basis from shareholders tendering at or below the purchase price.

The tender offer will expire, unless extended, at midnight, EDT, on June 23. Tenders of shares must be made on or before the offer expiration, and shares tendered may be withdrawn at any time on or prior to the expiration of the tender offer.

Morgan Stanley is the dealer manager for the tender offer.

PolyMedica bills itself as the nation's largest provider of blood glucose testing supplies and related services, and provides a range of medications through its Liberty mail-order pharmacy.

In other financing news:

Applied Imaging (San Jose, California) and the College of Medicine of the University of Vermont (UVM; Burlington) reported a collaboration between Applied Imaging's wholly-owned subsidiary, CTC (Vancouver, British Columbia), and UVM to develop technology for detecting, quantifying and characterizing circulating tumor cells in the blood of cancer patients.

Financial terms of the agreement were not disclosed.

Cells from cancerous tumors (including breast, ovarian, colorectal, prostate and lung cancers) that shed into the blood contain information about the status and progression of the disease, CTC said. It is developing systems for evaluating these cells in a routine blood sample using a selection technology coupled with Applied Imaging's automated cell imaging system.

David Krag, MD, professor of surgical oncology, who will lead the program at UVM, said: "It is the undetected cancer cells that remain in a patient following definitive surgery, radiation, and systemic therapy that often grow and lead to the demise of the patient ... We believe that this research holds great promise for improving breast cancer management, and look forward to working closely with CTC to perfect [this] technology."

Applied Imaging is a supplier of automated imaging and image analysis systems for the detection and characterization of chromosomes and molecular markers in genetics and pathology laboratories. It manufactures scanning and image analysis systems for both conventional (brightfield) and fluorescent microscopic analysis of cellular and tissue specimens.

Innovative Biosensors (IBI: College Park, Maryland), a developer of rapid pathogen tests, reported raising $3.5 million in a Series A financing led by Harbert Venture Partners. Other investors include New Markets Growth Fund and the Maryland Venture Fund.

Founded in mid-2003, IBI licensed Canary technology from the Massachusetts Institute of Technology (Cambridge, Massachusetts), a technology enabling the detection of pathogens with a combination of speed and sensitivity. The company recently launched its E. coli O157:H7 Detection Kit for food processors and said it plans to introduce more tests in the clinical diagnostics and food testing markets.

With the Series A round, IBI added Will Brooke, from Harbert Venture Partners, and Mark Grovic, from New Markets Growth Fund, to its board.

Joe Hernandez, IBI founder and CEO, said the new funding "will enable us to expand our commercial infrastructure, allowing us to bring IBI's technology to markets currently in need of rapid, sensitive pathogen test results."

Harbert Venture Partner, an affiliate of Harbert Management, provides capital to early stage technology and healthcare companies in the Mid-Atlantic and Southeastern U.S.

Caris, an investment partnership founded by David Halbert, founder, former chairman and CEO of AdvancePCS, reported completing a $120 million recapitalization of Pathology Partners (Dallas), a developer of gastrointestinal (GI) diagnostic services and systems.

The proceeds were used to redeem the equity securities held by Pathology Partners' early investors, including Sprout Group, Salix Ventures and Alliance Technology Ventures.

Current management is retaining a minority interest in the company, it said.

Pathology Partners provides quick turn-around specimen processing and reporting, each report including diagnostic descriptions and color images in "an easy-to-read, concise and complete format." It said more than 1,200 GI physicians use its programs for integrating pathology diagnostic services with state-of-the-art technology and business solutions, including its IntelliPath and PathConnect! solutions.

Alliance Imaging (Anaheim, California) reported commencing an offer to exchange up to $150 million of its 7-1/4% senior subordinated notes, due 2012, for any and all of its outstanding 7-1/4% senior subordinated notes, due 2012, issued in a private placement.

The sole purpose of the exchange offer is to fulfill the obligations of Alliance Imaging with respect to the registration of the private notes. The exchange offer will expire, unless extended, at 5 p.m., EDT, on June 27.

Alliance is a national provider of shared-service and fixed-site diagnostic imaging services, providing these services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a number of fixed-site imaging centers. The company had 466 diagnostic imaging systems, including 354 MRI systems and 56 PET or PET/CT systems, and more than 1,000 clients in 43 states at March 31.