With the end of the year and the beginning of a new century, the baton of leadership changed hands in several medical device firms. For the most part, those changes sometimes served to highlight attempts either to solidify strong market positions or to refocus the efforts of developing firms.

Here is a selection of some of the recent leadership changes in companies ranging from the large and well-established to mid-sized developmental and struggling start-up firms:

The board of directors of Sulzer Ltd. (Winterthur, Switzerland) said in early January that it will propose Ueli Roost, 52, for board membership at the next annual general meeting on April 13, and, subject to his election, nominate him as chairman. In addition, at the annual general meeting of Sulzer Medica on April 14, 2000, Roost will stand for election as a member of its board.

Also on April 13, Pierre Borgeaud will be retiring as chairman and delegate of the Sulzer board, but will remain a member of the board of directors and retain his position as chairman of the board of Sulzer Medica. Borgeaud, who has been chairman of the board for several years, took over the additional role of delegate of the board in March 1999 when Fritz Fahrni resigned. At the same time, he set a limit of two years, at the most, for reaching a decision as to his successor. After what was termed by the company "an intensive search both in and outside Switzerland" for a candidate, Roost was selected for the posts. A Swiss national, he has longstanding international management experience, most recently as CEO of Keramik (Laufen, Switzerland). From 1981 to 1992, he held various positions with the Swiss chemicals company Rohner AG.

The shareholders of Welch Allyn (Skaneateles Falls, New York) last month approved a restructuring and succession plan, including the formation of a Welch Allyn holding company and new management responsibilities. An Allyn family-owned holding company, Welch Allyn Ventures LLC, will be established in early 2000, with the businesses within the holding company expected to operate as separate entities with independent boards and management teams. In the succession plan, William Allyn will retire as president and CEO of Welch Allyn this month to become chairman and CEO of Welch Allyn Ventures LLC. He will continue to serve on the executive committee and board of directors of Welch Allyn Inc., Everest VIT, and Welch Allyn Data Collection, separate entities within the company. Lew Allyn, executive vice president of Welch Allyn Inc., retired at the end of 1999 but will continue on the board of directors and assume the chairman position. Founded in 1915, Welch Allyn Inc. is one unit of a family of businesses that manufacture medical and dental diagnostic equipment, miniature precision lamps, automatic data input devices, and industrial analysis and inspection services and devices.

In late December, surgical sealant and coatings company Focal (Lexington, Massachusetts) appointed Robert DePasqua president and CEO and a member of its board. He replaces interim president and CEO Donald Grilli, who assumed the position of board chairman. DePasqua was one of the 10 founding employees of Boston Scientific (BSC), where he served as president/founder of Microvasive, a BSC subsidiary. Since 1994, he has been involved in the medical industry as a private investor, business consultant and board member with several medical start-up firms, including SpineTech, now a division of Sulzer Medica.

Premier Laser Systems (Irvine, California) brought in Michael Quinn as its new president and CEO in December. He replaced Colette Cozean, PhD, who remains as chairman of the board and chief technology officer, with the new appointment being part of what the company called a previously announced succession plan. Quinn joined Premier Laser from Imagyn Medical Technologies (Irvine, California), where he was retained earlier in 1999 as president and chief operating officer to manage the orderly stewardship of that company through receivership. Imagyn successfully emerged from receivership in October and is now operating as a private company.

Biofield (Atlanta, Georgia), which has been attempting to develop a noninvasive system for detecting breast cancer, said that at the end of December it received $700,000 from the sale of an aggregate of 14 million of its authorized, previously unissued shares of common stock to David Long Jr., MD, PhD; to a family limited partnership controlled by David Long; and to Raymond Long, MD. Simultaneously, David Long purchased an additional 1.07 million previously issued shares of common stock from C. Leonard Gordon and his wife. D. Carl Long, president, CEO and a director of Biofield; Gordon, chairman of the company; and Harvey Horowitz, a director, have resigned from their positions, and David Long has been appointed a director.

In November 1998, Biofield announced that it no longer met the Nasdaq continuing listing requirements for its common stock and that it was terminating substantially all of its operations. During the first quarter of 1999, Biofield voluntarily terminated its reporting requirements with the Securities and Exchange Commission.

Orthofix keeps $40 million in settlement

Orthofix International (Huntersville, North Carolina), a developer of minimally invasive devices primarily in the orthopedics sector, will net at least $40 million as the result of a U.S. Supreme Court decision not to review a lower court judgment against Biomet (Warsaw, Indiana) and two of its subsidiaries. The high court's decision serves to uphold a $64 million settlement that Biomet and the subsidiaries – Electro-Biology and EBI Medical Systems – must make with three subsidiaries of Orthofix.

The original amount awarded to Orthofix was $50 million in compensatory damages and $50 million in punitive damages, but a lower court struck down all but $1 million in punitive damages last summer while upholding the compensatory damage claim. The final figure was the result of adding pre-judgment and post-judgment interest, with these amounts then pared down by more than $20 million in contingent legal fees and other expenses, thus achieving the total judgment of $64 million, according to an Orthofix spokesperson.

The original suit was filed in 1997, with the jury's finding against Biomet being upheld through two subsequent appeals. The case involved a variety of business torts, including trademark infringement and charges that Biomet had engaged in various other acts, including producing knock-offs of Orthofix's External Dynamic Bone Fixator System. "This $64 million award vindicates the faith of our shareholders and employees," Robert Cooper, chairman of the Orthofix Group, said in a statement.

Cooper said that throughout the course of the two-year litigation, Orthofix had been able to maintain international growth in the double digits, "turned around our U.S. business, and increased our profit margin. With the litigation behind us, and substantial cash available, we are poised to continue future growth and deliver even more value to our shareholders."

EndoSonics cuts non-sales staff 10%

Medical device company EndoSonics (Rancho Cordova, California) said last month that it will reduce its non-sales staff of 360 by 10% and, as a result, record a 4Q99 charge of about $100,000. The company estimates the cuts will produce savings of about $2 million annually and allow for continued growth in its direct sales force as well as greater investment in key R&D projects. EndoSonics also said it expects to report 4Q99 revenues of about $11.6 million, about 10% greater that the preceding quarter.

Separately, the company announced the resignation of Chief Financial Officer Richard Fischer, saying he was leaving the firm because of family considerations. Corporate controller Kathleen Redd will serve as acting CFO until a replacement is named.

News of new funding

AdaptZ.com (New York), a web site designed to connect the business and consumer segments of the disability community, received $10 million in venture capital from an investor group led by Flatiron Partners. The funds will be used to develop an Internet portal to provide information and products to the disabled.

Privately held Axya Medical (Beverly, Massachusetts) has completed a $12.5 million private placement of preferred equity with a group of institutional investors led by Vector Fund Management and Marquette Venture Partners (both Deerfield, Illinois). Axya has developed a method for using ultrasonic energy to weld polymeric materials for surgical procedures.

Bio-Plexus (Vernon, Connecticut) reported an agreement with Appaloosa LP to extend the financing commitment totaling $17.5 million through this month. "We have an agreement for a second bridge loan of $1.6 million, and we anticipate hosting a special meeting of shareholders in February to approve the total deal," said Carl Sahi, company president and CEO. Bio-Plexus develops, manufactures and markets safety needle medical products under the Punctur-Guard and Drop-It brand names.

Cambridge Heart (Bedford, Massachusetts) reported raising $2.1 million through a private placement at a 10% discount to its recent price that is the final closing on an overall $7.4 million round of financing initiated last fall. The company said the proceeds will be used primarily to promote its T-wave Alternans Test and to pursue a third-party payer reimbursement strategy, as well as fund general operational needs.

Polyheal Ltd. has received an investment of $7.5 million from Clal Biotechnology Industries Ltd. (Haifa, Israel), Israel's single largest investment entity in the life sciences. Polyheal is developing human tissue repair and wound-healing systems for chronic wounds and other difficult-to-heal tissue lesions.

Point-of-care diagnostics developer Response Biomedical (Vancouver, British Columbia) has agreed to a $5 million special warrant financing with a syndicate led by Yorkton Securities. The funding will be used primarily to scale-up manufacturing of the firm's cardiac marker technology.

Schick Technologies (Long Island, New York) said it has executed a final agreement with Greystone & Co for a maximum $7.5 million credit facility. Under the loan terms, Greystone is receiving warrants to purchase common stock and its designees will occupy at least two seats on the company's board of directors.

SpectRx (Norcross, Georgia) said that Abbott Laboratories (Abbott Park, Illinois) has purchased $2.5 million in convertible redeemable preferred stock, completing the purchase of $5.25 million in such stock as part of an agreement to jointly develop a continuous glucose monitor for people with diabetes. Under the agreement, Abbott has exclusive worldwide marketing rights to continuous monitoring as well as single-use monitoring applications of the technology. The agreement includes revised milestones, and cooperative research and development focused initially on continuous glucose monitoring. SpectRx will receive a royalty on sales of disposables and have the option to manufacture continuous monitoring devices for Abbott.

ThermoGenesis (Rancho Cordova, California) reported completion of a private sale of $4 million of the company's convertible preferred stock to three institutional investors. Holders of the stock may convert those shares into shares of company common stock for $2.2719 per share. The company said the proceeds will be used primarily for marketing of products derived from its FDA-approved CryoSeal and BioArchive technology platforms.

VidaMed (Fremont, California), a developer of urological technologies, including the TUNA system for treating benign prostatic hyperplasia, has raised $11.2 million in new funding, with $9.2 million coming from Medtronic (Minneapolis, Minnesota) and $2 million from existing stockholders. Medtronic purchased 5.3 million newly issued shares of VidaMed common stock for $1.73 per share, and approximately 18% of VidaMed's total equity. Current stockholders in the company purchased 1.2 million newly issued shares under the same terms.

Companies ... in brief

EndiCor Medical (San Clemente, California) reported that it has been awarded ISO 9001 certification by TUV Product Service (Munich, Germany). EndiCor Medical's primary product is the X-Sizer Catheter System, currently in U.S. clinical trials, designed to be the first fully disposable device to treat heart attack victims as well as others with failed bypass grafts and stents ... Health Research Network (Aliso Viejo, California), a clinical research company, has changed its name to InSync Research. InSync Research contracts to conduct Phase II-IV clinical trials, pharmacoeconomic studies, outcomes research and other types of medical research and analyses ... Steris (Mentor, Ohio) reported completing expansion of the Steris/Isomedix Services operations in the Chicago, Illinois, area. The expansion includes the installation of a new, state-of-the-art continuous gamma irradiator at Steris's Commerce Center facility in Libertyville, Illinois.