A Medical Device Daily

Tengion (King of Prussia, Pennsylvania), a company focused on technologies in regenerative medicine, on Monday reported raising $50 million in a Series B financing led by Bain Capital and Quaker BioVentures. This follows the company's A round of $39 million last year (Medical Device Daily, Aug. 5, 2005).

The new investment is comprised of funds from Bain Capital Ventures and Brookside Capital. All previous venture investors – Oak Investment Partners, Johnson & Johnson Development, HealthCap and L Capital Partners – also participated in the round.

Tengion said it would use the proceeds to fund human clinical trials for development of its lead product, the autologous neo-bladder construct, for the treatment of neurogenic bladder associated with spina bifida and spinal cord injuries. The funds also will be used to develop Tengion's manufacturing facility in East Norriton, Pennsylvania, and to advance the company's product pipeline.

“The successful completion of this financing comes at an exciting time for Tengion, as we remain on target to file an Investigational New Drug [IND] application with the Food and Drug Administration and, following FDA acceptance, begin clinical trials later this year,” said Steven Nichtberger, MD, president and CEO of Tengion.

The company's technology begins with a biopsy of a diseased or impaired organ, followed by isolation of progenitor cells – the healthy cells capable of regeneration. Growth factors then are added and grown onto a scaffold. The resultant structure is then implanted in the patient, with the scaffold dissolving and leaving the integrated organ.

Tengion was founded in 2003 to develop these neo-organs and tissues primarily in the genitourinary and cardiovascular fields, based largely on technology developed in the laboratories of Dr. Anthony Atala. The technology was licensed from Children's Hospital Boston, the pediatric teaching hospital of Harvard Medical School (both Boston).

Atala is the director of the Wake Forest Institute for Regenerative Medicine (Winston-Salem, North Carolina), with which Tengion has license and research agreements. Additional technology has been licensed from the laboratories of Drs. Robert Langer and Jay Vacanti at the Massachusetts Institute of Technology (Cambridge).

Founded in 2003, Tengion develops autologous neo-organs and tissues, such as bladders, that are derived from the patient's own cells. It says its approach has the potential to enable people with organ and tissue failure to lead healthier lives without donor transplants or the side effects of current therapies.

Bain Capital Ventures is the venture capital arm of Bain Capital. Quaker BioVentures is a life science venture capital firm, focused on life science and biopharma and medical device and diagnostics companies in the Mid-Atlantic region.

Aksys (Lincolnshire, Illinois), a developer of home dialysis systems, reported closing new financing with Durus Life Sciences Master Fund, following the $5 million bridge financing provided to the company by Durus in March.

With the new closing, Aksys issued shares of its Series B preferred stock, convertible into 5 million shares of common stock, and warrants to purchase 5 million shares of the company's common stock in exchange for the cancellation of $5 million of existing subordinated promissory notes of the company currently held by Durus.

In addition, at the closing Durus provided about $15.9 million in senior debt to the company for about $1.45 million in cash; the cancellation of about $9.3 million of existing subordinated promissory notes held by Durus; and rollover of the $5 million bridge financing provided by Durus into the senior debt.

Durus also has made available to the company a $5 million line of credit to be used to fund ongoing operations “to the extent the company is unable to obtain other financing and certain funding conditions are met,” it said in a statement.

Durus also exercised its option under the financing agreements at the closing to purchase about $1.45 million of Series B preferred stock of Aksys, convertible into common stock at $1 a share, and warrants to purchase shares of common stock at $1.10 a share. In exchange, Aksys cancelled about $1.45 million existing subordinated promissory notes of the company currently held by Durus.

As previously reported, a majority of the members of the company's board changed in connection with the finance closing. New directors are Douglass Given, a partner at Bay City Capital; Timothy Mayleben, a consultant with ELMa Advisors; Gretchen Piller, director of research for Torrey Associates; and Leslie Lake, managing director of the Invus Group. The company's other directors – Lawrence Damron, Alan Meyer, Bernard Tresnowski and Brian Pereira – resigned from the board, and the new directors join current directors Richard Egen, Shodhan Trivedi and Larry Birch.

Aksys' lead hemodyalysis product, the PHD System, is designed to improve clinical outcomes of patients and reduce mortality, morbidity and the associated costs of care.

In other financing activity:

• Lumenis (Yokneam, Israel), a manufacturer of laser and light-based medical devices, reported receiving exclusive worldwide licensing rights for SRT, a new laser therapy for treating retinal diseases.

The rights include licenses issued to Lumenis by Medizinisches Laserzentrum Lubeck (Lubeck, Germany), Massachusetts General Hospital (Boston) and Professor Reginald Birngruber. Financial terms were not disclosed.

Lumenis said that SRT selectively targets and confines treatment to specific cells (the retina pigment epithelium) at the back of the retina. Since there is little heat generated, the surrounding photoreceptors are left undamaged and their normal function is sustained. “Therefore, SRT represents a paradigm shift for retinal laser treatments with the potential to enhance sight preservation for patients affected by several retinal diseases,” Lumenis said in a statement.

Avner Raz, president and CEO of Lumenis, said the company “continues to lead the medical technology industry towards efficacious laser treatments . . . The potential application for this new technology, namely diabetes and age-related macular degeneration, is massive and growing.”

According to Birngruber, chairman of Medizinisches Laserzentrum Lubeck and visiting professor at Harvard Medical School, “Laser photocoagulation is the accepted standard of care for diabetic retinopathy patients, while photodynamic therapy is the current standard for treating AMD patients. Although both of these laser treatments reduce disease progression, they seldom restore or improve visual acuity. SRT, on the other hand, has the potential of doing both.”

Lumenis also entered into separate agreements with Birngruber and Dr. Mark Latina at Massachusetts General Hospital, in addition to providing a grant to Dr. Charles Lin at the Wellman Center for Photomedicine at Massachusetts General Hospital, to advance development of SRT.

• Prematics (Bethesda, Maryland), a healthcare information technology firm, reported the close of a financing led by General Catalyst Partners and Foundation Capital. The financing was described as an “eight-figure” private equity funding, the exact amount not specified.

Prematics is the developer of ScriptTone, an electronic prescribing service delivered over the company's end-to-end network, allowing physician prescribing at the point-of-care.

Scott Puritz, CEO of Prematics, said, “The company's ScriptTone service . . . positions Prematics to improve patient safety, drive down costs and provide value to all key industry stakeholders.”

• bioMetrx (Jericho, New York) reported securing credit lines of more than $1 million with component suppliers – established, it said, to secure necessary long lead-time electronic components used in its biometrically-activated products.

bioMetrx, through its subsidiaries, develops biometrics-based products to the consumer, health information, medical devices and small business markets under the brand name smartTouch.