A Medical Device Daily

Arthrosurface (Franklin, Massachusetts), the developer of a new, less-invasive joint resurfacing system, reported that it has raised $10.5 million in preferred equity financing from new and existing investors.

As with the company's two most recent rounds of financing, Boston Millennia Partners participated in the latest round by investing in half the round. With this latest offering, Arthrosurface has closed on an aggregate of $22 million of equity financing to date.

“This latest round of funding will allow us to complete development and achieve inventory positions on our second generation of products,“ said Steve Ek, COO. “We are most pleased with our patient outcomes as well as the surgeon adoption rate of our initial product releases. With our second generation of products, we will continue to expand the field of joint resurfacing, with a focus on unmet patient needs.“

The company's HemiCAP system consists of a range of contoured articular prosthetics and instrumentation intended for the repair of significant lesions and cartilage damage in the major joints.

Arthrosurface has FDA 510(k) approvals for commercial application in hips, shoulders and great toes. The company is currently conducting clinical trials for the knee and will seek FDA approval following completion of the clinical trial. It also has CE mark approval for European commercialization for the treatment of knees, hips and shoulders.

The HemiCAP device has now been implanted in nearly 200 knees, hips, shoulders and great toes. Implantations have been performed in the U.S., Europe and Australia, with several patients approaching the two-year mark.

“Arthrosurface has established its distributor network in the U.S. and throughout the major European markets and Australia. I believe that we will see strong penetration outside the U.S. for our HemiCAP application for the knee. In just a short period of time, we have seen an impressive adoption rate in the European community given the strength of our top-rate distributors,“ said company president Steve Tallarida.

The company said it intends to use this latest round of financing to manage the business to cash flow breakeven.

Medwave (Danvers, Massachusetts) reported that it has closed on more than $5.2 million of additional capital to help further fund its growth and continued development.

The terms of the financing included the sale of 1.3 million shares of common stock at a price of $4 per share with additional investment rights for up to 575,000 shares of common stock at a price of $4 per share. The additional investment rights are exercisable for a period of six months.

The placement agent for this sale was Adam Harkness.

Medwave develops non-invasive blood pressure monitoring products. The company said it has received the necessary regulatory clearances to market its technology in Europe, Asia and the U.S.

In other financing activity:

• Neurologix (Fort Lee, New Jersey), which through its subsidiary, Neurologix Research, is engaged in the research and development of treatments for disorders of the brain and central nervous system, primarily utilizing gene therapies, said it completed a private placement of securities with investors led by Merlin Biomed Group, for an aggregate purchase price of roughly $1.4 million before transaction expenses.

Neurologix issued a total of 1,103,900 shares of common stock for a price of $1.30 per share. The purchasers also received five-year warrants to purchase a total of 358,750 shares of common stock, with an exercise price of $1.625 per share.

The warrants are callable beginning in August 2007 if the share price exceeds $3.25 for a 10-trading-day period and certain other conditions are met.

Proceeds will be used for general corporate purposes, including clinical trials and research and development.

The company said the purchase price represented a small premium to the market price at the time Neurologix and Merlin commenced discussions regarding the transaction in early December.

Concurrent with the closing of the financing, Neurologix has appointed Jeffrey Reich, MD, to its board of directors, to serve as a Class I director until his term expires in 2007. Reich is currently a principal at Merlin.

The company's initial development efforts are focused on gene therapy for treating Parkinson's disease and epilepsy. Its core technology, which it refers to as NLX, is currently being tested in a company-sponsored Phase I human clinical trial to treat Parkinson's disease.

• Boston Life Sciences (Boston) has converted all outstanding shares of Series E preferred stock into common stock.

At a special meeting on Feb. 4, stockholders approved an amendment to the company's Certificate of Designations, Rights and Preferences of Series E cumulative convertible preferred stock. The amendment provided for mandatory conversion of all outstanding shares of Series E preferred stock into common stock upon the election of the holders of 75% or more of the outstanding Series E preferred stock.

The company received the necessary votes and issued about 900,674 shares of common stock in connection with the conversion of the 561.3 outstanding shares of Series E preferred stock.

“The conversion of our preferred stock into common stock accomplishes a number of important objectives, including the simplification of our capital structure,“ said CEO Peter Savas. “Following our recently completed reverse split and the conversion of the preferred stock, the company now has approximately 7.8 million shares of common stock with no preferred stock or debt outstanding. In addition, the Series E stockholders held certain rights and preferences that were viewed negatively by many potentially new investors. With the elimination of these rights and preferences, the company is now positioned to move forward with financing discussions.“

Boston Life Sciences is engaged in the clinical development of diagnostic and therapeutic products for central nervous system disorders.

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