A Diagnostics & Imaging Week

Avantis Medical Systems (Sunnyvale, California) reported that it has raised $12 million in a Series B round of financing.

Avantis is developing the Third Eye retroscope, a device for detection of colon cancers and polyps hidden from the view of a standard colonoscope. The company said the financing will be used to fund development and commercialization of the Third Eye in the U.S., including ramping up manufacturing and distribution.

The Third Eye is passed through the instrument channel of a standard colonoscope until it extends beyond its tip. As it emerges, the device automatically turns 180 degrees to aim "backward" toward the tip of the colonoscope. Then, as the colonoscope is withdrawn from the colon, the device provides a continuous retrograde view to reveal polyps, cancers and other lesions that might be hidden from the view of a standard colonoscope.

Colonoscopy is widely regarded as the "gold standard" for detection of abnormalities in the colon. However, research has revealed that many polyps and cancers can be missed during colonoscopy, especially if they lie behind folds in the colon wall, Avantis said. This new device is designed to reveal the opposite side of those folds.

A first-in-man study is currently in progress and a larger study will launch in 1Q07, the company said.

The round was led by Montreux Equity Partners and joined by existing investors.

In other financings news:

• MedCath (Charlotte, North Carolina) reported the offering of 6 million shares of its common stock. MedCath will offer 1.7 million shares of its common stock, and Kohlberg Kravis Roberts and Co. and Welsh, Carson, Anderson & Stowe and their affiliates intend to offer 4.3 million shares of MedCath's common stock.

MedCath said that the net proceeds of the shares that it sells will be used to repurchase a portion of its outstanding 9.875% senior notes, due July 15, 2012, and for working capital and other corporate purposes.

Citigroup Global Markets, Wachovia Capital Markets and Deutsche Bank Securities are acting as joint book-running managers for the underwritten offering. Banc of America Securities, Raymond James & Associates and Stephens are acting as co-managers.

MedCath owns interests in and operates 11 hospitals with a total of 667 licensed beds, in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota, and Texas. MedCath also manages the cardiovascular program at various hospitals operated by other parties and provides cardiovascular care in diagnostic and therapeutic facilities in various states.

• Applied Biosystems Group (ABG; Foster City, California), an Applera business, reported that it has signed an agreement with Eagle Research and Development (Eagle R&D; Boulder, Colorado) to collaborate on further developing a single molecule detection device invented by Eagle. As part of the agreement, ABG also received an exclusive two-year option to license the technology. Financial terms of the agreement were not disclosed.

Eagle's technology, now in prototype stage, identifies and quantifies molecules based on their electronic charge signatures. ABG said it believes the technology could have significant use in advancing personalized medicine, based on its potential for faster and less expensive protein and nucleic acid identification, protein/protein and protein/small molecule interaction measurements and DNA sequencing.

Eagle received a two-year grant from the National Human Genome Research Institute (Bethesda, Maryland) in 2002 to demonstrate a unique DNA detection method using a nanopore-based device. Nanopores are extremely small openings in a thin membrane or silicon chip. When an electronic voltage is applied, molecules pass through these pores enabling each unique molecular component to be identified and counted.

"This technology offers the prospect to eventually correlate DNA and its expressed proteins with specific disease states using an inexpensive, disposable and portable device, which could be a boon for clinical research," said Jon Sauer, founder of Eagle R&D. "For example, the device has the potential to enable development of exquisitely targeted treatments using sequencing data both from a patient and from the disease-causing pathogen."

"A rapid, cost-effective and portable molecular detection device has the potential to advance a wide-range of important life science applications," said Dennis Gilbert, chief scientific officer of Applied Biosystems. "While it is still in early stages, we are excited about exploring this technology's ability to achieve these goals by identifying molecules directly by electronic charge signatures, a capability which could also represent the future of label-free molecule detection."

ABG said it intends to focus initial development support and feasibility testing for applications in protein identification and detection of protein-binding events.