SALE OF Rio Grande Neuroscience, Inc.
Gerbsman Partners (www.gerbsmanpartners.com) has been retained by Rio Grande Neurosciences, Inc. (RGN) (www.RioGrandeNeurosciences.com) to solicit interest for the acquisition of all, or substantially all of, RGN’s assets.
Headquartered in Santa Fe, New Mexico, RGN is a medical device company that has developed a suite of non-invasive brain stimulation (NIBS) technologies for use in treating neurological and psychiatric conditions and enhancing cognitive performance. RGN has raised $6.2 million over 5 years of capital financing. Over $50 million has been invested into the development of these three technologies over time by RGN and predecessor companies ($20 MM invested through Ivivi Health Sciences and $30 MM invested in Cervel Neurotech, both companies acquired by RGN).
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 RGN’s Assets (as defined herein) has been supplied by RGN. 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 RGN’s or Gerbsman Partners’ negligence or otherwise.
Any sale of the RGN 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 RGN and Gerbsman Partners. Without limiting the generality of the foregoing, RGN and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the RGN 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 contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent. This memorandum and the information contained herein are subject to the Confidential Disclosure Agreement attached hereto as Appendix A.
Company Profile
Rio Grande Neurosciences, Inc. (RGN), a Santa Fe, New Mexico based medical device company, has developed a suite of non-invasive brain stimulation (NIBS) technologies for use in treating neurological and psychiatric conditions and enhancing cognitive performance. The NIBS technologies, also called electroceuticalsTM, include a multicoil transcranial magnetic stimulation (mcTMS) device, a radio-frequency pulsed electromagnetic field (PEMF) technology, and a closed-loop transcranial electrical stimulation (clTES) platform. Each device delivers energy to the central nervous system (CNS) differently and has been studied for different clinical and consumer applications.
Multi-coil TMS, IP from Stanford University and originally developed by Cervel Neurotech, involves selectively modulating brain circuit nodes. This is accomplished with an array of coils that steer induced electrical currents so as to optimally modulate targeted brain regions. Each magnetic coil is independently positioned and powered, thereby steering the electrical current toward unique brain areas not reachable by single-coil devices. RGN’s mcTMS assets include a sought-after intellectual property position for TMS with multiple coils and strong clinical data in the areas of depression and pain. FDA 510k clearance for treatment-resistant depression is expected in Q1 2017.
RGN’s PEMF technology is a portable treatment that inductively delivers a low-power electric field to underlying tissue. PEMF is a Class II FDA-cleared treatment for postoperative pain and edema and in randomized controlled clinical studies has been found to be safe and able to significantly reduce pain, narcotic pain medication use, edema, and inflammatory cytokine production. RGN has repurposed PEMF for treating mild traumatic brain injury and multiple sclerosis, based on studies demonstrating its anti-neuroinflammatory and neuroprotective effects. Preliminary clinical data (Harvard University) indicate that at-home treatment with the PEMF TheraCapTM reduces symptoms in patients with post-concussion syndrome.
The clTES platform has been shown to markedly enhance learning and memory. It includes a proprietary stimulator (NeuroMod16) and electrodes that can deliver conventional (tDCS, tACS, tRNS) or non-conventional (user-specified) waveforms in open or closed-loop systems that are responsive to neurological or physiological events. Each of the 16 channels operates independently in terms of frequency, amplitude, latency, and duration of stimulation. The NeuroMod16 is the only device available with these advanced capabilities.
Founded in 2011 as a start-up company with support from a Los Alamos National Labs (LANL) Venture Accelerator award, RGN has raised $6.2 million over 5 years of capital financing. Over $50 million has been invested into the development of these three technologies over time by RGN and other companies.
RGN’s mission is to address unmet needs in neurology and psychiatry as well as enhance human performance by implementing the NIBS devices described. In the near term, RGN’s technologies are oriented towards populations with depression, pain, brain injury, and multiple sclerosis; very large multibillion dollar markets.
RGN believes its assets are attractive for a number of reasons:
mcTMS
1. RGN’s intellectual property position for mcTMS covers the use of TMS with more than one coil, a position sought by single-coil TMS manufacturers.
2. mcTMS has advantages over single coil TMS, such as the ability to target multiple brain regions simultaneously or in sequence and to steer current to brain areas not addressable by single-coil approaches (e.g., deeper brain structures)
3. mcTMS has been shown to significantly reduce treatment resistant depression and a FDA 510k clearance for that indication is expected in Q1 2017.
4. mcTMS treatment response rates were found to be markedly higher than that reported by single-coil TMS approaches for treatment-resistant depression.
5. Clinical studies (Stanford University) have shown that mcTMS can markedly reduce both acute and chronic pain.
6. Ongoing research at Stanford University has demonstrated proof of principle for a novel mcTMS pulsing method that can enhance plasticity (RGN-owned IP), a foundation for next generation TMS methodology that may be far more efficacious and require fewer treatments.
PEMF
1. PEMF is a portable CE/CSA-marked FDA-cleared treatment for postoperative pain and edema and in randomized controlled clinical studies has been found to be safe and able to significantly reduce pain, narcotic pain medication use, edema, and inflammatory cytokine production.
2. PEMF is currently in use clinically, is reimbursed by Medicare for treating chronic wounds, and can be further commercialized on-label in the US and abroad.
3. PEMF has no known or observed side effects nor any associated adverse events.
4. Preclinical studies have demonstrated that brief treatments with RGN’s PEMF significantly reduce neuroinflammation and promote neuroprotection and that PEMF is protective in animal models of brain injury, stroke, and multiple sclerosis.
5. PEMF operates via induction and therefore the blood brain barrier does not hinder delivery of the therapy to the brain parenchyma, which is a critical challenge for CNS drug development.
6. RGN is studying at-home PEMF treatment, delivered via the TheraCap™, in patients with post-concussion syndrome at Harvard’s Spaulding Rehabilitation Hospital and encouraging clinical pilot results indicate that treatment is resulting in reduced symptoms and enhanced cerebral blood flow.
7. RGN has IRB-approved clinical trials planned to investigate PEMF as (1) a treatment for acute concussion and (2) adjunctive treatment for symptoms associated with multiple sclerosis.
8. Clinical studies confirming PEMF anti-neuroinflammatory and/or neuroprotective effects pave a path toward other high impact indications related to neurodegenerative disease and psychiatric illness.
clTES
1. NeuroMod16 was built in response to the lack of a safe, effective, and reliable commercial device for multichannel electrical brain stimulation.
2. NeuroMod16 is currently integrated into a cl-TES system in which it responds to real time EEG signals and can be integrated into other closed loop systems.
3. The NeuroMod16 delivers cl-TES via RGN’s proprietary electrodes that substantially increase the safety and comfort of TES.
4. The NeuroMod16 and associated electrodes can deliver conventional (tDCS, tACS, tRNS) or non-conventional (user-specified) waveforms with high levels of precision in open or closed-loop systems that are responsive to neurological or physiological events.
5. Each of the 16 channels operates independently in terms of frequency, amplitude, latency, location, and duration of stimulation.
6. The NeuroMod16 is modular and multiple units can be connected to create high density, high spatial resolution cl-TES.
7. The NeuroMod16 is the only device available with these advanced capabilities.
8. RGN electrodes can be implemented in any montage to meet virtually any user need.
9. US Air Force exclusively uses RGN electrodes for brain stimulation.
10. The U.S. Department of Defense has expressed interest in deploying the Neuromod16 as part of a training enhancement protocol that incorporates virtual reality and EEG.
11. The NeuroMod16 is ready for commercialization and partnership with distributors is underway.
Impact of Technology on the Market
RGN’s development of the three NIBS technologies is rooted in the understanding that non-invasive approaches will often be sought before invasive technologies that require surgery and the associated risks. Further, aggregation of three different NIBS technologies and methods is informed by activity in the nascent field of neuromodulation, which is still unfolding which modalities will work best for different clinical conditions or performance goals. Therein, each of RGN’s devices offers a unique value proposition.
mcTMS
1. RGN owns the only multicoil TMS device and the multicoil approach has a number of advantages over single coil TMS devices.
2. Single coil devices exhibit either shallow and focused stimulation (small diameter coils) or deep and diffuse stimulation (large diameter coils), but cannot stimulate deeper brain structures with selectivity.
3. Multicoil TMS employs an array of coils that steer induced electrical currents so as to optimally modulate targeted brain regions not reachable by single-coil devices. This approach has been shown to be clinically effective in depression and results in higher treatment response rates than single-coil TMS devices.
4. FDA 510k clearance is expected in Q1 2017, after which commercialization can be pursued.
5. RGN’s IP position prevents competitors from using multiple coils.
6. New data suggest that a novel multicoil TMS pulsing sequence can enhance plasticity (RGN-owned IP), an approach that may result in a next generation TMS methodology that could dramatically increase efficacy and reduce treatment duration compared to current standards.
7. RGNs novel mcTMS business model is expected to capture significant market share and put pressure on single-coil competitors.
PEMF
1. RGN’s PEMF technology is a non-invasive radiofrequency device that has been shown to have potent anti-inflammatory effects and no side effects in blinded randomized controlled trials and anti-neuroinflammatory and neuroprotective effects in preclinical studies.
2. RGN has transitioned to studying PEMF treatment, via TheraCapTM, as an intervention for neuroinflammation associated with mild traumatic brain injury and multiple sclerosis.
3. Preliminary results from a post-concussion syndrome pilot trial indicate that PEMF promotes resolution of symptoms and mechanistic outcomes are planned.
4. Given continued positive results and regulatory approval, PEMF therapy would become the first labeled treatment for brain injury, a vast market and critical unmet need in neurological therapeutics.
5. Clinical evidence that PEMF reduces neuroinflammation non-invasively would create a clear path toward several other neurological and psychiatric indications with unmet treatment needs.
6. The attractive safety profile and non-invasive nature of PEMF will position it to compete with potential drug competitors with adverse effects and/or be used adjunctively.
clTES
1. RGN’s TES device, the NeuroMod16, was built in response to the lack of a safe, effective, and reliable commercial device for multichannel TES.
2. RGN’s clTES electrodes provide a safe, stable, and comfortable platform for delivering electrical NIBS.
3. The NeuroMod16 and associated electrodes can deliver conventional (tDCS, tACS, tRNS) or non-conventional (user-specified) waveforms in open or closed-loop systems that are responsive to neurological or physiological events.
4. Each of the 16 channels operates independently in terms of frequency, amplitude, latency, and duration of stimulation.
5. The NeuroMod16 is the only device available with these advanced capabilities.
6. RGN can have the NeuroMod16 manufactured at a cost that will allow it to be priced to disrupt the current TES stimulator market.
Intellectual Property Summary
RGN has an expansive portfolio of intellectual property that covers important methods and uses of NIBS. At present, RGN has (U.S.) 13 issued patents, 8 pending patents for mcTMS (some of which are licenses from Stanford University that are assignable), 13 issued patents, 14 pending patents for PEMF, and 2 pending patents for clTES. More detail can be found in Appendix C. The portfolio represents a broad array of strategic variables including:
mcTMS
1. Device for selective deep brain stimulation via multi-coil magnet arrays.
2. Methods for selectively modulating deep areas of the brain with shaped magnetic fields, using sulci as pathways for current flow.
3. Shaping of pulsed magnetic field is changed by altering the polarity of individual magnets with an array.
4. Use of different pulse rates from individual coils in one array and latencies between their discharges to achieve specific neuromodulation effects.
5. Network-based deep brain stimulation using multiple pulsed magnetic sources.
PEMF
1. RGN’s Neurological PEMF portfolio (5 issued and 3 pending) includes a broad set of applications of PEMF in neurological injury and trauma, neurological pain, neurodegenerative disease, stroke, multiple sclerosis, and prophylactic protection of neural tissue (neuroprotection).
2. RGN’s General PEMF portfolio (8 issued and 11 pending) provides broad protection on the configuration of PEMF devices and signals dating back to 1997, and includes integration of PEMF into clothing, wearables (e.g., TheraCap tm), and furniture.
3. RGN also has strong supporting IP for specific applications of PEMF outside of the CNS including wound repair, treatment of degenerative joint disease, cardiovascular disease, and angiogenesis.
4. RGN continues to actively pursue IP development, in part based on over a decade of research into PEMF signal transduction and mechanism(s) of action.
5. RGN has several PEMF patents providing international IP protection.
clTES
1. clTES has an intellectual property position (2 pending patents) that covers methods, devices, and electrodes that enhance the safety, comfort, effectiveness, flexibility, and ease of use of electrical neuromodulation over currently used methods.
2. Methods: The intellectual property position covers a methodology that looks at brain function first to determine the parameters for the delivery of clTES. Dubbed the REVS approach, our methods prescribe Recording brain activity, Evaluating the differences between optimal and dysfunctional brain states, Virtualizing the stimulation parameters to determine the optimal intervention in terms of frequency, amplitude, latency, location, and duration, and finally Stimulating the brain to effect the desired behavioral change.
3. Devices: The intellectual property specifies the parameters for the NeuroMod16 device that is unique among TES devices that are currently on the market. The NeuroMod16 has 16 independent channels that can be monopolar or bipolar in any combination, can deliver any user specified wave form, accepts external triggers for inclusion in clTES systems, has one touch operation for error reduction, and custom software for device control.
4. Electrodes: The intellectual property includes electrode assemblies that have proven safe and effective in multiple peer reviewed papers, have low sensation and side effect profiles, are stable over long periods, and have never caused a burn.
RGN’s Assets
RGN has developed a technology portfolio that spans three modalities of NIBS and has applications in neurological disease and trauma, psychiatric illness, and performance enhancement. These assets fall into a variety of categories, including:
1. Patents, patent applications, and trademarks
2. PEMF 510(k) clearance in post-surgical market, pending mcTMS 510(k) clearance for depression
3. Technology addressing the estimated the multibillion dollar global markets for treating depression, postoperative pain, brain injury, multiple sclerosis, and cognitive enhancement
4. Established and certified reimbursement codes
5. mcTMS clinical trial data for drug-resistant depression and pain
6. PEMF clinical trial data for post-surgical pain, opiate reduction, swelling, inflammation
7. PEMF pilot trial data for treating post-concussion syndrome
8. TES study data for cognitive enhancement
9. DoD research subcontract (through 2017) – Enhancing Learning & Memory with Brain Stimulation
10. Unique and clinically relevant patient data
11. IRB-approved study plans
12. Market supporting clinical trials underway
13. Next generation product designs
14. Product cost reduction designs
15. Manufacturing and design equipment
16. Device inventory for all three technologies
17. Intellectual capital and expertise
The assets of RGN will be sold in whole or in part (collectively, the “RGN Assets”). The sale of these assets is being conducted with the cooperation of RGN. RGN and its employees will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership. Notwithstanding the foregoing, RGN should not be contacted directly without the prior consent of Gerbsman Partners
Management
Steven Gluckstern, Ed.D., MBA – President & CEO
Steven has served as RGN’s president and CEO since 2011. Previously he has served as Chairman and CEO of Ivivi Health Sciences, Zurich Scudder Investments, and Centre Reinsurance.
Blake Gurfein, Ph.D. – Chief Science Officer
Blake is a neuroimmunologist and faculty member at the University of California San Francisco. Blake worked with RGN as a consultant from 2013-2014 and joined the company as Chief Science Officer in 2014. In this role, Blake oversees basic science and clinical research activities, manages staff, and interfaces with the medical advisory board. Blake has 15 years of experience in neuroscience and immunology research and has been involved in the design, development, and preclinical/clinical investigation of medical devices.
Sean Hagberg, Ph.D. – Chief Strategist
Sean co-founded RGN in 2011 and in 2004 co-founded Ivivi Technologies, which developed RGN’s PEMF technology. Sean is a faculty member at the University of New Mexico and served as Chief Science Officer of Ivivi and led the scientific and clinical research program, including several first-in-human RCTs with using PEMF. Sean has been involved in all aspects of PEMF IP development, testing, basic science through clinical trials and regulatory processes.
Michael Weisend, Ph.D. – Senior Scientist
Mike is a neuroscientist and faculty member at the University of New Mexico, Wright State University, and The Mind Research Network. Mike consulted for RGN from 2011 to 2015 and joined as a senior scientist in late 2015. Mike has 25 years of experience in neuroimaging, brain stimulation, and device development with emphases in memory, epilepsy, mental illness.
Peter Schwartz, Ph.D. – Director of Engineering
Peter is an engineering executive with a background rooted in science, and he has worked with RGN since 2015, spearheading the mcTMS 510(k) effort. Peter has 20 years of experience in research and development of capital equipment ushering inventions from the laboratory through commercialization.
Bret Schneider, M.D. – Senior Scientist
Bret is the principal inventor of multi-coil TMS and has 25 years of experience in neurotechnology development. Bret is also a Consulting Associate Professor of Psychiatry at Stanford University School of Medicine and a practicing psychiatrist.
Board of Directors
Steven Gluckstern, Chairman: CEO, Rio Grande Neurosciences
Stephen Juelsgaard, D.V.M., J.D.: Former General Counsel, Genentech
John Wilkerson: Managing Director, Galen Partners
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 RGN 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 RGN Assets. Each sealed bid must be submitted so that it is received by Gerbsman Partners no later than Monday, January 24, 2017 at 3:00pm Pacific Standard Time (the “Bid Deadline”) at 211 Laurel Grove Avenue, Kentfield, CA 94904. Please also email steve@gerbsmanpartners.com with any bid.
Bids should identify those assets being tendered for in an identifiable way. Specifically, RGN’s three core assets, multicoil transcranial magnetic stimulation, pulsed electromagnetic field technology, and closed-loop transcranial electrical stimulation platform, can be bid on in whole or in part.
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 Rio Grande Neurosciences, Inc.). The deposit should be wired to RGN’s attorneys Mitchell Silberberg & Knupp. The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by RGN’s counsel. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.
RGN 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.
RGN will require the successful bidder to close within a 7 day period. Any or all of the assets of RGN 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 RGN Assets shall be the sole responsibility of the successful bidder and shall be paid to RGN 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
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