A Medical Device Daily
XLR Medical (Point Roberts, Washington) reported that it has negotiated a $4.7 million convertible note financing with a New York-based investor.
The proceeds of the new funding, XLR said, will be used to fund the completion of the company's acquisition of about a 51% interest in Exelar Medical (Chicago), to repay corporate debt and for general corporate purposes.
XLR said that the convertible note will be secured by the company's interest in Exelar and will be convertible at the option of the holder into units at 40 cents a unit, each unit consisting of one share of the company's common stock and one-half of one share purchase warrant. Each whole share purchase warrant will entitle the holder to purchase one additional share of the company's common stock at 60 cents a share for a period of five years from the date the convertible note is issued.
Exelar Medical is developing cancer treatment technology using magnetic fields to control and focus the X-ray and electron beams used in external beam radiation. The technology is aimed at permitting an increase in the dosage of radiation to cancerous cells while decreasing the radiation exposure of healthy cells and the potential side effects.
In the event of a sale of Exelar Medical during the currency of the convertible note, the investor shall be entitled to a bonus based on the selling price of the company's interest in Exelar Medical. The bonus will depend on the selling price and will be equal to $5 Million on a selling price of up to $25 million, 60% of the selling price on a selling price above $25 Million but less than $60 million and 50% of the selling price on a selling price of more than $60 million.
Kensey Nash (Exton, Pennsylvania) reported that its board has approved repurchase of an additional 400,000 shares of its common stock through Sept. 30, 2005, adding to the 48,000 shares outstanding under its existing repurchase program. It also reported on delays in the expected approval of its triActive technology.
As of Wednesday, Kensey Nash had about 11.37 million shares of common stock outstanding. The company said the program does not require the repurchase of any specific dollar value or number of shares.
On triActiv progress, the company noted that early in February it submitted a response to FDA comments concerning labeling and clarification of previously submitted data in its submission for 510(k) clearance of its triActiv technology (Medical Device Daily, Feb. 10, 2005), a system designed to prevent debris, dislodged during stent procedures, from embolizing downstream and causing adverse coronary events.
It said that, "based on recent discussions with the FDA," it expects product clearance in about 30 days and that its new U.S. sales team for the triActiv System has completed product training and "is ready to begin selling" once clearance is received.
The company originally anticipated total triActiv System sales of around $1.2 million per quarter for the second half of FY05. But it said that "Due to the new anticipated timing of FDA clearance," it now expects that U.S. sales will not begin until the fourth fiscal quarter.
"While clearance is expected in the near term," it said in a statement, "the estimates provided . . . exclude any triActiv System sales in the U.S. for the remainder of fiscal 2005."
The company's estimates include about $200,000 in European sales, due to the recent regulatory approval in Europe of the triActiv System FX (MDD, March 15, 2005).
Joseph Kaufmann, president and CEO of Kensey Nash, said, "We believe the anticipated approval of the triActiv System in the U.S., in addition to the launch of the next generation device, the FX, in Europe, will provide a platform for significant growth in fiscal 2006. Combined with strong growth in the spine business, including the launch of new product lines and continued growth of existing products, continued performance of the Angio-Seal, and a return to growth in our sports medicine business, we believe fiscal 2006 will be an exceptional year for Kensey Nash."
The company also lowered its biomaterial sales guidance for 3Q and 4Q of fiscal 2005 by about $500,000 and $2 million, respectively. The reduction, it said, is due to a change in the timing of shipments or the launch dates of products co-developed with Orthovita (Malvern, Pennsylvania).
"[T]he timing of shipments to Orthovita and changes in the development timetables have shifted sales of certain Orthovita product lines into our fiscal 2006," Kaufmann said.
The company's preliminary outlook for FY06 includes sales for the triActiv System of from $7 million to $8 million.
Kaufmann said, "Fiscal 2005 was a year of major financial hurdles due to the 33% reduction in our Angio-Seal royalty rate and the investment in a sales force prior to the launch of the triActiv System." He added that in spite of these hurdles, "our company has made substantial progress in fiscal 2005 on many fronts."
Kensey Nash manufactures absorbable biomaterials-based products with applications in the cardiology, orthopedics, spine, drug and biologics delivery, periodontal/dental, surgical and wound care markets.
The Angio-Seal Vascular Closure Device, licensed to St. Jude Medical (St. Paul, Minnesota) was developed by Kensey Nash.
In other financing news: Inverness Medical Innovations (Waltham, Massachusetts) reported that it has extended the expiration of its exchange offer from midnight today to 11:59 p.m. EST, March 23. The company's 8-3/4% senior subordinated notes, due 2012, are offered for exchange for the $150 million of outstanding 8-3/4% senior subordinated notes, due 2012, issued Feb. 10, 2004.
As of 5 p.m., EST, March 16, about $90.08 million of the old notes (roughly 60% of the old notes) had been tendered. The exchange offer has been extended to allow more time for the holders of the remaining $59.92 million of old notes to participate in the offer, Inverness said.
Inverness develops diagnostic devices and says it is exploring opportunities for its electrochemical and other technologies in several diagnostic and consumer-oriented uses, with a focus on women's health, cardiology and infectious disease.