Medical Device Daily

Accuray (Sunnyvale, California), maker of the CyberKnife radiosurgery system, appears to have hit a home run with its initial public offering (IPO).

The company, which reported the pricing of its IPO of 16 million shares of common stock — 10 million are being sold by the company and 6 million are being sold by certain stockholders of the company — at $18 per share, saw its stock surge ahead, closing the day at $28.47 a share, a staggering 58% ($10.47) over its opening price.

The company's success apparently validated the increased price range of the stock as the company on Thursday lifted its estimated price range to $17 to $18 per share, from the prior $14-$16 range that the company had disclosed earlier in the week (Medical Device Daily, Feb. 7, 2006).

The company and selling stockholders also increased the amount of shares for sale by more than 2.7 million for the IPO, which generated about $288 million.

Accuray and the selling stockholders also granted the underwriters an option to purchase up to an additional 399,998 and 2 million shares, respectively, at the initial public offering price to cover any over-allotments.

Accuray said it plans to use net proceeds for working capital, sales and marketing, general corporate purposes and research and development.

The company's Cyberknife includes features for providing highly targeted radiation and is intended as an improvement over older radiosurgery systems with limited mobility, and used mostly to treat brain tumors. The CyberKnife can be used to treat tumors anywhere in the body. The procedure requires no anesthesia and can be performed on an outpatient basis.

The CyberKnife received FDA 510(k) clearance in July 1999 to provide treatment planning and image-guided robotic radiosurgery for tumors in the head and neck. The system received 510(k) clearance in 2001 to treat tumors anywhere in the body where radiation treatment is indicated. CyberKnife has received a CE mark and has been approved for various indications in Japan, Korea, Taiwan, China and other countries.

The company reports more than 20,000 patients worldwide treated with the CyberKnife system since its introduction, with increasing use for indications outside of the brain, including for tumors on or near the spine and in the lung, liver, prostate and pancreas. It said that more than 50% of patients treated with the system in the U.S. were treated for tumors outside the brain. The company says the CyberKnife can treat tumors untreatable via traditional techniques because of their location, number, size, shape or proximity to other vital tissues or organs. This ability is facilitated by a "manipulator" arm designed to move and direct the linear accelerator with a high level of precision, enabling radiation doses to be delivered from nearly any direction.

The common stock will trade on the NASDAQ Global Market under the symbol ARAY.

J.P. Morgan Securities and UBS Investment Bank are serving as joint book-running managers for the offering, with Piper Jaffray & Co. as lead manager and Jefferies & Co. as co-manager for the offering.

In other financing news:

• MAKO Surgical (Ft. Lauderdale, Florida), a company developing advanced solutions for least invasive knee surgery, reported that it has closed on a $30 million Series C private equity financing led by funds affiliated with and advised by Tudor Investment Corp.

The financing also included Ziegler Meditech Equity Partners, as well as MAKO's existing stockholders, including the Exxel Group, MDS Capital Corp., Aperture Venture Partners, Ivy Healthcare Capital, and Sycamore Ventures.

The company's Haptic guidance system, is designed to allow orthopedic surgeons to perform MAKOplasty, a therapy for a large, yet highly underserved, population of patients with early-stage osteoarthritis of the knee. The company said that MAKOplasty empowers orthopedic surgeons to pre-operatively plan the precise alignment of knee resurfacing components and to intra-operatively make complex, anatomic, tissue-sparing and bone-conserving cuts with accuracy and precision.

"This infusion of capital will enable MAKO to execute on an operating plan that expands the clinical presence of MAKOplasty and bolsters the development of the next generation of MAKO proprietary technology and implants, all for the ultimate benefit of patients," said company president/CEO, Maurice Ferre, MD.

The MAKOplasty program also provides surgeons with an early intervention to effectively treat patients with unicompartmental osteoarthritis of the knee, allowing patients to retain their pre-operative lifestyle. In June 2006, the company performed the first MAKOplasty procedure and has performed more than twenty procedures to date.

The companies said the Haptic system is FDA-cleared and protected by more than 230 patents and patent applications owned or licensed by the company.

• DaVita (El Segundo, California) and NxStage Medical (Lawrence, Massachusetts) reported that they have entered a multi-year agreement under which the two companies will collaborate on expanding the availability of home hemodialysis to patients across the continental U.S. As part of the arrangement, DaVita has purchased $20 million in NxStage stock, representing an ownership position of about 7%.

Additionally, DaVita has purchased outright all of its NxStage System One equipment currently in use for about $5 million, and will purchase the majority of its future home hemodialysis equipment requirements.

The companies have also agreed to collaborate on a variety of initiatives to expand the home hemodialysis market such as public awareness, public policy and additional research efforts.

DaVita is a provider of dialysis services for patients suffering from chronic kidney failure.

NxStage develops systems for the treatment of end-stage renal disease and acute kidney failure primarily in the U.S.

• Invacare (Elyria, Ohio) reported the pricing of $175 million principal amount of its senior notes due 2015.

The notes will be unsecured senior obligations of the company guaranteed by substantially all of its domestic subsidiaries, and will pay interest at 9 % per annum on each February 15 and August 15. Subject to customary conditions, the offering is expected to close on Feb. 12.

The company is negotiating a new financing program that is expected to result in total capacity of about $700 million and is expected to include a senior secured revolving credit facility and term loans, in addition to the notes and $125 million principal amount of the company's 4.125% convertible subordinated debentures due 2027, which priced on Feb. 5.

The company said it intends to use the net proceeds from the sale of the notes, together with proceeds from these other financings that it is currently negotiating, to refinance substantially all of its existing indebtedness and pay related fees and expenses.

Invacare develops home and long-term care medical products that promote recovery and active lifestyles.