A Medical Device Daily

AxioMed Spine (Beachwood, Ohio), a developer of next-generation artificial spinal discs, reported that it has secured $18 million in Series B financing from a group of investors led by Thomas, McNerney & Partners.

Joining the round was Investor Growth Capital and returning investor Primus Venture Partners. All of AxioMed's other Series A venture capital investors — CID Equity Partners, Early Stage Partners, MB Venture Partners and Reservoir Venture Partners — participated, and Medical Venture Fund also joined as a new investor.

AxioMed has developed the Freedom Lumbar Disc, a next-generation artificial spinal disc characterized by innovative design and materials. The Freedom is designed to closely mimic the native function of a human disc by providing physiologic motion and replicating key biomechanical properties.

Clinical trials are scheduled to begin this year as a treatment for degenerative disc disease.

David Floyd, president and CEO, said, “We are very pleased to close on such a substantial round of capital. The interest from strong and experienced new investors, along with enthusiastic participation from all of our existing venture partners is very gratifying and a significant validation of our technology, team and business plan.“

Pete McNerney, managing partner at Thomas, McNerney & Partners, said, “Degenerative disc disease is a serious problem without a complete solution; we think AxioMed holds the key.“

Fischer Imaging (Denver), a manufacturer of medical imaging systems, said it has entered into a $10 million loan agreement with private equity group ComVest Investment Partners.

Under the agreement, Fischer received an initial advance of $5 million and used the proceeds to retire all of its outstanding senior indebtedness and for working capital to fund operations, research and development and marketing initiatives. The remaining $5 million available under the commitment may be borrowed by Fischer from time to time, subject to the satisfaction of certain conditions, through Nov. 15.

Harris Ravine, Fischer president and CEO, said, “This financing provides the company with valuable capital and additional resources to support the current rollout of our second-generation SenoScan digital mammography system, as well as development of future enhancements to SenoScan such as 3-D capability. It will also support other key development programs.“

The loan carries an interest rate of 8.5% per year and matures in November 2008.

Fischer has the option to prepay the loan, in full or in part, at any time without any prepayment fee. Beginning with the first calendar quarter of 2006, the company is required to make certain minimum quarterly principal payments and to make mandatory principal prepayments based on its future cash flows.

In connection with the financing, the company issued ComVest warrants to acquire up to 2 million shares of Fischer common stock. The warrants have an exercise price of $4.25 per share and expire in February 2010.

One company focus is women's health, particularly the diagnosis and screening of breast cancer through the application of digital imaging technologies. Fischer also produces equipment designed for emergency, radiology, surgical and certain cardiovascular needs. Fischer Imaging is the oldest manufacturer of X-ray imaging devices in the U.S., having started in 1910.

Applied Spine Technologies (AST; New Haven, Connecticut), an emerging spinal technology company, said it has closed on a Series B round of financing. The $15 million Series B round was led by InterWest Partners, with De Novo Ventures also participating.

AST was founded in February 2004 with Series A funding of $4 million from Oxford Bioscience Partners and BioVentures Investors. It was formed to commercialize technology invented at Yale University (also New Haven) to address chronic low back pain, now called the M-Brace System. The M-Brace is a posterior dynamic stabilization device designed to support the spine while preserving motion and flexibility.

The company's scientific founder is Dr. Manohar Pan-jabi, professor of orthopedics & rehabilitation and mech- anical engineering at Yale and a leading authority on spine biomechanics.

Thomas Wood, president and CEO, said, “Back pain patients remain one of the most underserved clinical populations today. AST is now well positioned to advance the development and clinical testing of its M-Brace System for motion preserving spine solutions.“

Ellen Koskinas, a principal at InterWest Partners, will join the AST board.

In other financings:

• Scandius BioMedical (Littleton, Massachusetts), an early stage medical device company focusing on the development of minimally invasive orthopedic implants and surgical instruments, has raised $8 million through the private sale of Series C preferred stock.

The financing was led by Stockton Partners (New York). Stockton, a first-time investor in the company, was joined in the round by Scandius' existing investors, KBL Healthcare Ventures, Commerce Health Ventures and Ivy Healthcare Capital.

“This financing positions the company favorably as we gain continued visibility as a leader in the orthopedic sports medicine market,“ said Mark Johanson, founder, president and CEO. “We are very pleased to have such experienced healthcare investor partners as we continue to grow and broaden our technology platform.“

In November 2004, the company began commercial use of its debut product, the Stratis ST ACL Reconstruc-tion System. The Stratis device is used for arthroscopic reconstruction of the torn anterior cruciate ligament, one of the most common sports related orthopedic injuries.

Proceeds from the financing will be used for expansion of the company's worldwide sales and marketing network, continued research and development activities, and working capital.

• NeuroVasx (Maple Grove, Minnesota) reported completing a private placement of common stock in the aggregate amount of $6.5 million with Miller Johnson Steichen Kinnard and The Stephens Group. Terms of the financing were not disclosed.

The funds will support the completion of the company's 510(k) application to the FDA for its APEX cerebral aneurysm treatment device, currently in development. The proceeds also will be used for continued product development and commercialization of the APEX.

“We are very pleased to have raised the capital required for us to achieve in reaching certain milestones that are crucial to the future success of NeuroVasx, including the filing of our 510(k) application,“ said Eric Timko, president and CEO.

NeuroVasx was founded in 1997 focused on developing a portfolio of unique catheter and implant technologies to treat acute stroke, aneurysms and other cerebrovascular disorders.

• BioDelivery Sciences International (BDSI; Morrisville, North Carolina) said it has closed a $2.5 million secured convertible debt financing from Laurus Master Fund.

Net proceeds from the financing will be used primarily to retire BDSI's existing secured equipment loan with Gold Bank,on which approximately $300,000 is presently owed; to support the company's research, development and commercialization opportunities; and for general working capital purposes.

The investment, which takes the form of a convertible note secured by substantially all of BDSI's assets, has a three-year term and bears at an interest rate equal to prime plus 2% a year. The note is convertible, under certain conditions, into shares of BDSI common stock at a price equal to $3.10 a share.

In connection with the financing, BDSI also issued Laurus Funds a common stock purchase warrant to purchase up to 350,000 shares of BDSI common stock at a price equal to $3.88 per share. BDSI has agreed to register the shares of common stock underlying the note and the warrant with the Securities and Exchange Commission (SEC).

Dr. Mark Sirgo, president and chief operating officer of BDSI, said, “Achieving a financing in the first quarter of 2005 was a critical goal for BDSI.“

He added: “This financing will help us to advance our product portfolio on schedule during 2005, including an anticipated filing of a new drug application for our Eme-zine product in April and the expected initiation of clinical trials on our BEMA fentanyl product in the same month.“

BDSI is a specialty biopharmaceutical company that is exploiting its licensed and partner-owned patented drug delivery technologies to develop and commercialize new formulations of proven therapeutics, nutraceuticals and micronutrients.

• Vivus (Mountain View, California) said it has filed a prospectus supplement with the SEC relating to an underwritten public offering of 7.5 million shares of common stock under an existing shelf registration statement and supplement.

SG Cowen & Co. is sole book-running manager for the proposed offering and Wachovia Capital Markets is co-lead manager.

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