Archive for January 21st, 2020

Date Certain M&A of Dune Medical Devices, Ltd.

Gerbsman Partners – http://gerbsmanpartners.com has been retained by Dune Medical Devices, Ltd. (“Dune” or the “Company”), to solicit interest for the acquisition of Dune Medical Devices Ltd. by way of an asset purchase which would include include all or substantially all of Dune’s assets (including assets of Dune USA), including its Intellectual Property (“IP”), (collectively, the “Dune Assets”) and the option of transferring Dune’s operations, commercial agreements, approvals, authorizations, customer agreement and information, and all which would be required to continue and operate the Dune business (collectively the “Dune Business”).

Dune Medical Devices Ltd. is an Israeli-domiciled medical device company with offices in Caesarea, Israel, and wholly owned subsidiary Dune Medical Devices Inc. (“Dune USA”), with offices in Alpharetta, GA.  Dune’s principal business is to design, manufacture, sell and distribute medical devices that differentiate and characterize microscopic tissue for the purposes of identifying normal verses malignant tissue in real-time. 

Dune has been privately held since its founding in Israel in 2002. Dune USA the wholly owned subsidiary of Dune was incorporated in Delaware in 2007 and is headquartered in Alpharetta, GA. Over $100 million has been invested in its technology and products by Apax Partners, Aton Partners, The Kraft Group, Canepa Healthcare, other VC’s and private investors.  A loan in the amount of $5 million dollars was secured with Oxford Finance LLC (“Oxford”) in October 2015 and remains outstanding. To date, the MarginProbe device has been approved for marketing and sales in the United States, Israel and Europe, although commercialization has been limited to Israel and the United States.

Dune Medical has a “Robust intellectual property portfolio of 60+ patents”.

The Dune Business including all assets and Intellectual Property, are offered for sale by Dune and are all subject to pledges held to the benefit of Oxford, the senior secured lender which are registered with the applicable authorities in Israel and also in the United States. A condition to the sale of the Dune Business is to repay Oxford with the proceeds from the sale of the Dune Business, in exchange for the release of such pledges. Please note that with respect to assets of the Company in Israel, certain mandatory creditors under applicable law may be entitled to receive funds prior to Oxford and these include but are not limited to employees, tax authorities and landlord.  The transfer of certain assets particularly IP that was funded by the Israel Innovation Authority (IIA), are further subject to the R&D Law in Israel and require the approval of the State of Israel with respect to transfer of such assets outside of Israel.


The sale is being conducted with the cooperation of Dune. Dune and its employees will be available to assist purchasers with due diligence and assist with a prompt transition and possibility of continued employment by the purchaser.

Please see detailed sales letter – attached


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 Dune Assets has been supplied by third parties and obtained from a variety of sources.  Nothing contained herein has been independently investigated or verified by Dune, Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Dune or 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.

Dune, and 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 Dune or Gerbsman Partners’ negligence or otherwise. Consultants, 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 Seller’s, Consultants’ or Gerbsman Partners’ negligence or otherwise.

Any sale of the Dune Business or Dune 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 Dune and Gerbsman Partners. Without limiting the generality of the foregoing, Dune and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Dune 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 Non-Disclosure Agreement attached hereto as Appendix A.

Company Profile

Dune Medical Devices Ltd is an  Israeli-domiciled  medical device company with offices in Caesarea Israel, with a wholly owned subsidiary, Dune Medical Devices Inc, with offices in Alpharetta, GA., Dune’s  principal business is to design, manufacture, sell and distribute medical devices that characterize and differentiate between tissue types instantaneously by touching the tissue with its proprietary sensors and analyzing the radio signal which is reflected from the tissue.   This, among others,  enables to identify microscopic malignant tissue for the purposes of differentiating between  normal and  malignant tissue in the operating room in real-time.

Dune’s commercial product, the MarginProbe (“MP”) device, is used intra-operatively in breast-conserving surgery (lumpectomy, partial mastectomy) for the purpose of evaluating the presence of microscopic residual cancer  on the surface of the excised tissue.  This enables the physician to remove additional suspicious tissue from the cavity in real-time, saving the patient from a subsequent re-excision surgical procedure. Its second product, the Smart Biopsy device, whose development was supported by a $3.5 million Horizon 2020 grant from the European Union, has recently begun its first-in-man clinical trial. Dune’s mission is to be the global leader in tissue characterization technology in the surgical oncology space.

Dune was granted its first CE mark in Europe in 2009, and was launched in Israel at that time. The U.S. Food and Drug Administration, or FDA, granted MarginProbe Premarket Approval (PMA) authorization in December 2012 as a Class III medical device (P110014);  Initial marketing release of MarginProbe in the U.S. started in late-year 2013.  Since the launch of the MP in 2013 there have been two PMA supplements and one additional CE mark, as follows:

  1. Table-top model of the console
  2. PMA supplement 2 Vers 1.2R for ROHS compliance.
  3. CE mark: Split Probe is a reposable device which allows retention of the cord for multiple uses with a fully-disposable probe.
  4. Pending PMA supplement for the MP 2020 with an updated look and feel; due to launch in early 2021.

The MarginProbe device is  indicated for use as an adjunctive diagnostic tool for identification of cancerous tissue at the margins (≤ 1mm) of the main ex-vivo lumpectomy specimen following primary excision and is indicated for intraoperative use, in conjunction with standard methods (such as intraoperative imaging and palpation) in patients undergoing breast lumpectomy surgery for previously-diagnosed breast cancer.

MarginProbe achieved approximately 22% market share in Israel during the third year of commercialization.   In the US, MarginProbe is currently being used in approximately 3,200 procedures annually, in 70 hospitals, reflecting a market share in the low single digits, consistent with targeted sales representative coverage in five key US geographies.  Worldwide revenue was approximately $800 thousand in the third quarter of 2019 and approximately $1 million in the fourth quarter of 2019, with over 90% of sales in the US.

The MarginProbe system includes a small transportable console and single use probe.  The probe is packaged as a single-use disposable device and delivered sterilized via ethylene oxide sterilization.  It has been engineered to prohibit re-sterilization, or re-processing for multiple use. The console is a capital acquisition and will only work with a Dune-manufactured probe. The business model is a recurring-revenue stream, with the console being acquired first through purchase or via a contracted  placement in the account for a fixed period of time.  The ASP for the probe and the console in the US are approximetly $1,000 and $32 thousand respectively. The probes are sold as single-use, disposable items in boxes of five. The system has proven to be an effective, easy-to-learn, and easy-to-use product which seamlessly integrates into workflow in the operating room with minimal staff training and adding no more than 10 minutes to the procedure..

Dune Medical Devices, Inc was incorporated in Delaware in 2007, (as a wholly owned subsidiary of Dune Medical Devices Ltd) and is headquartered in Alpharetta, GA . Dune has been privately-held since its founding in 2002. Over $100 million has been invested in its technology and products by Apax Partners, , Aton Partners, The Kraft Group, Canepa Healthcare (currently Avidity) and other VC’s and private investors.  A loan in the amount of $5 million dollars was secured with Oxford Finance LLC in October 2015. To date, the MarginProbe device has been approved for marketing and sales in the United States, Israel and Europe, although commercialization has been limited to Israel and the United States.

Dune Medical believes its assets are attractive for a number of reasons:

  1. Unique, proven, easy-to-use platform technology.  Proprietary radiofrequency (RF) + artificial intelligence (AI) technology which characterizes tissue types in real time and determines whether cancerous in ALL solid tumor cancers. For biopsy, surgery and targeted therapy.
  2. Large unmet need in women’s health, with minimal improvement over past 25 years.  Lumpectomy surgeries average 20-40% re-operation rates, resulting in unnecessarily high cost and disease recurrence.
  3. Substantial body of published data demonstrating the success of MarginProbe in the hands of ordinary surgeons.  Commercial validation in over 70 hospitals and over 20,000 cases. Extensive proof of clinical benefits (30+ published papers and abstracts).
  4. Reimbursement becoming available based upon physician & patient demand.  Category 3 Stand-Alone CPT code in effect as of 7/1/19 and anticipating society guidelines imminently.
  5. Very strong competitive position and attractive business model.  Only PMA approved product on the market with competition at least 3-4 years behind. High gross margin (80%+), recurring-revenue business model.
  6. Significant upside in the technology platform.  Second product in human trials to launch in 2022. Application of core technology to other major cancers including lung and prostate with published feasibility work completed.
  7. Robust intellectual property portfolio.  Over 60 issued patents.

RFST Technology

Breakthrough Radio Frequency Spectroscopy Technology (RFST) technology measures the electrical properties of tissue in situ and in real time with exceptional accuracy.

Sensors emit an RF signal onto the tissue surface, energize the tissue and measure the signal which is reflected by the tissue.

Proprietary algorithms and AI technology analyze the signal to differentiate between tissue types based on each tissue’s electrical properties.  In the case of a surgical procedure, as with MarginProbe this enables the physician to immediately identify and excise remaining cancerous tissue.

Newly developed miniaturized sensors (not yet in commercial use) are used as arrays to cover tissue surfaces in open surgery (in development),

embedded in biopsy needles (in development) and in minimally invasive surgery devices for all cancers. 

Large unmet need in women’s health

The market for a technology which accurately characterizes tissue and identifies

cancer in real-time includes approximately 1.6 million surgical procedures and 5

million biopsy procedures worldwide for the main cancers, creating a multi-billion

dollar opportunity.

Breast cancer is a global problem and accounts for an estimated economic burden of nearly $30 billion. Escalating costs associated with breast cancer are in part related to the fact that nearly 25%, or 750,000, breast biopsies are incorrect. In addition, it is -estimated that nearly 10% to 50% of all lumpectomy procedures performed worldwide will require a second surgery when post-surgery pathology determines that the resection margins of the first surgery are not free of cancer cells.

Surgeons cannot identify cancer in the breast cavity by sight or palpation. In most

cases where cancer is left behind (i.e.positive margin), patients must have a second surgery (i.e., re-excision). Re-excision negatively impacts all healthcare constituents and places a tremendous cost on payers (e.g. $16,000 avg. hospital cost per patient).  Additionally, it diminishes the quality of care of patients due to disappointing outcomes, high re-excision rates, readmissions and increased recurrence. 

Substantial body of clinical evidence

Dune has executed an extensive series of clinical trials, including the largest trial ever done for intra-operative margin assessment devices in the US and Israel.  The trial was a pivotal PMA trial.  It was a prospective, multi-center, randomized (2:1), controlled, open-label study, which enrolled a total of 596 patients in 21 centers in the US and Israel.

Results included a threefold improvement in identification of cancer versus the standard of care.  Two additional randomized controlled trials are currently undergoing.  One post-approval trial for the FDA, a 440 patient, dual-arm, 11 center trial is expected to complete enrollment in March of 2020.  Additionally, an NHS-sponsored dual-arm, randomized, controlled trial of 460 patients has just completed enrollment in 12 centers in the United Kingdom and will be complete in December 2020.

Reimbursement traction

Three very important events have occurred during the last few months that will have a very positive impact on overall reimbursement and market adoption for the MarginProbe System.

  1. Pivotal Article Publication:
    An article published in the Journal of the American College of Surgeons https://doi.org/10.1016/j.jamcollsurg.2018.12.043 described breast cancer surgery re-excision rates based upon 291,000 Medicare claims from 2012-2018 which demonstrated an overall re-excision rate in Medicare recipients of 20%, with a range of 0% to 91.7% and concluded with a recommendation formalizing a re-excision frequency metric to improve quality and reduce the financial burden to the healthcare system. Two of the authors of this paper are David Euhus, M.D. and Mehran Habibi, M.D. from Johns Hopkins who recently adopted use of the MarginProbe system throughout the Hopkins system based upon the results of their participation in the Dune Medical FDA Post- Approval study in which they enrolled approximately 80 patients.


  1. CMS Comparative Billing Report Announcement:

Based upon the above study, on July 1st CMS announced that Breast Cancer Surgery Re- Excision Rates have been included in the CMS Comparative Billing Report (CBR) program focused on reducing payment for “no-value” procedures. Effective on July 1 breast cancer re-excisions are one of nine (9) procedures included in this effort by CMS and will undoubtedly bring greater attention to breast cancer surgery re-excisions. The announcement of this program to all members of the American Society of Breast Surgeons (ASBrS) is included below:

ASBrS July 29, 2019 CMS Announcement:
CMS Releases New Comparative Billing Report (CBR) on Breast Re-Excision Rates On July 29th, the Centers for Medicare and Medicaid Services (CMS) made an announcement that it released new Comparative Billing Reports (CBRs) related to breast re-excision rates. The CBR program is run through a CMS contractor and, as described on the CBR Website “present the results of statistical analyses that compare an individual provider’s billing practices for a specific billing code or policy group with the billing practices of that provider’s peer groups and national averages. Each CBR is unique to a single provider and is only available to that individual provider. CBRs are not publicly available.” It is important to note that the reports are intended to be educational only and are not part of any CMS audit program.
The reports define a “re-excision” as a follow-up breast excision within 365 days of a previous breast excision procedure. The excision procedures analyzed include the following codes:

CPT 19120 (Excision of cyst, fibroadenoma, or other benign or malignant tumor, aberrant breast tissue, duct lesion, nipple or areolar lesion, open, male or female, one or more lesion)

CPT 19301 (Mastectomy, partial)
CPT 19302 (Mastectomy, with axillary lymphadenectomy) CPT 19303 (Mastectomy, simple, complete)
CPT 19304 (Mastectomy, subcutaneous)

This report focuses on 3 metrics: Percent of re-excisions, Percent allowed amount for re-excisions , Percent of beneficiaries receiving a re-excision

The metrics compare provider utilization against others in the same specialty per your Medicare enrollment designation (here, General Surgery, Physician Assistant, Surgical Oncology, Plastic and Reconstructive Surgery, and Nurse Practitioner) as well as against all providers nationally. When CMS conducts the analysis, a report will be issued for any provider with a Medicare re- excision rate (as calculated by the CMS contractor) greater than 30 percent; if you do not have a re-excision rate greater than 30 percent, no report would be generated. A sample CBR can be viewed here.

Common Procedural Terminology (CPT) Code:
Effective on July 1, 2019 a CMS CPT Code has been published for use when billing for use of the MarginProbeTM System. This CPT Category III Code allows MarginProbe customers to begin billing health insurance plans electronically for our system. There are several very important aspects of this code to note. First, as you can see from the text description of the code (below), this code specifically describes the Dune Medical radio- frequency spectroscopy technology and will thus be for exclusive use with the MarginProbe System. Other approaches being developed to identify margin status intra-operatively will not be able to use this code. Second, this is a free- standing code that will not be “lumped” into a global reimbursement amount used to reimburse for breast cancer surgery.


The combination of these three important events…(i) published landmark data supporting the rate of “no value” breast cancer re-excision surgeries by two key opinion leader users of the MarginProbe System, (ii) the decision by the Centers for Medicare Services to target “outlier physicians” with higher than average breast cancer surgery re-excision rates with Comparative Billing Reports and (iii) the availability of a technology-specific CPT billing code…represent a very significant opportunity for Dune and our customers to improve the quality of patient care by significantly reducing re-excision procedures and to receive adequate reimbursement for their high quality surgical service and will serve as significant catalysts for broader adoption of the Dune’s MarginProbe System.


Dune has a strong and growing IP portfolio


The Dune Israel team has direct oversight into production and manufacturing at three outsourced manufacturing facilities located in Shlomi ,Tiberias  and Yokneam all in the Northern part of  Israel

Production includes probes, consoles, beta systems and prototypes. All sterilization is also managed at Mediplast, located in Yavne, Israel .  The engineering team oversees configuration management, change management, control of sub-contractors and maintenance of manufacturing tooling.  The Israeli team also manages purchasing, inventory management, warehouses, shipments, cost of goods sold and production planning & control.  All technical support originates with the team in Israel and includes troubleshooting, repair, checkups, prevention and training.

Dune Medical has a robust quality system responsible for Audits, CAPA’s and non- conforming materials.  Since the approval of MarginProbe, Dune has successful passed 2 FDA audits at its Caesarea facility, 3 with its sub contractors as well as annual notified body reviews without any material findings.  Dune partners with Millstone in Olive Branch ,Mississippi as a distribution center for its US probe and console inventory. 

Company Management1

Lori Chmura – CEO, member of the BOD

Lori joined Dune in January 2016. Lori is a seasoned veteran in the healthcare space beginning her career as a CCRN working in critical care, trauma and emergency medicine at Yale New Haven Hospital, Emory University Hospital and St Joseph’s of Atlanta. She transitioned into the medical device industry with Datascope Corporation (now Maquet), taking on increasing levels of leadership, completing her 10-year tenure as the Vice President of North American Sales. She spent time as a regional Corporate Sales Director at Medtronic and then moved to Covidien Endomechanical Products, where she spent four years as the VP of Sales and Marketing. Most recently, she served as the VP of the US for Cordis, a Johnson and Johnson company. Lori is known as a champion of change management and passionate about delivering growth. She has led numerous women’s leadership initiatives and formerly served as the President of the Atlanta Chapter of the Healthcare Businesswomen’s Association. She also serves on the the board of directors of Pinecrest Academy in Atlanta. Lori earned a BSN from Southern Connecticut State University.

Mike Kaswan – CFO

Mike joined Dune in February of 2019 as a consulting CFO from Burkland Associates, which he joined in 2016. Prior to Burkland, Mike was the CEO of Persante Health Care, a leading provider of sleep apnea diagnostic and therapeutic services he formed via the private equity-backed acquisition of two private companies in the space. Previously, he was a healthcare venture capital and private equity investor at KBL Healthcare Ventures, where he was one of three partners managing a $100 million venture capital fund and two publicly-traded Special Purpose Acquisition Companies (SPACs) that raised over $180 million. He has an MBA with Distinction from Harvard Business School and a B.S. in Finance from the University of Virginia.

Gal Aharonowitz – COO, GM Israel

Gal leads R&D, manufacturing and worldwide logistics activities for the company. Gal is an industry veteran with more than 18 years of experience in leading product development and engineering teams at early-stage medical device companies and international public corporations. Prior to Dune, he was head of R&D at Lumenis Corp., where he managed a team of over 45 engineers. Prior to that, he was head of R&D at SHL Telemedicine, developing medical applications that are conveniently used from home. He earned a BSc degree in mechanical engineering from Ben-Gurion University in Israel

Avihai Lachman – Vice President of Research and Development

Avihai has over a decade of experience in developing radiofrequency technologies and is currently leading Dune’s effort in expanding the use of RF Spectroscopy for new clinical applications and disease sites. Avihai’s background encompasses both engineering and development within the field of RF, satellites and communication. He brings experience in mechanical design for RF modules and a proven track record of moving products from the concept phase to mass production.  He was previously the Director of Antennas and Defense R&D at Gilat, having spent 18 years there developing digital communication algorithms for satellite modems and tracking antenna systems for the in-flight connectivity market.  Avihai earned both Bachelor and Master of Science Degrees in Electrical Engineering from Ben-Gurion University in Beersheba, Israel.

Susan Turner – Vice President of Healthcare Economics

Susan Turner has over 20 years in medical device marketing and healthcare economics, with expertise in bringing products to market and establishing payment and coverage for innovative technologies. Over the past 17 years, her professional passion has been making an impact in women’s health.  Prior to Dune, she served in marketing in the start-up environment at International Brachytherapy Inc. (IBT) and Proxima Therapeutics, and later as Director of Health Economics & Reimbursement at Cytyc and Hologic.  Susan received her Bachelor of Science with a Major in Psychology and a Minor in Business from Clemson University, with advanced graduate work in Healthcare Administration from Mercer University.

Robin Fatzinger – Vice President of Clinical and Regulatory Affairs

Robin Fatzinger has over 25 years of experience in the medical device industry, with a focus on Clinical Affairs, Quality Assurance and Regulatory Affairs. She has an extensive background with 510(k), IDE and PMA submissions for small to multi-national medical device companies as well. Robin holds a bachelor’s degree in Biology from Muhlenberg College and a Masters of Education from Lehigh University. In addition, she is Regulatory Affairs Certified (RAC) and has participated in various industry trade association committees, including AdvaMed and the Association for the Advancement of Medical Instrumentation (AAMI).


Board of Directors

Amos Goren – Chairman of the Board

Dan Levangie – Director

Paul Enever , PhD – Director

Bill Scazulli – Director

Seeking a buyer of Dune Medical assets

Dune’s Board of Directors is seeking a buyer of the Dune Business  and Assets, in whole or in part.  Interested parties may bid on all or part of Dune’s Business or Assets, enabling the purchaser to leverage Dune’s Business or Assets to obtain new sales, enhance revenue streams or accentuate or augment other products.

The Bidding Process for Interested Buyers  

Interested and qualified parties will be expected to sign the Non-Disclosure Agreement (attached hereto as Appendix A) to have access to key members of management and intellectual capital teams and the due diligence data room documentation (“Due Diligence Access”), and the AirXpanders Video. 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 Dune Business and 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 Dune or 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 Dune 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 Dune Business Assets. Each sealed bid must be submitted so that it is received by Gerbsman Partners no later than February 14, 2020 (the “Bid Deadline”) at Dune’s corporate office located at 6120 Windward Parkway, Suite 160, Alpharetta, GA 30005.  Please also email steve@gerbsmanpartners.com with any bid.

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 Dune Medical Devices, Ltd.  Refundable deposit wiring instructions will be provided at a later date. The winning bidder will be notified within three (3) business days of the Bid Deadline.   Unsuccessful bidders will have their deposit returned to them within three (3) business days of notification that they are an unsuccessful bidder.

Dune 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.  

Dune will require the successful bidder to close within a seven (7) day period.  Any or all of the Dune Assets 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 Dune Assets shall be the sole responsibility of the successful bidder and shall be paid to Seller at the closing of each transaction.

For additional information, please see below and/or contact:

Steven R. Gerbsman
415 505-4991


James Skelton
949 466-7303


Kenneth Hardesty
408 591-7528



Read Full Post »