A Medical Device Daily

Spiration (Redmond, Washington), a developer of devices for the treatment of lung disease, reported raising $13.4 million in a Series F round of equity funding.

The investment was led by new investor Olympus Medical System (Tokyo) with additional support from returning investors Guidant (Indianapolis), New Enterprise Associates, Sprout Group (currently New Leaf Venture Partners), Versant Ventures, Three Arch Partners, InterWest Partners and Investor Growth Capital.

“The strong interest and support shown by Olympus Medical Systems Corporation, the world's leader in providing bronchoscopy tools to pulmonologists, is a credit to our leadership in the pulmonary device market and the opportunity available to provide improved treatment options and a higher quality of life to COPD patients,“ said Richard Shea, president and CEO of Spiration.

Privately-held Spiration said the financing will be used to fund clinical trials for the company's lead product, the IBV Intra-Bronchial Valve System, including a multicenter, randomized pivotal study in the U.S. and a multicountry study in Europe. Spiration developed the IBV Valve System as a less invasive alternative to surgery for achieving improvement in both health status and functions supported by the lungs in subjects with severe emphysema.

The system consists of a one-way valve and accessories for implanting the valve in the intended airway or airways leading to the diseased lung portions. The valve is loaded into a delivery catheter, which is then passed through the channel of a flexible bronchoscope to the intended implant location. The design of the IBV system blocks inspired airflow, yet allows expiratory airflow and mucus to clear from the treated airways.

The IBV Valve System is CE-marked but is currently an investigational device in the U.S. and Canada.

Sequenom (San Diego) reported that the amount of its previously reported private placement of common stock has been increased by $3 million to a total of $33 million. Siemens Venture Capital has agreed to join the previously announced investors ComVest Investment Partners II, Pequot Private Equity Fund IV, and LB I Group (an affiliate of Lehman Brothers) in an aggregate commitment for a $33 million private placement of common stock and warrants.

The company will issue 60 million shares of common stock and 36 million common stock purchase warrants exercisable at 70 cents a share. The transaction is expected to close by May 31.

Sequenom said that the proceeds will be used for general working capital needs.

Sequenom is a developer of genetic analysis products. Its MassArray system is a DNA analysis platform that measures the amount of genetic target material and variations therein.

In other financing activity:

• Aksys (Lincolnshire, Illinois), a manufacturer of home dialysis systems, reported entering into definitive agreements with Durus Life Sciences Master Fund that give it the capital needed “to support ongoing operations and restructure its current relationship with Durus.“

Durus invested $5 million in cash in bridge financing to acquire senior secured notes of the company. The agreements contemplate a subsequent closing in which Durus would exchange about $5 million of existing subordinated promissory notes of the company held by Durus for new shares of the company's Series B preferred stock, convertible into 5 million shares of common stock at $1 a share, and warrants to purchase 5 million shares of stock at $1.10 a share.

At closing, Durus would also exchange about $10.8 million of subordinated promissory notes for about $10.8 million of senior secured notes. Durus also will provide Aksys with a credit facility for up to $5 million of additional senior secured notes and have the option to invest up to another $15 million in cash to acquire additional shares of preferred stock convertible into common stock at $1 a share and additional warrants to purchase common stock at $1.10 a share.

Larry Birch, Aksys' senior vice president and CFO, has been appointed interim CEO and placed on the company's board. Bill Dow has stepped down from his position as the company president and CEO and will transition to a strategic advisory role.

Birch said: “Going forward, we will be concentrating on three major initiatives, including a geographically-focused sales and marketing program, the development and launch of our next generation PHD system, and a more efficient cash management strategy. The relationship with Durus is integral to our repositioning.“

Aksys also revised its preliminary 4Q and FY05 earnings, initially released on March 1, resulting from a decrease in the value of a vendor deposit by $694,000 to reflect uncertainty associated with that vendor. This adjustment increased cost of goods sold for 4Q and year ended Dec. 31, 2005, to $3,198,000 and $14,925,000, respectively. The net loss for the fourth quarter and year ended Dec. 31 increased to $7,428,000 or 25 cents a share and $34,198,000 or $1.14 a share, respectively.

• Quintiles Transnational (Research Triangle Park, North Carolina) reported completing new credit facility arrangements, including a $225 million first-lien revolving credit facility due in 2012; a $1 billion first-lien term loan due in 2013; and a $220 million second-lien term loan due in 2014.

Quintiles said that proceeds from the borrowings under the term loans were used, together with available cash, to pay the purchase price for notes accepted in a tender offer and to cash out the outstanding preferred stock of Pharma Services Holding , the parent company of Quintiles, as part of the mergers of Pharma Services and Pharma Services Intermediate Holding (Durham, North Carolina) into Quintiles.

The previously reported cash tender offer and consent solicitation relating to the outstanding 10% senior subordinated notes due 2013 of Quintiles and 11.5% senior discount notes due 2014 of Holding expired at midnight March 30. On March 31, about $446.5 million principal amount, or 99.2% of the outstanding principal amount of subordinated notes, and $219 million aggregate principal amount at maturity, or 100% of the outstanding discount notes were accepted for purchase.

Citigroup Corporate and Investment Banking acted as the dealer manager in connection with the tender offer and consent solicitation. Global Bondholder Services served as the tender agent and information agent for the tender offer and consent solicitation.

• Nanostart (Frankfurt Am Main, Germany) has made an investment in NanoDynamics (Buffalo, New York), the amount undisclosed.

NanoDynamics develops technologies for nano-sized metal and ceramic powders, as well as a novel process for affordable production of multiwall carbon nanotubes. The company reports having more than 60 patents and patent applications protecting its proprietary processes, materials, and end-products.