SALE OF NOVALIGN ORTHOPAEDICS, INC.
Gerbsman Partners ( http://www.gerbsmanpartners.com ) has been retained by NovaLign Orthopaedics, Inc. ( http://www.novalign.com ) to solicit interest for the acquisition of all, or substantially all of, NovaLign’s assets.
Headquartered in Memphis, Tennessee, NovaLign is a medical device company that has developed innovative, next generation intramedullary nail technologies to address the estimated $2 billion global trauma market for the treatment of humeral, femoral, and tibial fractures.
IMPORTANT LEGAL NOTICE:
The information in this memorandum does not constitute the whole or any part of an offer or a contract.
The information contained in this memorandum relating to NovaLign’s Assets (as defined herein) has been supplied by NovaLign. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.
Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.
Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of NovaLign’s or Gerbsman Partners’ negligence or otherwise.
Any sale of the NovaLign Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either expressed or implied, of any kind, nature, or type whatsoever from, or on behalf of NovaLign and Gerbsman Partners. Without limiting the generality of the foregoing, NovaLign and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the NovaLign Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.
This memorandum is not to be supplied to any other person without Gerbsman Partners’ prior consent. The information contained herein is not subject to the Confidential Disclosure Agreement, however any additional requested information would require execution of the attached CDA attached hereto as Appendix B.
Company Profile
NovaLign Orthopaedics, Inc., a Memphis, Tennessee based medical device company, is developing next generation intramedullary nail technology to address the estimated $2 billion fracture fixation market. NovaLign™ offers compelling advantages to patients and surgeons by providing implantable devices that avoid damage to nearby joints and tissues in the process of repairing long bone fractures.
Founded in 2005 as a start-up company within The Innovation Factory (Duluth, GA), NovaLign has raised $13.8 million in two rounds of venture capital financing. Current investors include Versant Ventures (Menlo Park, CA), SV Life Sciences (Boston) and Accuitive Medical Ventures (Duluth, GA).
NovaLign’s mission is to develop new solutions for treating long bone fractures that minimize damage to nearby joints, soft tissues, and neurovascular structures. The goal of the technology is to create a stable fracture repair that promotes healing and utilizes a surgical technique that is simple and straightforward for surgeons. The ultimate goal is to heal the fracture with the least possible damage to healthy tissues, and allow patients to return to normal function as quickly as possible.
The core of NovaLign’s technology is the NovaLign® Intramedullary Fixation System (IFS), an implant that can be inserted into the intramedullary canal in a flexible state and then converted to a rigid state. This conversion from flexible-to-rigid imparts the strength and rigidity needed to manage loads encountered during the healing process.
NovaLign believes its assets are attractive for a number of reasons:
· The NovaLign® IFS Nail is FDA cleared and currently on the US market. NovaLign’s 510(k) (K083458) provides clearance to market in 3 fracture markets: femur, tibia, and humerus.
· NovaLign is the only company offering extra-capsular compression nailing for fracture repair, meeting unmet clinical needs for both patients and physicians.
· NovaLign’s intellectual property, including 1 licensed issued US patent, 15 pending US patent applications, 1 allowed international licensed patent, and 13 pending international patent applications, is a broad portfolio that protects novel ways of treating long bone fractures.
· The NovaLign® IFS Nail technology has no royalty obligations.
· Reimbursement codes have already been established and confirmed for all 3 clinical applications (CMS and AMA certified).
· Leading orthopaedic trauma surgeons have actively supported and implanted NovaLign’s devices.
· The company has collected a significant amount of pre-clinical and clinical scientific evidence in support of the technology.
· NovaLign has achieved and maintains ISO 13485 certification.
· NovaLign has undergone a Technical File review to receive the CE-mark and is currently addressing minor non-conformities. We estimate that it will take four months to complete the remaining tasks for securing CE-mark approval.
· NovaLign believes the IFS Nail design is scalable for other markets and continues to expand the breadth and depth of its intellectual property.
Impact of Technology on the Market
NovaLign believes that its novel IFS Nail offers several advantages over currently marketed nails and plates. The surgical technique associated with the technology completely avoids all articular surfaces and preserves all surrounding tendons and ligaments. No tendon or ligament has to be manipulated, pushed to the side, or split for the insertion of the product; thereby creating minimal additional harm to the patient.
NovaLign’s cannulated IFS Nail contains interconnected segments that transition from a flexible state to a rigid state through cable tensioning, allowing the system to be inserted outside of the joint. This preserves critical soft tissues around the joint. Acquiring access to NovaLign’s intellectual property is critical for any company that must be on the leading edge of the trauma market.
Current treatment methods for fractures include bracing, plating, and nailing. Bracing requires multiple adjustments that cause patient discomfort throughout the healing process. Plating requires large incisions for direct exposure of the fracture site that can lead to increased blood loss, risk of nerve damage and disruption of the blood supply. Conventional intramedullary (IM) nails for humeral fractures violate the rotator cuff leading to shoulder pain and motion loss in 16-37% of patients. Standard retrograde femoral nailing (through the knee joint) causes knee pain in 20-36% of patients with the pain lasting for years. Conventional tibial IM nailing can lead to knee pain in 57-83% of patients with the pain having been documented to last more than 14 years.
Intellectual Property Summary
NovaLign believes it has a unique intellectual property portfolio for minimally invasive treatment of long bone fractures. At present, NovaLign has an exclusive license to 1 issued US patent, 15 pending U.S. patent applications, 1 allowed licensed international patent, and 13 pending international patent applications, each as more specifically described in Appendix C. The portfolio represents a broad array of strategic variables including:
- Specific claims regarding fracture compression with an IM device;
- Multiple embodiments of implant technology that enable the intramedullary device to be inserted in a flexible state and transitioned to a rigid state once inside the bone;
- Exclusive license for use of a collet fixation system patent for all orthopaedic and spine applications excluding cerclage fixation, ACL fixation, articulating joint applications and bunion surgery of the first MTP joint. This fixation system is a key design feature that ensures the rigid state of the device is repeatable and reversible;
- Unique instrument for tensioning a device and maintaining tension while locking the device;
- Provisional application for multiple embodiments of devices designed for treating proximal femur fractures;
- Technology using metal reinforced structures combined with a hardenable fluid to repair bone fractures; and
- Expandable stent technology combined with polymer to repair bone fractures.
NovaLign’s Assets
NovaLign has developed a technology portfolio that delivers a product platform for treating long bone fractures with minimal damage to bone, soft tissues, and neurovascular structures. These assets fall into a variety of categories, including:
· Patents, patent applications, and trademarks
· 510(k) clearance in 3 fracture markets including humerus, femur, and tibia
· Technology addressing the estimated $2 billion global market for treating humeral, femoral, and tibial fractures (US Markets for Trauma Devices: 2008 and 2009 by Millennium Research).
· Established and certified reimbursement codes
· Extra-capsular intramedullary fixation that meets clinically unmet needs
· Optional fracture compression
· Unique and clinically relevant patient data
· Market supporting pre-clinical and clinical trials underway
· Next generation product designs
· Product cost reduction designs
· Manufacturing and design equipment
· Surgical product inventory
· Intellectual capital and expertise
The assets of NovaLign will be sold in whole or in part (collectively, the “NovaLign Assets”). The sale of these assets is being conducted with the cooperation of NovaLign. NovaLign and its employees will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership. Notwithstanding the foregoing, NovaLign should not be contacted directly without the prior consent of Gerbsman Partners.
Next Milestones – August 2010
NovaLign is working toward additional key milestones that will be achieved by the end of August 2010. These include:
1) Completion of an animal study at Auburn University assessing the ability of the NovaLign® IFS Nail to be removed from a living animal (goat humerus) six months post-operatively.
2) Obtaining 6-month human clinical results on approximately ten patients enrolled in NovaLign’s multi-center, multi-national clinical study.
Management
Jeffrey G. Roberts – President & CEO: Jeff has served as NovaLign’s president and CEO since September 2007. From 2000 to 2007, Jeff served in executive management roles, including Senior Vice President and Chief Technical Officer at Wright Medical Technology, Inc., a publicly traded orthopaedic implant company. Jeff has more than 25 years of experience in the orthopaedic medical device industry and has been involved in the design, development, and manufacture of many orthopaedic devices, implants, and instruments for total joint reconstruction, arthroscopy, biologic, and extremity applications.
Board of Directors
· Charles Larsen, Chairman: Vice Chairman, The Innovation Factory – Duluth, GA
· David Milne: Managing Partner, SV Life Sciences – Boston, MA
· Jeffrey G. Roberts: President & CEO, NovaLign Orthopaedics, Inc. – Memphis, TN
· Beckie Robertson: Managing Director, Versant Ventures – Menlo Park, CA
The Bidding Process for Interested Buyers
Interested and qualified parties will be expected to sign a Confidential Disclosure Agreement (attached hereto as Appendix B) to have access to key members of management and intellectual capital teams and the due diligence “war room” documentation (“Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has had an opportunity to inspect and examine the NovaLign Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.
Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the NovaLign Assets. Each sealed bid must be submitted so that it is received by Gerbsman Partners no later than Friday, September 17, 2010 at 5:00pm Central Daylight Time (the “Bid Deadline”) at NovaLign’s office, located at 5885 Ridgeway Center Parkway, Suite 210, Memphis, TN 38120. Please also email steve@gerbsmanpartners.com <mailto:steve@gerbsmanpartners.com> with any bid.
Bids should identify those assets being tendered for in a specific and identifiable way. In particular, please identify separately certain equipment or other fixed assets. The attached NovaLign fixed asset list may not be complete and bidders interested in the NovaLign equipment must submit a separate bid for such assets.
Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase. All bids must be accompanied by a refundable deposit in the amount of $200,000 (payable to NovaLign Orthopaedics, Inc.). The deposit should be wired to NovaLign’s attorneys Murray & Murray, A Professional Corporation. The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by NovaLign’s counsel. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.
NovaLign reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale. Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.
NovaLign will require the successful bidder to close within a 7 day period. Any or all of the assets of NovaLign will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.
All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the NovaLign Assets shall be the sole responsibility of the successful bidder and shall be paid to NovaLign at the closing of each transaction.
For additional information, please see below and/or contact:
Steven R. Gerbsman
Gerbsman Partners
(415) 456-0628
steve@gerbsmanpartners.com
Kenneth Hardesty
Gerbsman Partners
(408) 591-7528
ken@gerbsmanpartners.com
Dennis Sholl
Gerbsman Partners
(415) 457-9596
dennis@gerbsmanpartners.com
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