BB&T

As Cyberkinetics Neurotechnology Systems (Foxborough, Massachusetts) awaits a Humanitarian Device Exemption (HDE) from the FDA for its implantable Andara OFS (Oscillating Field Stimulator) System for acute spinal cord injury, it's taking this technology to a different, broader market with the formation of PNIR (peripheral nerve injury repair), a joint venture with NeuroMetrix (Waltham, Massachusetts).

The two companies will develop and commercialize Andara OFS for a variety of peripheral nerve injury indications. They will have equal ownership in the j-v.

"We are just totally focused right now, as a small company, on the HDE approval. We are in our third round of submissions to the FDA and if we are successful, that will be the first product FDA has approved for spinal cord injuries," Cyberkinetics' Timothy Surgenor, president/CEO of Cyberkinetics, told Biomedical Business & Technology. "NeuroMetrix had a need to broaden their product portfolio, which is why they formed PNIR with us. The spinal cord injury indication would be for a potential $100 million market. But the market for peripheral nerve injury repair might be a $1 billion market."

Under terms of the agreement, NeuroMetrix will fund the first $2 million of the development costs at PNIR during the next two years and provide PNIR with biomedical engineering and neurophysiology expertise.

Cyberkinetics will contribute intellectual property related to its Andara OFS platform and provide technical and scientific expertise to the j-v.

The Andara OFS technology is designed to restore sensory and motor function through the use of low voltage, direct current, electrical stimulation that promotes and directs the nerve fibers to grow across the area of injury.

Results from a Phase I, a 10-patient clinical trial of the Andara OFS in patients with recent spinal cord injuries were published in 2005 and indicated statistically significant improvements in sensory and motor function at 12 months after treatment.

After the initial $2 million investment by NeuroMetrix, the companies will contribute equally to future development costs. As part of the agreement, NeuroMetrix will distribute and Cyberkinetics will manufacture any products developed out of the j-v.

Some initial uses of the device include treating war-injured soldiers.

"Their injuries create deficits that are hard to recover from," Surgenor said. "In the military, they can do reconstructions on patents, but they may not get their full feeling back in legs or hands. It's very frustrating for these people."

Cyberkinetics and NeuroMetrix estimate that as many as 100,000 people with lacerations, stretch and compression injuries could benefit from nerve fiber growth repair treatment using Andara OFS Therapy.

Cyberkinetics received a letter from the FDA requesting additional analyses and data last fall. Surgenor estimates that the company's formal response will be submitted by the end of March.

Surgenor said the j-v, in the short term, will help Cyberkinetics to push forward its technologies without spending its own cash, but that the company also will be "exploring additional avenues" to raise more funding.

Currently there are no approved treatments for spinal cord injury that offer the possibility of returning sensory or motor function, according to Cyberkinetics. Spinal cord-injured patients generally face poor prognosis, and may need to have multiple follow-up procedures and extensive rehabilitation.

Cyberkinetics acquired Andara (Indianapolis), developer of the OFS device, in a stock exchange deal. Andara's technology derives from research concerning the repair and regeneration of neural tissues at the Center for Paralysis Research at Purdue University (West Lafayette, Indiana).

Merge plans to reduce headcount by 180 by end of '08

Merge Technologies (d/b/a Merge Healthcare; Milwaukee), a medical imaging software and services company, reported that it is planning a substantial headcount reduction.

The company said it anticipates that its total worldwide headcount of about 600 employees will be reduced to about 440 people by March 31, a reduction of 160 personnel.. The company said it expects a further estimated reduction from anticipated attrition during 2008 of about 20 people, for a total reduction of 180 persons. The reduction includes 45 jobs in North America and Canada and about 115 positions offshore, including consultants, or 28% of its current workforce. The company said that most of the reductions are effective immediately, with a small number to be completed prior to March 31.

The company will recognize a charge for the first quarter ending March 31, of about $2 million, about $1.3 million in severance and $700,000 in legal fees and future lease payments on its Burlington, Massachusetts, office, which it has vacated.

Merge said it estimates that annual cost savings of these actions will be about $7 million, the net reduction in recurring operating costs about $10 million a year, plus another $1 million to $2 million of anticipated savings.

"As we addressed earlier, the impacts of the Deficit Reduction Act, the two financial statement restatements, and ongoing legal expenses associated with litigation and the SEC investigation have been quite significant and have necessitated the recent rightsizing initiative," said Ken Rardin, president/CEO of Merge.

Post-acquisition restructuring by Natus is made to cut costs

Following a string of three acquisitions since 2006, Natus Medical (San Carlos, California) has restructured its operations and layoff of 45 employees, to eliminate redundant costs and save, it estimated, $2.4 million.

Natus makes devices to screen, detect, treat and monitor common medical ailments such as hearing impairment, neurological dysfunction, epilepsy and sleep disorders, and for newborn care.

"The restructuring is largely related to the acquisition of Xltek [Oakville, Ontario, Canada] and the ability to centralize our R&D efforts going on in multiple sites," Jim Hawkins, president/CEO of Natus, told BB&T.

Other recent acquisitions have included Bio-logic Systems (Mundelein, Illinois) and Deltamed (Paris), plus its wholly owned subsidiary IT-Med (Frankfurt, Germany).

Natus said it will eliminate "redundancies" in its North American field sales and service personnel, resulting from the acquisition of Xltek and certain production resources and outsource assemblies. The restructuring will be phased in during the first nine months of 2008.

Natus said it expects the actions to be cost neutral in 2008, since savings during the year will be largely offset by severance costs, which the company expects to total around $800,000. The plan is expected to result in a net cost reduction before tax of about $2.4 million in 2009.

As part of the plan, the company said it will centralize its R&D activities supporting the company's three main product families:

• Activities associated with North American diagnostic neurology product lines will be consolidated at the Xltek facility.

• Activities associated with newborn hearing screening and diagnostic hearing product lines will be consolidated at the Bio-logic facility.

• Activities associated with other newborn care products will be consolidated at the company's Olympic Medical facility (Seattle, Washington).

At the end of 2007, Natus reported that for the first quarter ending March 31, 2008, revenues are projected to range from $34.5 million to $36 million and earnings a share to range from $0.09 to $0.10. For the full year, Natus anticipates reporting revenue of about $160 million and earnings per share of $0.68 to $0.70.

The revenue and earnings guidance presumes Natus will receive FDA clearance to ship its Olympic Cool-Cap System in the U.S.

Illumina's systems analyzes Genome sequence of African male

Illumina (San Diego) reported that scientists at the company have sequenced the genome of an anonymous African male (Yoruba from Ibadan, Nigeria), using the Genome Analyzer. Sequencing of this HapMap sample was conducted internally, and the company said it marks the first human genome sequence generated exclusively with paired reads of 35 to 50 bases in length.

Leveraging recent system improvements that increase the throughput and improve the accuracy of the Genome Analyzer, Illumina scientists were able to complete this project in a matter of weeks. More than 95% of production runs generated high-quality data with an average of over three billion bases (three Gb) per run, it said.

Illumina said the work establishes the utility of its sequencing technology for accurately sequencing large and complex genomes. Using paired reads primarily from 200 base pair (bp) insert size libraries, supplemented with reads from 2000 bp insert size libraries, Illumina scientists initially conducted 27 runs to generate over 75 Gb of DNA sequence and achieve more than 90% coverage of the genome.

An initial analysis yielded over 3.7 million single nucleotide polymorphisms (SNPs); including more than 1 million novel SNPs.