A Diagnostics & Imaging Week

Microvision (Bothell, Washington), a developer of light scanning technologies, reported that it has completed the sale, to four institutional investors, of $10 million aggregate principal amount of senior secured exchangeable convertible notes and warrants for an aggregate of $10 million.

The notes are convertible at the option of the holders into shares of Microvision common stock at a conversion price of $6.84 a share or exchangeable into shares of Lumera common stock, owned by Microvision, at an exchange price of $5.64 a share.

The notes have a term of two years and scheduled repayments of principal over the last six quarters of the term. Interest on the notes will be at an annual rate of between 6% and 8%. The notes are secured by 1.75 million shares of Lumera common stock owned by Microvision, the maximum number of shares of Lumera common stock transferable upon exchange and/or repayment of the notes.

Microvision develops high-resolution displays and imaging systems based on its silicon micro-mirror technology.

TechniScan Medical Systems (TMS; Salt Lake City), a developer of ultrasound technology for breast imaging, reported that it has completed its latest round of financing, raising roughly $6.7 million.

TMS CEO and President David Robinson said that the funds raised "are critical for our next clinical phase and will accelerate our 2005 timeline and the expansion of our staff."

Previously, TechniScan turned to the private equity market, angel investors and prominent Salt Lake City business people for financial backing, and has flourished with no institutional or venture funding, it said.

"The fact that TMS has survived with no institutional or venture capital testifies to the quality of our company management team, the commitment of our employees and the value of our mission," Robinson added.

Following the completion of about 100 patient studies at TMS, the company conducted the first clinical investigation of its UltraSound CT technology at St. Mark's Hospital (Salt Lake City) in September 2004.

TechniScan said this first study has allowed the company to develop important information about user preferences, additional patient data, and the utility and practice efficiency of the equipment. A new set of prototypes will deploy at sites across the country in the second half of 2005, with sales forecasted for early 2006.

TMS, founded in 1984, uses an ultrasound technology called inverse scattering, which makes use of the entire spectrum of information available from the ultrasound signal. The resulting diagnostic information includes ultrasound transmission tomography images in a format similar to that provided by MRI and computed tomography imaging. In addition, UltraSound CT provides indices of speed and attenuation of sound, tissue properties that may provide physicians with valuable diagnostic information.

OmniCorder Technologies (East Setauket, New York) reported that it has signed a two-year agreement with Mark Fauci, the company's founder, board member and former president and CEO. Under the agreement, Fauci will continue as a board member and will provide consulting services to the company, among other things.

In another development, the board of directors unanimously agreed to extend the original stock lock-up agreement, entered into in September 2004 and set to expire on March 17, until Dec. 31, 2005.

All board members, including Fauci, agreed to extend their commitment not to publicly sell any of their shares through year-end 2005 and will establish corporate policies to restrict the sale of stock by directors beyond that point.

The board has initiated a study to examine appropriate guidelines for those restrictions. Further, Fauci has agreed to be bound by the same restrictions as all other board members regarding the sale of director stock through the term of his consulting agreement whether or not he remains a member of the board of directors.

"The board's unanimous decision to extend the lock-up agreement restricting the sale of OmniCorder stock by the company's directors and our determination to establish corporate policies that limit sales of director stock underscores our long-term confidence and commitment to the company and its shareholders," said Chairman Joseph Lisa.

The company's BioScanIR system is a medical imaging modality that provides a non-invasive, radiation-free method for detecting and managing a wide variety of diseases that affect blood perfusion such as cancer and vascular disease by detecting minute changes in temperature based on the pattern of infrared photon emissions over time.

OmniCorder has used the BioScanIR system successfully in a number of medical markets, including breast cancer detection, cancer therapy monitoring, drug discovery, neurosurgery and reconstructive surgery.

Waters Instruments (Minneapolis) reported that its board has adopted a shareholder rights plan. Jerry Grabowksi, Waters' president and CEO, said the plan is "intended to assure fair and equal treatment for our shareholders in the event of a takeover and to encourage a potential acquirer to negotiate with the company's board of directors before attempting a takeover." He said that the plan does not respond to any specific takeover threat or offer. "It provides, however, a mechanism for the board of directors to negotiate a fair price for all shareholders at the company's true long-term value, should someone attempt to acquire the company."

Waters' board declared a dividend distribution of one right for each outstanding share of Waters common stock. Upon becoming exercisable, each right would entitle its holder to buy one one-100th of a share of a new series of preferred stock at a price of $70 a right. The rights will become exercisable if a person or group acquires 15% or more of the company's common stock or announces a tender offer for 15% or more of its common stock without prior board approval. If, after a person acquires 15% without approval of the company's board of directors, Waters were acquired in a merger or similar transaction, each right would enable a shareholder to buy shares of the acquiring company having a market value of twice the right's exercise price, or, in effect, at a 50% discount to the market price.

The rights dividend distribution will be made on March 18 to shareholders of record as of the close of business on that date, and they will expire March 17, 2015.

Waters' Medical Systems division manufactures renal perfusion devices for the organ preservation and transplant market and whole blood oximeter products that provide oxygen saturation information.