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Gerbsman Partners – The Advantages of a “Date-Certain M&A Process” over an “Assignment for the Benefit of Creditors – ABC”

Posted in Uncategorized, tagged , , , on February 12, 2015| Leave a Comment »

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The Advantages of a “Date-Certain M&A Process” over an “Assignment for the Benefit of Creditors – ABC”
Apart from a formal bankruptcy (Chapter 7 or Chapter 11) there are two basic approaches to maximizing enterprise value for under-performing and/or under-capitalized technology, life science, medical device and solar companies and their Intellectual Property: a “Date-Certain M&A Process” and an assignment for the benefit of creditors (ABC).

Both of these processes have significant advantages over a formal bankruptcy in terms of speed, cost and flexibility. Gerbsman Partners’ experience in utilizing a “Date Certain M&A Process” has resulted in numerous transactions that have maximized value anywhere from 2-4 times what a normal M&A process would have generated for distressed asset(s). With a “Date-Certain M&A Process”, the company’s Board of Directors hires a crisis management/ private investment banking firm (“advisor”) to wind down business operations in an orderly fashion and maximize value of the IP and tangible assets.

The advisor works with the board and corporate management to:

1.  Focus on the control, preservation and forecasting of CASH.
2.  Develop a strategy/action plan and presentation to maximize value of the assets. Including drafting sales materials, preparing information due diligence war-room, assembling a list of all possible interested buyers for the IP and assets of the company and identifying and retaining key employees on a go-forward basis.
3.  Stabilize and provide leadership, motivation and morale to all employees,
4.  Communicate with the Board of Directors, senior management, senior lender, creditors, vendors and all stakeholders in interest.
The company’s attorney prepares very simple “as is, where is” asset-sale documents. (“as is, where is- no reps or warranties” agreements is very important as the Board of Directors, Officers and Investors typically do not want any additional exposure on the deal). The advisor then contacts and follows-up systematically with all potentially interested parties (to include customers, competitors, strategic partners, vendors and a proprietary distribution list of equity investors) and coordinates their interactions with company personnel, including arranging on-site visits.

Typical terms for a “Date Certain M&A” asset sale include no representations and warranties, a sales date typically three to four weeks from the point that sale materials are ready for distribution (based on available CASH), a significant cash deposit in the $150,000 range to bid and a strong preference for cash consideration and the ability to close the deal in 7 business days. Date Certain M&A terms can be varied to suit needs unique to a given situation or corporation. For example, the Board of Directors may choose not to accept any bid or to allow parties to re-bid if there are multiple competitive bids and/or to accept an early bid.

The typical workflow timeline, from hiring an advisor to transaction close and receipt of consideration is four to six weeks, although such timing may be extended if circumstances warrant. Once the consideration is received, the restructuring/insolvency attorney then distributes the consideration to creditors and shareholders (if there is sufficient consideration to satisfy creditors) and takes all necessary steps to wind down the remaining corporate shell, typically with the CFO, including issuing W-2 and 1099 forms, filing final tax returns, shutting down a 401K program and dissolving the corporation etc.

The advantages of this approach include the following:

Speed – The entire process for a “Date Certain M&A Process” can be concluded in 3 to 6 weeks. Creditors and investors receive their money quickly. The negative public relations impact on investors and board members of a drawn-out process is eliminated. If circumstances require, this timeline can be reduced to as little as two weeks, although a highly abbreviated response time will often impact the final value received during the asset auction.

Reduced Cash Requirements – Given the Date Certain M&A Process compressed turnaround time, there is a significantly reduced requirement for investors to provide cash to support the company during such a process.

Value Maximized – A company in wind-down mode is a rapidly depreciating asset, with management, technical team, customer and creditor relations increasingly strained by fear, uncertainty and doubt. A quick process minimizes this strain and preserves enterprise value. In addition, the fact that an auction will occur on a specified date usually brings all truly interested and qualified parties to the table and quickly flushes out the tire-kickers. In our experience, this process tends to maximize the final value received.

Cost – Advisor fees consist of a retainer plus an agreed percentage of the sale proceeds. Legal fees are also minimized by the extremely simple deal terms. Fees, therefore, do not consume the entire value received for corporate assets.

Control – At all times, the Board of Directors retains complete control over the process. For example, the board of directors can modify the auction terms or even discontinue the auction at any point, thus preserving all options for as long as possible.

Public Relations – As the sale process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all sales terms kept confidential. Thus, for investors, the company can be listed in their portfolio as sold, not as having gone out of business.

Clean Exit – As the sale process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all sales terms kept confidential. Thus, for investors, the company can be listed in their portfolio as sold, not as having gone out of business.

To this end the insolvency counsel then takes the lead on all orderly shutdown items.

In an Assignment for the Benefit of Creditors (ABC), the company (assignor) enters into a contract whereby it transfers all rights, titles, interests, custody and control of all assets to an independent third-party trustee (assignee). The Assignee acts as a fiduciary for the creditors by liquidating all assets and then distributing the proceeds to the creditors. We feel that an ABC is most appropriate in a situation with one or more highly contentious creditors, as it tends to insulate a board of directors from the process. Nevertheless, we have found that most creditors are rational and will support a quick process designed to maximize the value that they receive. A good advisor will manage relationships with creditors and can often successfully convince them that a non-ABC process is more to their advantage. Apart from its one advantage of insulating the board of directors from the process, an ABC has a number of significant disadvantages, including:

Longer Time to Cash – Creditors and investors will not receive proceeds for at least 7 months (more quickly than in a bankruptcy but far slower than with a “date-certain” auction).

Higher Cost – Ultimately, ABCs tend to be more expensive than a “Date Certain M&A Process”. It is not uncommon for the entire value received from the sale of company assets to be consumed by fees and/or a transaction for maximizing value may not be consummated in a timely fashion.

Loss of Control – Once the assets are assigned to the independent third-party trustee, the board of directors has no further control over the process. It cannot modify the process in any way or discontinue the process. Thus, it is not possible to explore multiple options in parallel.

Higher Public Relations Profile – The longer time frame for the ABC process and the more formal (and public) legal nature of an ABC make it more difficult to put a positive spin on the final outcome.

Messy Exit – Most independent third-party trustees do not perform the services of cleanly shutting down the remaining corporate shell. Thus, investors must either pay another party to do this job or leave it undone, resulting in increased liability.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 88 technology, medical device, life science, fuel cell and solar companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, New York, Virginia/Washington DC, Boston, Europe and Israel.

 

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February, 2015 Bidding Process for Date Certain M&A Palyon Medical Corp., its Assets and Intellectual Property

Posted in Uncategorized, tagged , , , , on February 2, 2015| Leave a Comment »

The Bidding Process, Procedures for the Sale of certain Assets and Intellectual Property of Palyon Medical Corp.

Further to Gerbsman Partners previous e-mail and sales letter of January, 2015, regarding the sale of certain assets of Palyon Medical Corp., (Palyon), I attach the form of agreement (“APA”) that we will be requesting the bidders for certain Assets and Intellectual Property of Palyon execute and deliver in connection with such transaction. The Palyon Assets have been previously supplied, as outlined in Palyon sales letter. Also attached is Exhibit A, the NDA and updated Fixed Asset list. Ken and I will be following up to review the Bidding Process.

Gerbsman Partners (http://www.gerbsmanpartners.com) has been retained by Palyon MedicalCorp.,  to solicit interest for the acquisition of all or substantially all of Palyon’s assets, including its Intellectual Property (“IP”), in whole or in part (collectively, the “Palyon Assets”).

Any and all the assets of Palyon will be sold on an “as is, where is” basis and will be subject to “The Bidding Process for Interested Buyers”, outlined below.

Prior to the bid date of March 6, 2015., I would encourage all interested parties to have their counsel speak with Maggie Wong, Esq. of Goodwin Procter counsel to Palyon. She is available to discuss any questions or comments of a legal nature relating to the transactions contemplated by the APA. 415 733 6071 – mwong@goodwinprocter.com

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “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 an opportunity to inspect and examine the Palyon Medical Corp. 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 Palyon Medical Corp. Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than Friday, March 6, 2015 at 3:00 p.m. Central Daylight Time (the “Bid Deadline”) at Palyon Medical Corp.s’ office, located at 28432 Constellation Road, Santa Clarita CA . Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.

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 where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Palyon Medical Corp., Inc.). The winning bidder will be notified within 3 business days of the Bid Deadline. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are the unsuccessful bidder.

Palyon Medical Corp. reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all of the 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. Palyon Medical Corp. will require the successful bidder to close within a 7 day period. Any or all of the assets of Palyon Medical Corp. 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 Palyon Medical Corp. Assets shall be the sole responsibility of the successful bidder and shall be paid to Palyon Medical Corp. 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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January 2015 – “Date Certain M&A” of Palyon Medical Corp., its Assets and Intellectual Property

Posted in Uncategorized, tagged , , , , , , on January 26, 2015| Leave a Comment »

Gerbsman Partners (www.gerbsmanpartners.com) has been retained by Palyon Medical Corp. (www.palyonmedical.com) to solicit interest for the acquisition of all, or substantially all of Palyon Medical Assets.

Headquartered in Santa Clarita, California, Palyon Medical was in the process of developing the P1005 Programmable Implantable Drug Delivery System and the M21 Constant Flow Implantable Drug Delivery System, drug delivery systems primarily for the treatment of spasticity and intractable pain. The company has identified applications of the technology for other medically important and commercially attractive conditions where chronic, localized drug delivery address unmet medical need. The core technology platform was originally developed and acquired from Fresenius Medical in Germany. Palyon Medical has a small wholly owned subsidiary in Bad Homburg, Germany that has been involved the development aspects of the pump and is in the process of being shut down.

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 the Palyon Medical Corp. Assets has been supplied by Palyon Medical Corp. 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 Palyon Medical Corp.s’ or Gerbsman Partners’ negligence or otherwise.

Any sale of the Palyon Medical Corp. Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Palyon Medical Corp. and Gerbsman Partners. Without limiting the generality of the foregoing, Palyon Medical Corp. and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Palyon Medical Corp. 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 Exhibit A.

Company Profile

Palyon Medical develops and manufactures implantable drug delivery systems for the treatment of unmet medical needs where chronic, localized delivery is required. The initial applications of the technology are in the fields of chronic pain and spasticity. Other potential indications include pulmonary hypertension, diabetes, lysosomal storage disorders and other neurodegenerative diseases. Spun out in 2003 from Fresenius Medical, the technology has been proven in over 100 patients. Palyon has an extensive patent portfolio with 21 US issued, 20 pending, 11 issued Europe and 2 active EP patents.

In 2009, Palyon Medical raised $21 MM in Series A funding. The proceeds were targeted to complete the transformation of Palyon’s constant flow pump into a programmable pump for the US market. Baird Venture Partners led the round with Hambrecht & Quist Capital Management, Fountain Healthcare Partners, BB Biotech Ventures, Cross Atlantic Partners and Arcus Ventures also participating in the transaction. In 2013, the company raised an additional $17 million in Series B funding, from the current investors and one additional individual investor to facilitate EU registration and initial commercialization.

In 2013 Palyon conducted a single center clinical pilot study in Austria. See Regulatory and Clinical Assets section, below. The trial, scheduled for 10 patients was closed after 7 patients were enrolled due to suboptimal delivery accuracy. Palyon has identified what it believes is the root cause of this flow rate issue and has implemented design and controls to mitigate such an occurrence in the future.

In December of 2014, the Board of Directors of Palyon Medical made a strategic decision to maximize value at Palyon Medical and as such, have retained Gerbsman Partners to do a “Date Certain M&A Process”.

Value Proposition

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

1.  Manufacturers in this market segment have dominated the implantable pump industry but have experienced recalls and other challenges related to device design. In our opinion, there is a need for a safer more consistent pump which leads to a significant commercial opportunity. To the best of our knowledge, other competitors in this field have made incremental advances but lack the safety and performance advantages that Palyon’s core technology provides.

2.  Palyon is able to offer a flexible platform that supports both constant flow and programmable pump products based upon a common core technology. Palyon has also demonstrated the viability of its implantable pump technology for insulin delivery.

Intellectual Property Assets

Palyon Medical has a strong and broad patent portfolio, which initiated through transfer of assignment from Fresenius Medical and subsequently grew through internal innovation management process. Palyon also has significant international patent coverage, with protection extending in various countries including US, Germany, Austria, France, Great Britain, Japan, Canada and Mexico.

Palyon patents provide a broad coverage for the core aspects of Palyon technology focusing on drug propulsion, safety, flow control, and key design and clinical features. We believe the following are some of the key areas where Palyon patents strength is unmatched:

· Only device that is capable of monitoring and accordingly adjust the flow rate with use of two sensors, providing a safe and accurate delivery

· Broad coverage on dual reservoir systems, which address a long-standing unmet clinical need for simultaneous delivery of two independent drugs

· Application for implantable insulin delivery using Palyon core technology, as a potential entry into the large diabetes market

U.S. Registered Trademarks

· Palyon (US) – 86/014,915

· Palyon (Community Trademark) – 005373774

U.S. Patent Portfolio

· 21 issued patents

· 20 pending US Patents

OUS patent Portfolio

· 11 issued patents, with varying coverage in Germany, France, GB, Spain, Italy, Japan etc.

· 2 active EP cases

o WO2013097956 – Implantable infusion pump capable of constant and variable flows, and with ability to adjust flow based on sensor input

o WO2014159866 – Dual rate implantable insulin pump with basal and bolus capability using Palyon core technology

Potential acquirers:

· Manufacturers and developers of implantable drug delivery systems

· Medical device and pharmaceutical companies developing targeted drug delivery systems

Core Technology Platform

Unknown

Palyon utilizes a common core of unique and proven technology across a platform of implantable drug-delivery systems

Advanced Safety Features

Unknown

P1005 Programmable Implantable Drug Delivery System Assets

The Palyon P1005 Programmable Implantable Drug Delivery System is based upon Palyon core technology

* Unparalleled accuracy from 100ul/day to 2000 ul/day due to flow monitoring and feedback control.

* The target 20 ml refill volume is modular and extensible to 40 ml.

* Propellant driven system provides laminar flow and long battery life (target 10 years)

* Able to detect catheter occlusion and pocket fill events.

* Palyon pump’s pressure sensors provide capabilities unique among implantable pumps.

t Real-time in-line flow control; pump self-adjusts to maintain programmed flow rate countering any changes in elevation or day-to-day variances in atmospheric pressure

t Maximum refill safety – sensors confirm presence of needle in refill port, avoid risk of potentially fatal “pocket fills”.

t Generates alert if catheter patency is compromised.

* Highly Accurate Laminar Flow

t Propellant drive and resistor capillary produce laminar flow, improved accuracy and stability of drug delivery.

Unknown

Delivery Device assets

· Design History File

· SolidWorks CAD models and detailed drawings

· Engineering documentation, test and analysis reports

· Embedded Software Code, Requirements and Test Procedures for Implantable Pump and RF Wand

· Software Code, Requirements and Test Procedures for Clinician Programmer

· Electronics System Design including schematics, PCB layout and component specifications for Pump and RF Wand

· Assembly fixtures and molds for injection molded components

· Manufacturing process layout and documentation

· Detailed assessment of the device design and requirements for transferring from clinical to commercial production

· Component Inventory for key parts

M21 Constant Flow Implantable Drug Delivery System Assets

The Palyon M21 Constant Flow Implantable Drug Delivery System is based upon Palyon core technology

* Modular with common design elements with Programmable Pump.

* Current target is 20 mL refill volume; modularity allows expansion to 40 mL.

* Unique flow regulator to prevent large fluctuations in flow resulting from environment changes

* Propellant and resistor technology ensures non-pulsating flow.

* Lightest and smooth contours with use of either Titanium or Polymeric material.

* Safety guard and radio-opaque catheter access port.

* Inherent low-pressure feedback on refill port to avoid pocket fills.

Delivery Device assets

· SolidWorks CAD models and prints

· Prototype parts

Unknown

Marketing Assets

The marketing assets of Palyon Medical provide detailed business intelligence for companies developing competitive technologies for the treatment of spasticity and intractable pain.

· Implantable Pump EU Market Analysis

o List of EU Markets that accept CE Mark

o Market Regions Overview

o Competitors – Medtronic, Flowonix Medical Inc, Medallion Therapeutics, Tricumed Medizintechnik GmhH, Codman (J&J)

o Differentiating Constant Flow vs Programmable Pumps

o Business opportunity for Constant Flow Pumps

Potential Acquirers:

· Companies developing technologies for the treatment of intractable pain and spasticity

· Companies focused on developing therapeutics for localized delivery to specific regions in the body – e.g. liver, brain, spinal cord, pulmonary veins etc.

· Drug delivery companies seeking to broader their technology offerings and product development capabilities.

· Orthopedic / Neurostimulation companies seeking to broaden their product offering to their target customers.

Manufacturing and Physical Assets
Palyon Medical has applied a strategy to combine internal engineering resources for product development, in collaboration with external contract manufacturing. Hence Palyon physical assets reside at both locations, at Palyon facility in Santa Clarita as well as at Palyon Contract Manufacturer in San Jose, California. These equipment are used in manufacturing, testing and product development.

A partial list of physical assets used in manufacturing includes two autoclaves, two large incubators, highly accurate scales with isolation chambers, environment chambers/ovens, packaging and forming machine from Medipack, ultrasonic cleaners, UV curing equipment, pressure sensors, pressure controllers, vacuum pumps and chambers, microscopes, syringe pumps etc.

A partial list of physical assets used in product development includes multiple pressure sensors and controller, National instrument equipment, soldering equipment, ovens, Sensirion flow measurement, various lab tools and gages, large glove box, multimeters, sound pressure meters, ultrasonic cleaner, various injection molds, sensors and actuators, microscope with built-in camera, test fixtures etc.

Regulatory and Clinical Assets

Clinical Study

Palyon Medical sponsored an open label, prospective, pilot study on the use of the Palyon Model P1001 Programmable Pump System to deliver preservative-free morphine sulfate, for the treatment of patients with chronic pain that has not responded to other types of treatment. Through this study Palyon Medical planned to characterize the safety and performance of this drug delivery platform.

The proposed study was performed at a single site in Austria:
Kabeg Klinicum Klagenfurt
Feschnigstrasse 11
A-9020 Klagenfurt am Wöthersee
AUSTRIA
Prim. Univ. Prof. Dr. Rudolf Likar MSc, Principal Investigator

The study enrollment plan included of up to ten patients. The primary study endpoint was the proportion of subjects free of serious adverse events at six months after implant of the P1001 implantable drug delivery system.

Enrollment started in June 2013; seven subjects were enrolled. Of these, three received a pump implantation. In addition to the three enrolled patients who received a pump implantation, three observational patients (not enrolled in the study) were implanted with Palyon pumps prior to the start of the study. A total of six patients were implanted with a Palyon pump.

Five Serious Adverse Events (SAEs) were observed in enrolled subjects. Three of the SAEs in enrolled subjects involved over-delivery of medication to the subject. As a result of over-delivery, the pump reservoir became empty sooner than expected, causing the subject to experience withdrawal symptoms. One observational patient also experienced this event. In all cases, medication successfully resolved the issue. The other two Serious Adverse Events in enrolled subjects were also successfully resolved. No adverse events were observed in the four subjects who were enrolled but did not receive a pump implantation.

All enrolled subjects with implanted pumps received drug therapy from the device. Subjects typically experienced expected drug-related adverse events, such as restlessness, dizziness, headache, nausea, and other symptoms, that are commonly seen in patients who are just starting therapy with a drug pump.

No subject or observational patient experienced an unexpected adverse event. All refill procedures were completed successfully. No life-threatening events of any kind were observed. However, device-related problems caused pump explant in all cases where a pump was implanted. These device-related problems included premature battery depletion in each of the three observational patients. This technical issue was successfully addressed by the time the next three subjects were implanted.

Because implanted pumps did not perform as expected, Palyon stopped the study on 26 Sep 2013. By the end of September 2013, all implanted subjects were explanted. All subject participation was withdrawn. All subjects and observational patients continued to receive alternative therapy at the study site.

The study is closed. All filings associated with study closure have been completed. Palyon believes that the technical issues observed during the clinical study are well addressed in the improved pump design and quality system procedures represented by the P1005 system. Over 1.5 years of real time test data demonstrated that the solutions put in place to solve the premature battery depletion were effective.

Regulatory

Palyon Medical implemented a full Quality Management System per EN ISO 13845:2003. In 2013, Palyon received certification of compliance to this standard from LNE/GMED, a French Notified Body. As a cost-savings measure, Palyon allowed this certificate to expire. Palyon believes that re-certification could be easily achieved following a Quality System audit by a Notified Body.

Achieving CE-mark for Palyon’s next-generation pump system, such as the P1005, will depend critically on completing the device design and testing, which is in progress. Following completion of the device technical file, examination of the technical file by a Notified Body will be required for CE certification.

Potential Acquirers:

· Companies developing technologies for the treatment of intractable pain and spasticity

Key Personnel (Palyon Medical Corporation.):

· Mike Sember-President and CEO

o Mike has more than 40 years of comprehensive experience working with public and private pharmaceutical, biotech and medical device companies in the U.S. and Europe. He has experience in the areas of R&D, business development, and corporate finance, including involvement with over 100 licensing transactions and corporate acquisitions. Previously, Mike served in senior positions with Marion Laboratories (now called Marion Merrell Dow) and Elan Corporation. He has served on the Boards of 14 public and private companies and also on the Advisory Boards of several venture capital firms.

· Manish Vaishya, PhD -Chief Technology Officer/ VP of R&D, Manufacturing

o Manish has over 20 years of experience in a broad range of industries, with organizations including Palyon, Advanced Bionics and Siemens. His role spans technical leadership, program management and manufacturing. He has successfully led many innovations, with 3 issued and 15 pending patents in fields of digital control, acoustics and implantable insulin pump. While leading the research and development teams, his particular focus has been on design, analysis, manufacturability and reliability.

· Jay Yonemoto – VP of Program Management / Business Development

o Over 25 years of experience in the medical device industry, developing both Class II and III devices; serving in engineering leadership and program management roles at companies such as Medtronic Minimed and St Jude Medical as well as smaller companies such as Palyon Medical and Chad Therapeutics. He has experience in electrical/software driven devices such as surgical generators, oxygen conserving devices, implantable cardio defibrillators and external as well as implantable pumps.

· Chris Reiser, PhD – Director of Clinical, Regulatory and Quality Affairs

o Chris has worked in medical device companies for over 20 years, applying his technical expertise to all aspects of the product life cycle. He developed state-of-the-art quality systems covering all aspects of quality and regulatory functional deployment, and has directed pivotal device trials in the USA and EU. His expertise includes Class II/III devices in multiple medical specialties, covering surgical tools, disposables, active and passive implantables, and medical electrical equipment. He has served as VP/Director extensively in start-ups (Palyon, Spectranetics, Lasertechnic, Cymer) and in large companies (Boston Scientific, J&J).

Board of Directors: (previous and current)

Michael Sember , Chairman and CEO *

Nicole Walker, Robert W Baird- Chicago *

Dan Omstead, Tekla Capital Management (formerly H&Q)-Boston

Aidan King –Fountain Healthcare Partners-Dublin *

Juerg Eckhardt, BB Biotech-Zurich

Alfred Scheidegger, PhD- Nextech Invest Ltd-Zurich

* indicates current board member

The Bidding Process for Interested Buyers
Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “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 an opportunity to inspect and examine the Palyon Medical Corp. 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 Palyon Medical Corp. Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than Friday, March 6, 2015 at 3:00 p.m. Central Daylight Time (the “Bid Deadline”) at Palyon Medical Corp.s’ office, located at 28432 Constellation Road, Santa Clarita CA . Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.

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 where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Palyon Medical Corp., Inc.). The winning bidder will be notified within 3 business days of the Bid Deadline. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are the unsuccessful bidder.

Palyon Medical Corp. reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all of the 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.
Palyon Medical Corp. will require the successful bidder to close within a 7 day period. Any or all of the assets of Palyon Medical Corp. 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 Palyon Medical Corp. Assets shall be the sole responsibility of the successful bidder and shall be paid to Palyon Medical Corp. 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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Successful Acquisition of BioPharmaceutical Intellectual Property – Gerbsman Partners

Posted in Uncategorized, tagged , , , on January 13, 2015| Leave a Comment »

gp_nl_header

San Francisco, January, 2015
Successful Acquisition of BioPharmaceutical Intellectual Property
Steven R. Gerbsman, Principal of Gerbsman Partners, announced today the success in acquiring various Patents/Intellectual Property for a BioPharmaceutical company. The Patents/Intellectual Property were acquired from a company in bankruptcy.

Gerbsman Partners provided Insolvency negotiation skills and Investment Banking leadership and facilitated the sale of the Patents/Intellectual Property. Due to market conditions and the insolvency of company holding the Patents/Intellectual Property, the acquiring BioPharmaceutical company made of the decision to retain Gerbsman Partners to represent them in the acquisition of the Patents/Intellectual Property.

Gerbsman Partners provided leadership to the company with:

1.  Consulting, Negotiation and Investment Banking Life Science domain expertise in developing the strategic action plans for the negotiation of the Patents/Intellectual Property;
2. The ability to “Manage the Process” among Lawyers, Advisors, the BioPharmaceutical company and the Receiver;
3.  Daily/weekly Communications with the acquiring BioPharmaceutical company senior management and legal counsel.
About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 88 Technology, Life Science, Medical Device, Solar, Fuel Cell and Digital Marketing/Social Commerce companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, Boston, New York, Washington, DC, McLean, VA, Europe and Israel.

GERBSMAN PARTNERS
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

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“Terminating/Restructuring Prohibitive Real Estate, License, Payables & Contingent Liabilities” – Gerbsman Partners

Posted in Uncategorized, tagged , , , on January 11, 2015| Leave a Comment »

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“Terminating/Restructuring Prohibitive Real Estate, License, Payables & Contingent Liabilities”
Gerbsman Partners has been involved with numerous national and international equity sponsors, senior/junior lenders, investment banks and equipment lessors in the restructuring or termination of various Balance Sheet issues for their technology, life science, medical device, digital commerce, solar and cleantech portfolio companies. These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the termination, restructuring and/or reduction of:

1.  Prohibitive executory real estate leases, computer and hardware related leases and senior/sub-debt obligations – Gerbsman Partners was the “Innovator” in creating strategies to terminate or restructure prohibitive real estate leases, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $810 million of such obligations. These were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.
2.  Accounts/Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts and trade payable obligations that become prohibitive for the viability of the company on a go forward basis. Gerbsman Partners has successfully negotiated mutually beneficial restructurings that allowed all parties to maximize enterprise value based on the reality and practicality of the situation.
3.  Software and technology related licenses – As per the above, software and technology related licenses need to be restructured/terminated in order for additional capital to be invested in restructured companies. Gerbsman Partners has a significant track record in this area.
About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 88 Technology, Life Science, Medical Device, Solar and Digital Marketing/Social Commerce companies and their Intellectual Property, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Orange County, Europe and Israel.

 

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