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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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Gerbsman Partners www.gerbsmanpartners.com has been retained by Pegasus Biologics, Inc. www.pegasusbio.com to solicit interest for the acquisition of all, or substantially all, Pegasus Biologics Inc.’s (“Pegasus”) assets.

Pegasus Biologics, headquartered in Irvine, California, is an emerging growth regenerative medicine company focused on the manufacturing and commercialization of advanced bio-surgical solutions for soft tissue repair and regeneration.

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 Pegasus Biologics’ Assets has been supplied by Pegasus. 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 Pegasus’ or Gerbsman Partners’ negligence or otherwise.

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

Pegasus believes its assets are attractive for a number of reasons

·       Privately-held regenerative medicine, medical device company – capitalized in Jan 2005.

·       $31.8MM raised through Three Arch Partners, Onset Ventures, Frazier Healthcare Partners, Affinity Capital and others.

·       Has developed and is commercializing a revolutionary bioscaffold comprised of highly organized collagen, sourced from equine pericardium that encourages the healing process by addressing the demands of a challenging biological environment.

·       Core product technology is based on a proprietary processing and sterilization method resulting in a sterile, structurally sound, biologically conductive scaffold that complements soft tissue repair and adds strength to the repair over time. .

·       Known as “flexible crosslinking”, the technology maintains the native collagen architecture, which supports cellular ingrowth and resists enzymatic degradation – ideal for both soft tissue reinforcement as well as chronic wounds.

·       Has obtained exclusive worldwide licenses for the processing and sterilization of biological tissue for use in orthopedic, oral/dental, spinal and neurological, abdominal and thoracic, breast and wound applications.

·       Technology has 6 issued US patents, 5 pending US patent applications and associated International filings.

·       A revenue model consistent with other medical devices that are invoiced at the time of application (surgery).  Current ASP holding at $2200 with attractive gross margins
·       To date, over 10,000 patients have been treated with Pegasus’ products in various orthopaedic and chronic, complex wound applications

·       Received four FDA 510(k) approvals:  For Unite® Biomatrix as a collagen wound dressing (Sept. 26, 2007), for Orthadapt® as a surgical mesh for the repair, reinforcement and augmentation of soft tissues repaired by sutures or suture anchors during tendon repair surgery (Aug 5, 2005 and May 4, 2007), for Duradapt ® as a dural substitute under an IDE, and for Orthadapt® PR (Peek Reinforced), also for the repair, reinforcement and augmentation of soft tissues repaired by sutures or suture anchors during tendon repair surgery (May 5, 2009).

·       Received 1 FDA Investigational Device Exemption (IDE) to evaluate the safety and procedural success of a product called Duradapt® (a version of Orthadapt) for the repair/replacement of cranial dura mater.

·       Inventory of 4000 units valued at $667K based on cost of goods.

Revenue Summary–

Pegasus has been generating revenue since mid 2006 with both Orthadapt and Unite products.  Total revenue summary is as follows:
·     2006 – $2,958,113
·     2007 – $7,323,429
·     2008 – $9,147,515
·     Q1, 2009 – $2,479,987
Pegasus Key Accounts –
·     UCSD Medical Center – San Diego, CA
·     Alexian Brothers Hospital – Arlington Heights, IL
·     Wellstar Cobb Hospital – Marietta, GA
·     Westchester General Hospital – Miami, FL
·     Memorial Hospital of Rhode Island – Pawtucket, RI

Pegasus Biologics Company Profile

Founded in June, 2004, Pegasus is a California based, revenue stage medical device company.  Over the last 4 years, the company has raised $32MM in equity and debt from leading capital venture firms such as Onset Ventures, Frazier Healthcare Partners, Three Arch Partners and Affinity Capital.

Pegasus is becoming recognized as a global leader in bio-surgical solutions for soft tissue repair.  With thousands of successful clinical outcomes, current applications range from the repair, reinforcement and reconstruction of tendons to limb preservation and advanced wound management.

Impact of Technology on the Market
With the growing demand for advanced biologics, Pegasus is well positioned for the future.  An estimated 850,000 orthopedic soft tissue repairs and over 365,000 chronic complex wounds performed annually worldwide support this theory, and the high failure rates of tendon repair reported in the literature indicate an unmet clinical need.  The OrthADAPT® Bioimplant and Unite® Biomatrix collagen-based products are both FDA cleared and CE Marked.

Pegasus Biologics has obtained exclusive worldwide licenses for the revolutionary bio-platform technology developed for the processing and sterilization of biological tissue for use in orthopedic, oral/dental, spinal and neurological, abdominal and thoracic, breast and wound applications.

Pegasus Biologics’ Assets
Pegasus Biologics has developed a portfolio of assets critical to the repair and reinforcement of soft tissues and the treatment of chronic, complex wounds. These assets fall into a variety of categories, including:
·       Patents
·       Product
·       Product designs and prototype
·       Software and control algorithms
·       Manufacturing equipment and fixtures
·       One (1) prospective, multi-center, clinical trial under an FDA investigational device exemption. (Dura)
·       Three (3)  prospective, multi-center clinical studies for marketing purposes (Achilles tendon, arthroscopic rotator cuff, wound)
·       One (1) retrospective study for marketing purposes (open rotator cuff)
·       Current FDA regulatory clearances and CE marks
·       Data from human clinical trials/studies
·       Intellectual capital and expertise
·       Trademarks
·       Domain names

The assets of Pegasus Biologics will be sold in whole or in part (collectively, the “Pegasus Assets”).  The sale of these assets is being conducted with the cooperation of Pegasus. Pegasus and its employees may be available to assist purchasers with due diligence.  Notwithstanding the foregoing, Pegasus Biologics 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 Pegasus Biologics’ 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 Pegasus Biologics’ Assets. Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than Friday, June 26, 2009 at 3:00 p.m. Pacific Standard Time (the “Bid Deadline”) at Pegasus’ office, located at 6 Jenner Dr, Suite 150 Irvine, CA. 92618.  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 Pegasus fixed asset list may not be complete and Bidders interested in the Pegasus Biologics Equipment must submit a separate bid for such assets. Be specific as to the assets desired.

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 Pegasus Biologics, Inc.). The winning bidder will be notified within 3 business days after the Bid Deadline. Non-successful bidders will have their deposit returned to them. Pegasus Biologics reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.

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

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

Steven R. Gerbsman
steve@gerbsmanpartners.com

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