Medical Device Link.

Originally Published MX November/December 2004

MILESTONES

Vascular Architects Inc. (San Jose) closed a $6.6 million private placement of its Series E preferred stock at the beginning of September. The company develops, manufactures, and markets devices for treating peripheral vascular disease and nonvascular obstructions. The new funding will enable the company to shift its near-term focus to enhancing its proprietary line of remote endarterectomy products and to commercializing the next generation of its aSpire covered stent.

Privately held medical device company Vivant Medical Inc. (Mountain View, CA) has initiated a clinical study to determine the effectiveness of microwave ablation for the treatment of lung cancer. The study will be conducted at Rhode Island Hospital (Providence, RI) using Vivant's VivaWave ablation system, which has previously received FDA 510(k) clearance for coagulation of soft tissue.

Barta

In September, development-stage medical device company Nephros Inc. (New York City) launched its initial public offering on the American Stock Exchange under the ticker symbol NEP. Founded in 1997, the company is developing and marketing dialysis products for the treatment of end-stage renal disease (ESRD), including a proprietary middilution diafiltration technology intended to more effectively remove middle-molecule renal toxins that contribute to such conditions as carpal tunnel syndrome, dialysis-related amyloidosis, and degenerative bone disease in ESRD patients. Nephros president and CEO Norman Barta said that the company is looking forward "to the benefits it will bring to our current and future shareholders in increasing the company's visibility and liquidity in the capital markets." Opening price of the company's shares was $6.00.

An early trial date has been set for the patent infringement lawsuit by OraSure Technologies (Bethlehem, PA) against Schering-Plough Healthcare Products Inc. (Kenilworth, NJ). The final trial on the merits of the case is expected to occur in February 2005, and will offer an early final determination of OraSure's request for permanent injunctive relief, in lieu of its prior request for a preliminary injunction. OraSure originally filed the suit in July 2004 in the U.S. District Court for the Eastern District of Pennsylvania, alleging that Schering-Plough's manufacture and sale of its Dr. Scholl's Freeze Away cryosurgical wart-removal product in the over-the-counter market infringes several OraSure patents relating to the cryosurgical removal of warts and other benign skin lesions.

Natus Medical Inc. (San Carlos, CA) has announced the cash acquisition of privately held Fischer-Zoth GmbH (Germering, Germany), a manufacturer of otoacoustic emissions (OAE) products. Natus expects the acquisition will be accretive to earnings in 2005. Under the terms of the acquisition, Natus will retain Fischer- Zoth's operations and existing sales channels. Fischer-Zoth cofounder Peter Zoth will continue on as managing director of the organization. Fischer-Zoth currently has 20 employees and recorded revenue of approximately $3.1 million during calendar 2003.

In September, Nanobac Life Sciences Inc. (Tampa, FL) completed a private placement of its common stock led by the Nutmeg Group LLC (Northbrook, IL), a private-capital investment firm and financial consulting organization. The placement will potentially bring $5 million to the company over the next four quarters. Nanobac is conducting research to establish the pathogenic role of nanobacteria in calcification, particularly in coronary artery and vascular disease.

Corasanti

In October, Conmed Corp. (Utica, NY) completed its acquisition of certain products of the endoscopic technologies division of C. R. Bard Inc. (Murray Hill, NJ). The acquired product line comprises a comprehensive line of single-use medical devices employed by gastrointestinal and pulmonary physicians to diagnose and treat diseases of the digestive tract and lungs using minimally invasive endoscopic techniques. The product line had 2003 revenues of approximately $54 million and is the third-largest U.S. source for these types of products. Conmed president and COO Joseph Corasanti commented that "Conmed benefits from the marketing and manufacturing synergies created by the addition of the endoscopic technologies business unit to our company. We believe the acquisition will add approximately 12 cents to non-GAAP earnings per share in 2005 and also bring our total consolidated free cash flow in 2005 to the range of approximately $75 million to $80 million." The transaction was valued at $80 million, subject to postclosing adjustment. Conmed financed the purchase with available cash and borrowings under its revolving line of credit.

Dixon

A newly formed venture, EProducts (Alexandria, VA), has announced the introduction of its first product focused on patient-centric fluid management and hydration solutions. The company's DigiStraw is a noninvasive pocket-sized device used by individuals that require fluid-volume management. The product is targeted at hemodialysis, congestive heart failure, and elderly nursing-home patients at risk of dehydration or who have specific fluid restrictions and must monitor how much fluid they ingest over a period of time. According to Eric Dixon, president of EProducts, "The goal is for the DigiStraw to be used as a tool to improve patients' quality of life and reduce costly emergency room visits and hospital stays due to fluid overload."

Guezuraga

At the beginning of September, Medtronic Inc. (Minneapolis) announced that it had acquired the assets of Coalescent Surgical Inc. (Sunnyvale, CA), a developer of sutureless technologies for blood vessel anastomoses. Products acquired include Coalescent's U-Clip and Spyder anastomotic devices. Bob Guezuraga, president of Medtronic Cardiac Surgery, commented that the acquisition "creates excellent synergy with our strategy to develop technologies enabling surgical procedures that produce better outcomes for patients while reducing trauma and hospitalization." Financial terms of the purchase were not disclosed.

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