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SALE OF APPLIED SPINE TECHNOLOGIES, INC.

Gerbsman Partners has been retained by Applied Spine Technologies, Inc. http://www.appliedspine.com to solicit interest for the acquisition of all, or substantially all, Applied Spine Technologies’ assets.

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 Applied Spine Technologies’ Assets has been supplied by Applied Spine Technologies. 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 Applied Spine Technologies’ or Gerbsman Partners’ negligence or otherwise.

Any sale of the Applied Spine Technologies 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 Applied Spine Technologies and Gerbsman Partners. Without limiting the generality of the foregoing, Applied Spine Technologies and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the Applied Spine Technologies 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

Headquartered in Rocky Hill, Connecticut, Applied Spine Technologies, Inc. (“AST”) has developed the Stabilimax® System, the only true pedicle screw based dynamic stabilization system validated with Class 1 clinical data.

Founded in 2004, AST is a private, Connecticut-based, clinical stage medical device company. To date the Company has been financed with $47M over three venture rounds. Oxford Bioscience Partners and BioVentures Investors invested $4 million in Applied Spine’s Series A financing. The $15M Series B round was led by Interwest Partners and added DeNovo Ventures to our list of tier one investors. Investor Growth Capital and MB Venture Partners led the $28M C round.

The underlying premise of the Stabilimax System is that painful spine motion increases in an injured spine; Stabilimax treats pain by compensating for the instability and abnormal motion caused by degeneration or injury. It utilizes a novel double concentric spring mechanism that maximizes stiffness and support where the spine needs it most. By eliminating abnormal motion, the Stabilimax System eliminates the compensating load on the surrounding muscles and tissues, which should allow a return to near-normal physiologic motion, function and thus, tissue healing.

AST believes its assets are attractive for a number of reasons:

  • Stabilimax. The Stabilimax® System is positioned to become the US market leader in the $250mm+ Pedicle Screw-Based Dynamic Stabilization segment1, upon successful completion of a clinical trial and PMA approval. OUS opportunities are possible currently, due to CE marked implant inventory and a 25 instrument set inventory to support a 200 surgery launch. The current inventory of implants, pedicle screws, implant components and instruments is valued at approximately $2.7M.  There are no development costs to incur, and products are available immediately.
  • Design. A true dynamic stabilization implant is one that has an optimum stiffness profile, permits interpedicular travel, and maintains a near normal center of rotation2. Quality of motion is as important as quantity3. The Stabilimax design, with its proprietary combination of springs and articulating junctures, utilizes pedicle screws and a posterior surgical approach, which appeals to surgeons due to a low (or no) learning curve. Motion is near normal kinematic, allowing for interpedicular travel, and respecting center of rotation. It is not a hinge, and therefore less harmful to the adjacent level.
  • Clinical Data. Applied Spine has Class 1 data that validates the Stabilimax design rationale, and offers proof of IPT, ROM, and near normal kinematic motion. We have documented the typical stenosis patient’s pre op motion + IPT, and have recorded post op motion and IPT at 12 months for over 100 patients. Preclinical data shows stabilization in face of decompression to be 54% of Intact; Clinical data at the 12 month follow up mimics preclinical data (54% of PreOp). Measurement via Kinematic Indicator (IPT/ROM) shows consistencies with normal kinematics in preclinical and 12 month follow up.
  • Intellectual Property. Applied Spine has 8 issued US patents, 1 notice of allowance, and 8 additional US patent applications in process with parallel filings in the EU. Patents issued include method patents of use of a dual spring dynamic stabilization device as well as apparatus patents covering the dual spring, specific travel and stiffness ranges for the dual spring, and the articulating spheres connection to the pedicle screw that enable intraoperative assembly. As a result, Applied Spine has both defensive and offensive positioning options.
  • Defensive/Offensive Patent Position. The Company now has an established defensive position to protect the Stabilimax device.  Specifically, the defensive patents would make it difficult to design a product that allows for the same amount of physiological motion while using springs.  Additionally, the company is growing its offensive position through the ongoing prosecution of additional applications. Our patent counsel believes that the offensive patents/applications could read on other current devices.  Furthermore, there are continuation patents in process on a variety of related subjects where claim language can continue to be refined to further the company’s offensive position.
  • Competitive advantage. We have become the „last man standing‟ – the only true PMA/IDE product in the pedicle screw-based dynamic stabilization segment. Zimmer’s Dynesys was denied PMA by Panel; all other devices such as N-Hance (Synthes), and Transition (Globus) are caught under the FDA‟s 522 order and thereby exposed to labeling issues. As Stabilimax has no fusion labeling – and no 510(k) – this provides us an opportunity to secure first to market position in the US.

Impact of Technology on the Market
The potential positive impact of a pedicle screw based dynamic stabilization system that works in concert with the body’s natural biomechanics has attracted the attention of leading physicians worldwide. The relationship of providing stability without fusion has attracted many competitors but few have been able to support their product design rational with actual clinical data that validates the benefits.  AST’s significant clinical data positions the Stabilimax system for robust market opportunities.  Accessing AST’s intellectual property is critical for any successful endeavor into this very attractive market. Commercialization of its products could provide high returns in this large and fast-growing market.

Applied Spine Technologies Company Profile

Founded in 2004, AST is a private, Connecticut-based, clinical stage medical device company. To date the Company has been financed with $47M over three venture rounds. Oxford Bioscience Partners and BioVentures Investors invested $4 million in Applied Spine’s Series A financing. The $15M Series B round was led by Interwest Partners and added DeNovo Ventures to our list of tier one investors. Investor Growth Capital and MB Venture Partners led the $28M C round.

The Stabilimax is the culmination of over 30 years of focused research from Dr. Manohar Panjabi. Dr. Panjabi, recently retired from Yale University (2006), is regarded as a leading authority on spine biomechanics. He has conducted extensive research on spine implants, analyzing both fusion and motion-preserving devices. Dr. Panjabi has also published more than 265 original research papers, and written two textbooks: Clinical Biomechanics of the Spine, 1990; and Biomechanics in the Musculoskeletal System, 2000. The first of these remains to this day the iconic text for spine clinicians and researchers.

Presently the company has enrolled 146 patients in their IDE clinical study. Applied Spine received approval to start the clinical study in February 2007 with the first US patient enrolled in March 2007. As of July 2010, 60 single level patients and 36 two-level patients as well as 21 control patients will be at the two-year follow-up point. In February 2010, Applied Spine commenced enrollment with the second generation pedicle screw. In this enrollment group we enrolled 20 Stabilimax patients and 9 control patients. These patients will be at the one year follow-up point at the end of 2010.

Applied Spine Technologies’ Assets
AST has developed a portfolio of assets critical to the success of pedicle screw based dynamic stabilization for the lumbar spine. These assets fall into a variety of categories, including:

Patents, Patent Applications and Trademarks

  • Encouraging Class 1 clinical data on over 100 patients shows reduction in pain, reduced adjacent level effects, and near-normal quality and quantity of kinematic motion.
  • Product Inventory to support an immediate OUS sales launch
  • Complimentary Product Designs
  • Manufacturing, Design and Calibration Equipment
  • CE Mark for the Stabilimax System
  • Intellectual Capital and Expertise

The assets of Applied Spine Technologies, Inc. will be sold in whole or in part (collectively, the “Applied Spine Technologies’ Assets”). The sale of these assets is being conducted with the cooperation of Applied Spine Technologies. Applied Spine Technologies and its employees will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership. Notwithstanding the foregoing, Applied Spine Technologies should not be contacted directly without the prior consent of Gerbsman Partners.

Key Personnel

  • CEO: Craig Corrance joined in 2009; Previously CEO Scient’x, Altiva Corp
  • CFO: Terry Brennan joined in 2005; Previously CFO CyVera and CiDRA Corporations

Applied Spine Technologies, Inc. Board of Directors

  • Ellen Baron: Oxford Bioscience Partners – Boston, MA
  • Stephen Campe: Investor Growth Capital (IGC) – New York, NY
  • Marc Goldberg: BioVentures Partners – Boston, MA
  • Michael Sweeney: Interwest Partners – Menlo Park, CA
  • Craig Corrance:CEO, Applied Spine Technologies – Lake Mary, FL

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 Applied Spine Technologies 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 Applied Spine Technologies Assets. Sealed bids must be submitted so that it is actually received by Gerbsman Partners no later than Friday, October 15, 2010 at 3:00 p.m. Central Daylight Time (the “Bid Deadline”) at Applied Spine Technologies’ office, located at 30 Cold Spring Rd, Rocky Hill, CT 06067.  Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.  In particular, please identify separately certain equipment or other fixed assets.  The attached Applied Spine fixed asset list may not be complete and bidders interested in the Applied Spine equipment must submit a separate bid for such assets.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. All bids must be accompanied by a refundable deposit check in the amount of $100,000 (payable to Applied Spine Technologies, 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.

Applied Spine Technologies 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.

Applied Spine Technologies will require the successful bidder to close within a 7 day period. Any or all of the assets of Applied Spine Technologies 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 Applied Spine Technologies Assets shall be the sole responsibility of the successful bidder and shall be paid to Applied Spine Technologies at the closing of each transaction.

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SALE OF CardioMind, INC.

Gerbsman Partners has been retained by CardioMind, Inc. to solicit interest for the acquisition of all, or substantially all, the assets of CardioMind Inc.

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute in whole or in part an offer or a contract.

The information contained in this memorandum relating to CardioMind‘s Assets has been supplied by CardioMind. It has not been independently investigated or verified by Gerbsman Partners or its agents.

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

CardioMind, 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 CardioMind‘ or Gerbsman Partners” negligence or otherwise.

It is expected that any sale of the CardioMind 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 CardioMind or Gerbsman Partners. Without limiting the generality of the foregoing, CardioMind and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the CardioMind Assets and any portions thereof, including, but not limited to, 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.

CardioMind, Inc.

Headquartered in Sunnyvale, California, CardioMind, Inc. is a development stage company focused on a unique stent delivery platform that has applications in treating coronary, neuro and peripheral artery disease.

CardioMind believes its assets are attractive for a number of reasons:

1. CardioMind’s Sparrow bare metal stent systems are CE Marked and represent:
– the first stent “in a guidewire” system ever approved for sale.
– the lowest profile (.014 Inch maximum diameter) stent system ever approved for sale.
– the stent with the thinnest struts ever approved for sale.
– the first approved stent system specifically designed to treat vessels below 2.75 mm.

2. CardioMind has data on its Sparrow drug eluting stent out to 8 months that shows binary restenosis rates of 6.7% in vessels whose mean diameter is 2.27 mm with a mean in-lesion late loss of .23 mm. This data was collected from world respected cardiology centers in Europe, Asia, Australia, and South America in a multicenter controlled randomized trial and analyzed by key ivus and angiographic core laboratories. Data sets and data bases available during due diligence process.

3. CardioMind has extensive data from bench, preclinical, and clinical studies that was used to get the CE Mark on the bare metal stent and is in process of using existing data to get the CE mark for its drug eluting stent.

4. CardioMind has existing bare metal inventory that can be used for clinical evaluation and sale preference testing in Europe.

Intellectual Property Summary

At present, CardioMind has 2 issued US patents, 14 pending patent applications of which 2 have been allowed, and 14 pending international patent applications of which 1 has been allowed. These patents and patent applications are in the area of implant and/or stent delivery technology and stent construction technology and describe among other things:

* A low-profile implant/stent delivery device having an implant/stent releasably secured to a delivery guide member.

* Stent delivery systems comprising an elongate stent carrying member that serves as a guidewire for a balloon catheter that can be used, for example, for vessel predilation or postdilation of an emplaced stent. And methods of passing a balloon catheter over an elongate stent carrying member, which serves as a guidewire.

* Prosthesis twist-down delivery systems including a prosthesis mounted on an elongate member in a twisted reduced diameter configuration and stent configurations suitable for twisting.

* Implant/stent holding and release approaches to releasably hold an implant/stent to a delivery guide including mechanical and electrolytic mechanisms.

* Power delivery technology for releasing electrolytically erodable stent holding mechanisms.

CardioMind has allowed claims involving methods for treating a vessel including passing a balloon catheter over an elongate stent carrying member, which serves as a guidewire for the balloon catheter. CardioMind also has allowed claims involving a system comprising prosthesis structure being in a twisted reduced diameter configuration and releasably mounted on an elongate member. These allowed claims also include other language as will be apparent from reviewing the claims. Other aspects of the technology also are being pursued.

Sparrow is a differentiated stent and delivery technology

* The stent “in a guidewire” technology is unique to CARDIOMIND and may offer significant clinical benefits.

* The Sparrow’s low profile and guidewire integration allows for significantly improved delivery and access to distal lesions, lesions in tortuous anatomy, small vessels, lesions distal to previously placed stents, and access through stent struts to treat bifurcations.

* The Sparrow allows direct access to the lesion with the Sparrow being used as the lead guidewire. The Sparrow guidewire can then be used to rail a rapid exchange catheter over its shaft and stent. Alternatively, the Sparrow with its stent attached can fit through any standard .014 inch catheter lumen (infusion or balloon).

Large and well established stent market

* Existing $5 billion worldwide coronary stent market.

* Existing reimbursement.

* Physician base known for rapid adoption of new technologies that provide improved safety/efficacy and/or greater efficiency.

* Neurovascular Stent: The Sparrow can be used in neurovascular anatomy to treat ischemic stroke, atherosclerotic disease, or bridge aneurysms prior to coiling. Existing stents with much stiffer, bulkier delivery systems are priced at $6000 for bare metal stents. There are over 700,000 ischemic strokes in the US annually. Access is a key issue in treatment of distal, tortuous neurovascular disease.

* Peripheral Stent: The Sparrow can access distal parts of the peripheral vascular system to treat unmet clinical needs in erectile dysfunction and distal disease in the leg. The Sparrow system is extremely flexible and trackable and may be able deliver a self-expanding stent to distal, tortuous anatomy better than current systems. These markets represent markets over $500MM.

CardioMind Company Profile

CardioMind was founded in 2003 and raised approximately $53 million through private placements of its convertible preferred stock involving leading venture capital firms including Latterell Venture Partners, Morgenthaler Ventures, InterWest Partners, De Novo Ventures, SV Life Sciences, and Onset Ventures.

CardioMind is a developer of the innovative “stent in a guidewire” Sparrow system using both drug eluting and bare metal stent systems for the treatment of coronary artery disease, neurovascular disease and peripheral vasculature disease. The CardioMind® Sparrow Stent is the only stent system designed specifically to treat small vessel disease and offers delivery on a guidewire that has a profile 70% smaller than any commercial competitor.

CardioMind’s stent systems are the only stent systems designed to enable physicians to access lesions with combination wire/stent that acts as a lead wire. CardioMind’s stent systems are designed to treat small vessels and distal, hard to reach anatomy in coronary, neuro and peripheral vasculature.

Impact of Technology on the Market

CardioMind believes that its “stent in a guidewire” technology offers advantages over currently marketed stents.

* The “stent in a guidewire” technology is unique to CARDIOMIND and may offer significant clinical benefits

* The Sparrow’s low profile and guidewire integration allows for significantly improved delivery and access to distal lesions, lesions in tortuous anatomy, small vessels, lesions distal to previously placed stents, and access through stent struts to treat bifurcations.

* The Sparrow allows direct access to the lesion with the Sparrow used as the lead guidewire. The Sparrow guidewire can then be used to rail a rapid exchange catheter over its shaft and the stent. Alternatively the Sparrow and its stent can fit through any standard .014 inch catheter lumen (infusion or balloon).

CardioMind Assets

CardioMind has developed a portfolio of assets critical to the development and manufacture of stent “in a guidewire” systems. These assets fall into a variety of categories, including:

* Patents, Patent Applications and Trademarks

* CE Mark for Sparrow bare metal stent systems

* Custom built equipment for manufacturing stent systems

* Technology and intellectual property related to stent “in a guide wire” systems

* Key know-how and expertise in manufacturing smallest profile stent system approved for sale

* Technology and intellectual property related to drug coating the Sparrow system utilizing a biodegradable polymer

* Patient Data from 2 clinical trials involving 170 patients

The assets of CardioMind will be sold in whole or in part (collectively, the “CardioMind Assets”). The sale of these assets is being conducted with the cooperation of CardioMind. CardioMind and its employees will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership. Notwithstanding the foregoing, CardioMind should not be contacted directly without the prior consent of Gerbsman Partners.

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 CARDIOMIND 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 CARDIOMIND, Inc., 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 neither CARDIOMIND nor Gerbsman Partners (or their respective, staff, agents, or attorneys) makes 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 CardioMind Assets. Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than Thursday, June 3 at 3:00 p.m. Pacific Standard Time (the “Bid Deadline”) at CardioMind’ office, located at 257 Humbolt Court Sunnyvale, CA 94089. Please also email Steve@GerbsmanPartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way. The attached CardioMind fixed asset list may not be complete and Bidders interested in the CardioMind Assets must submit a separate bid for such assets. Be specific as to the assets desired. CardioMind cash and accounts receivable are not being offered for bid as par of the CardioMind Assets.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to CardioMind, Inc.). The winning bidder will be notified within 3 business days after the Bid Deadline. Unsuccessful bidders will have their deposit returned to them. CARDIOMIND reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.

CARDIOMIND will require the successful bidder to close within 7 business days. Any or all of the assets of CardioMind 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 CardioMind Assets shall be the sole responsibility of the successful bidder and shall be paid to CardioMind at the closing of each transaction.

For additional information, please see below:

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 60 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $790 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, Europe and Israel.

Gerbsman Partners
Phone: +1.415.456.0628, Fax: +1.415.459.2278
Email: Steve@GerbsmanPartners.com

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