A Medical Device Daily
Refocus Group (Dallas), which develops treatments for eye disorders, reported the closing of the first half of a financing commitment totaling $14 million from Medcare Investment Fund III (San Antonio).
At the first closing on March 1, the company issued to Medcare 280,000 shares of its newly authorized Series A-1 convertible preferred stock at a price of $7 million. The Series A-1 stock is convertible into common stock at 25 cents a share, and Medcare will purchase another 280,000 shares of the company's newly authorized Series A-2 convertible preferred stock for an additional $7 million at a second closing to occur no sooner than 12 months after the initial closing and upon the company's achievement of an FDA clinical trial milestone and other closing conditions. The Series A-2 convertible preferred stock is convertible into common stock at 25 cents a share.
Medcare also was granted a two-year warrant to purchase up to 133,334 shares of the company's newly authorized Series A-3 convertible preferred stock for a price of up to $4 million. The Series A-3 convertible preferred stock is convertible into common Stock at 30 cents a share.
The closing in total has the potential of providing Refocus with up to $18 million in financing between now and March 2007, assuming the close of the second offering as well as the exercise of all warrants granted as part of this closing, the company said.
The company said it will use proceeds of the first closing for the repayment of debt, for expansion of its Scleral Spacing Procedure (SSP) clinical trials program and for capital expenditures and general corporate purposes. Following this closing, the company said it plans to explore the possible termination of the company's financial reporting to the Securities and Exchange Commission in order to reduce costs relating to such reporting obligations, such as annual audit, legal, insurance and other expenses.
Refocus Group's SSP for surgically treating presbyopia, primary open-angle glaucoma and ocular hypertension, employs four scleral implants, each about the size of a small grain of rice, surgically implanted just under the surface of the sclera (white of eye) in four quadrants.
At the March 1 closing, Medcare owns more than 50% of the outstanding Refocus voting stock. Effective with the closing, David Williams and Chuck Edwards have resigned from the company's board, and Thomas Lyles Jr. and Doug Williamson have joined the board.
Presbyopia is a disorder that affects virtually all of those over age 40, while glaucoma affects millions worldwide and is a leading cause of blindness. The surgical procedure is the same for presbyopia, glaucoma and/or ocular hypertension. For the latter of these two conditions, Refocus says it believes the procedure helps restore the natural base-line tension in the ciliary body, allowing improvement in the natural drainage of the eye and lowering intraocular pressure. In presbyopia, the company believes that the procedure helps reduce the crowding of the underlying tissues surrounding the crystalline lens, enabling the muscles to reshape the lens.
The technology does not remove tissue from the eye, does not affect the cornea and is believed to be fully reversible, unlike laser vision surgery or more invasive treatments. The procedure can be performed on an outpatient basis under topical or local anesthesia. The company's implant device is limited, in the U.S., by federal law to investigational use, pending FDA approval.
In other financing activity:
• DaVita (El Segundo, California) reported that it will offer $500 million in senior notes, due in 2013, and $850 million in senior subordinated notes, due in 2015. The private offering, which is subject to market and other conditions, will be made in the U. S. to qualified institutional buyers, and outside the U.S. to non-U.S. investors.
The company said it intends to use the net proceeds, along with available cash, to repay all outstanding amounts under the term loan portion of its senior secured credit facilities.
• CareDecision (Westlake Village, California) reported receiving new financing of $2 million through the Mercator Advisory Group and its affiliated funds (MAG) to finance current and anticipated growth initiatives enabled by the recent acquisition of CareGeneration. The company said it will use plans for acquisitions and investments in "accretive enterprises."
Through a subsidiary, CareDecision is a provider of Wi-Fi PDA technology and has merged with CareGeneration, a pharmaceutical programs enterprise.
• Edwards Lifesciences (Irvine, California) reported that Michael Mussallem, company chairman and CEO, has adopted a pre-arranged stock trading plan under Securities and Exchange rules allowing him, over a period of about a year, beginning in April 2005, to exercise stock options for up to 9,000 shares per month of Edwards' common stock, for a total of up to 108,000 shares, and sell those shares. This amount is less than 10% of his total Edwards holdings.
Mussallem reportedly adopted the stock trading plan primarily for philanthropic purposes and did so in accordance with SEC guidelines, according to the company.
Edwards develops advanced cardiovascular disease treatments and bills itself as the No. 1 heart valve company in the world.
• The board of directors of Lynx Therapeutics (Hayward, California) has approved a 1-for-2 reverse split of its stock, following approval by stockholders at the company's recent annual meeting. Lynx's common stock began trading yesterday on a post-split basis under the temporary trading symbol LYNXD and will trade under this symbol for about 20 trading days.
The reverse split was approved by Lynx stockholders with approval for the business combination of Lynx with Solexa Limited. Lynx will issue around 14.75 million shares of its common stock in exchange for all of the issued and outstanding Solexa shares and all options to purchase Solexa shares on a post-reverse split basis. The business combination is expected to occur later this month.
Lynx bills itself as a leader in the application of genomic analysis solutions. Its Massively Parallel Sequencing System consists of proprietary instrumentation and software that used to analyze millions of DNA molecules in parallel, enabling genome structure characterization at very level of resolution.