Medical Device Daily Associate

Neurologix (Fort Lee, New Jersey) said it has entered into an agreement with Medtronic (Minneapolis) for the joint development, manufacturing and commercialization of micro-infusion catheters designed to deliver gene therapy into the brain and central nervous system.

Medtronic and Neurologix – through its Neurologix Research subsidiary – will jointly develop, and Medtronic will manufacture, delivery devices for Neurologix’s Parkinson’s disease and temporal lobe epilepsy clinical programs.

The companies will have a revenue-sharing arrangement upon the commercialization of the device.

In conjunction with the agreement, Medtronic also increased its equity investment in Neurologix by $2 million, purchasing 1,141,552 shares of common stock at a price of $1.752 per share, plus warrants to purchase an additional 285,388 shares at an exercise price of $2.19 per share.

In connection with the agreement, Neurologix will pay development costs to Medtronic over the course of the project, based on development milestones.

“This is a very important collaboration and a significant milestone for Neurologix,” said Michael Sorell, MD, Neurologix CEO. “In 2002, prior to our beginning human clinical trials, Medtronic made a $1.75 million equity investment in Neurologix based on our preclinical work. Enrollment in our Phase I study for Parkinson’s disease is nearly complete, and we are delighted that Medtronic is continuing to support our work in gene therapy for Parkinson’s disease and temporal lobe epilepsy.”

Sorell told Medical Device Daily that Medtronic already had observer status on the company’s advisory board and adding the powerhouse medical device team into the equation made perfect sense to his company. “Devices are not our area of expertise, but we had intellectual property [the catheter] that needed to be developed. So what better partner than the one who’s already there and [with] their area of expertise.”

Sorell said that to date all procedures in the company’s landmark Parkinson’s disease trial have been performed using a patent-pending delivery device which is not yet optimized for larger scale manufacture. Among the requirements for commercialization of this treatment is the demonstrated ability to develop and to produce in commercial quantities a user-friendly delivery device for neurosurgeons to easily, reliably and quickly perform this procedure.

“Our agreement with Medtronic is instrumental in achieving that requirement,” he said.

In April, the company provided an update on its Phase I clinical trial for the treatment of Parkinson’s disease at the American Association of Neurological Surgeons (Rolling Meadows, Illinois) annual meeting in New Orleans.

The trial is designed as an open-label dose-escalation study with four patients in each of three escalating dose cohorts. Eleven of 12 patients now have been treated and have been followed for as long as 18 months. The primary purpose of a Phase I study is to determine safety and to date there have been no treatment-related adverse events in any of the 11 patients in the Neurologix study.

Sorell said he believes at this time that Medtronic has no intention of acquiring his company, although it is very interested in gene therapy for the treatment of neurological conditions. He noted that the company’s shares are “pretty closely held, even though we are a public company . . . and they have no preemptive right to the drugs at this point.” He termed the current relationship as “very much complementary.”

He likened his company’s chemical approach to those treatments being done electronically in Medtronic’s own deep brain stimulation program, but said his company’s goal was to be able to perform more procedures on a given day than that technology.

“For every deep brain stimulation that can be performed [by a single surgeon] in one day, we’d like to be able to get five or six gene therapy transfers done,” Sorell said. “And this agreement is a big step in getting us to actually meet that goal.”

MacroPore Biosurgery (San Diego) said it has signed a definitive agreement to raise $11 million from the sale of 1.1 million shares of common stock at $10 per share.

The transaction will be completed on or before May 31.

As part of the agreement, the unnamed investor has been granted an option that expires Dec. 31, 2006, to purchase an additional 2.2 million shares of common stock at $10 per share. In addition, the investor has been offered a voting seat on MacroPore’s board of directors.

The company said it would use the funds primarily to support the research and development of its regenerative cell technology.

MacroPore specializes in the development of regenerative medicine therapies. The company has two principal technology platforms, adipose-derived regenerative cells and bioresorbable implants. The company is developing treatments for cardiovascular disease, spine and orthopedic conditions, gastrointestinal disorders and new approaches for aesthetic and reconstructive surgery using stem and regenerative cells from adipose tissue.

In other financing news:

• Geospiza (Seattle), a developer of software systems for collecting, managing, analyzing and communicating biological research data, reported the completion of a $1 million round of convertible debt financing from private individuals.

“Closing this funding is an important step in accelerating the realization of our vision for how research labs around the globe manage and capitalize on scientific information,” said Todd Smith, PhD, chairman and CEO. “Though Geospiza is profitable already, the new funding will support the company’s product development work with Applied Biosystems [Foster City, California].”

Geospiza’s flagship product, the Geospiza Finch Suite, is a web-based, scalable, integrated scientific information management system that brings together DNA sequencing and genotyping information in one solution. The software harnesses data collection, analysis, and discovery across a wide variety of life science instrumentation, computer operating systems and hardware platforms.

• Ardent Health (Nashville, Tennessee) reported that it has extended the expiration date for the previously disclosed cash tender offer and consent solicitation by its subsidiary, Ardent Health Services, for its outstanding 10% senior subordinated notes due 2013 from 5 p.m. EDT on May 13 to the same time on May 30.

The company has received tenders and consents from holders of $224.97 million in aggregate principal amount of the notes, representing about 99.99% of the outstanding notes, Ardent Health said.

The price determination date will be 2 p.m., EDT 10 business days prior to the expiration date. The completion of the tender offer and consent solicitation is subject to the satisfaction or waiver by the company of a number of conditions.

Ardent Health Services is a provider of healthcare services to communities throughout the U.S. Ardent currently owns 34 hospitals in 13 states, providing a range of medical/surgical, psychiatric and substance abuse services to patients ranging from children to adults.

• Hypertension Diagnostics (HDI; Eagan, Minnesota) said that on April 29, it completed the issuance of 2,756,609 shares of common stock and 173,335 shares of Series A convertible preferred stock to holders of warrants to purchase common stock and preferred stock, resulting in gross proceeds of $822,227, which represents 91% of the total warrant proceeds available for exercise.

Among those holders electing to exercise their warrants were four of HDI’s seven directors, who collectively exercised their warrants to purchase $207,758 of common stock and preferred stock. The warrants had an effective exercise price of 17 cents per share of common stock.

The company said that gross proceeds would be used primarily for working capital purposes and to expand market penetration of the CVProfilor, HDI’s device designed to help doctors save lives through early detection of cardiovascular disease.

The CVProfilor measures the elasticity of small and large arteries, an indicator of vascular health.

• Dynacq Healthcare (Houston) reported that it has executed an amendment to its $6 million revolving credit facility to set the maturity date of the obligations under the facility to May 31.

Currently, there is $5.6 million outstanding under the revolving credit facility. The company said it intends to either refinance the amounts due or repay all outstanding amounts by the final maturity date.

Dynacq is a holding company. Its subsidiaries provide surgical healthcare services and related ancillary services through hospital facilities and outpatient surgical centers.

• Advocat (Franklin, Tennessee) reported that it executed an agreement to refinance debt related to its nursing home property in Hartford, Alabama. The financing will replace bank debt that matured in February and had been subject to annual maturities. The new debt bears interest based on LIBOR plus 4%, and is payable in monthly installments based on a 25 year amortization, with a final balloon payment in 2008.

“The new financing agreement provides $3.7 million in financing with a three-year term,” said CEO William Council III.

Advocat provides long-term care services to nursing home patients and residents of assisted living facilities in nine states, primarily in the Southeast.