BioSphere Medical, Inc. (NASDAQ: BSMD) (“BioSphere Medical”
or the “Company”) – the pioneer in the use of bioengineered
microspheres to treat uterine fibroids, hypervascularized tumors
and vascular malformations by a minimally invasive, image-guided
medical procedure called embolotherapy – today reported that it has
entered into an a definitive agreement and plan of merger with
Merit Medical Systems, Inc. (NASDAQ: MMSI) and Merit BioAcquisition
Co., a wholly-owned subsidiary of Merit Medical pursuant to which
BioSphere Medical will merge with and into Merit BioAcquisition Co.
in a cash transaction valued at approximately $96 million.
In connection with but prior to the consummation of the
transaction, BioSphere Medical intends to call for redemption all
9,636 currently outstanding shares of series A preferred stock at a
redemption price of $1,000 per share plus accrued but unpaid
dividends. Holders may elect to convert each share of series A
preferred stock into 250 shares of common stock prior to
consummation of such redemption. Under the terms of the agreement,
and assuming the conversion of all outstanding shares of series A
preferred stock into shares of common stock, at closing each share
of BioSphere Medical common stock will be exchanged for $4.38 per
share in cash, representing a premium of approximately 54% over the
closing price on May 12, 2010.
David P. Southwell, Chairman of BioSphere Medical, said, “Merit
Medical Systems’ strong reputation and experience in interventional
radiology and extensive worldwide distribution network make it an
ideal fit for BioSphere. This transaction achieves significant
value for our shareholders. Furthermore, through Merit, more women
suffering from uterine fibroids will benefit from the less invasive
treatment solution offered by embolotherapy.”
“We are pleased to bring value to BioSphere shareholders through
this planned acquisition. We look forward to effectively
integrating into Merit, and we believe that this transaction will
allow us to even more fully meet the needs of our customers,” said
Richard Faleschini, BioSphere Medical’s president and chief
executive officer.
The transaction was unanimously approved on May 13, 2010 by
BioSphere Medical’s Board of Directors. Completion of the
transaction is subject to approval of BioSphere Medical
stockholders, regulatory approvals and other customary closing
conditions and is expected to occur early in the third quarter of
2010.
J.P. Morgan Securities Inc. is acting as financial advisor, and
WilmerHale LLP is acting as legal counsel, to BioSphere
Medical.
Also today, BioSphere Medical reported its financial results for
the three months ended March 31, 2010.
Total worldwide revenue for the first quarter of 2010 was $7.12
million, compared with $7.28 million in the first quarter of 2009,
a decline of 2%. Total revenue in the first quarter of this year
includes $0.08 million from Nippon Kayaku, the Company’s
distribution partner in Japan. There was no revenue from Nippon
Kayaku in the first quarter of 2009 as this agreement began in
April 2009. First quarter 2010 results included licensing revenue
of $0.02 million, compared with $0.10 million last year. Worldwide
revenue from embolics and delivery systems was $7.02 million in the
quarter, a decline of 2% from the prior year.
U.S. sales of embolics and delivery systems were $5.44 million
in the first quarter, compared with $5.69 million in the same
period of 2009. Revenue from embolics and delivery systems in
Europe, the Middle East and Africa (EMEA) was $1.00 million in the
first quarter, compared with $1.16 million in the same period of
2009.
In Emerging Markets outside of the United States and EMEA,
revenue from embolics and delivery systems was $0.58 million for
the first quarter of 2010, compared with $0.34 million in the first
quarter of 2009, an increase of 71%. Revenue in China was $0.15
million, up 11%, and revenue in Brazil was significantly higher, at
$0.34 million, up 232%.
Gross profit for the first quarter of 2010 was $5.33 million, or
74.9% of revenue, compared with gross profit of $5.44 million, or
74.7% of revenue, for the first quarter of 2009.
Operating expenses for the first quarter of 2010 were $6.66
million, compared with $7.29 million for the first quarter of 2009.
The decrease was primarily due to a reduction in research and
development expense in connection with the conclusion of our
manufacturing improvement program in the first quarter of 2009 and
to lower incentive compensation expense resulting from lower than
expected sales in the first quarter of 2010.
Operating loss for the first quarter of 2010 narrowed to $1.33
million from $1.84 million in the same period of 2009, a reduction
of 28%.
Foreign exchange gain for the first quarter of 2010 was $0.22
million compared with $0.20 million for the same period last year,
due to higher euro denominated intercompany trade payables.
The Company recorded an income tax benefit of $0.03 million
during the quarter from the French economic stimulus program.
The quarterly preferred stock dividend for the first quarter of
2010 was $0.15 million, unchanged from the first quarter of
2009.
Net loss applicable to common stockholders narrowed by 31% for
the first quarter of 2010 to $1.23 million or $0.07 per share,
compared with a net loss applicable to common stockholders of $1.79
million or $0.10 per share in the same period last year.
As of March 31, 2010, BioSphere Medical had cash, cash
equivalents and marketable securities of $16.56 million, compared
with $18.09 million at December 31, 2009.
Sales by therapeutic area in the first quarter of 2010 were as
follows:
- Worldwide sales of embolics used
in interventional gynecology, or UFE, were $5.00 million, compared
with $5.25 million in the first quarter of 2009. This includes U.S.
sales of $4.07 million, compared with $4.35 million in the
comparable year-ago quarter and sales outside of the U.S. of $0.93
million, compared with $0.90 million in the prior year. The slower
sales in UFE is believe to be principally due to the continued high
unemployment rate, which the Company believes has had the effect of
reducing demand for elective procedures such as UFE.
- Worldwide sales of embolics used
in interventional oncology rose 4% to $1.66 million compared with
$1.60 in the prior year. This includes U.S. sales of $1.23 million,
up from $1.16 million, and sales outside of the U.S. of $0.43
million, compared with $0.44 million in the prior year. The Company
believes sales in the United States were impacted somewhat due to
the scarcity of Ethiodol, a third-party product used by doctors
with the Company’s Embosphere Microspheres during conventional
transarterial chemoembolization procedures, or cTACE. On May 11,
2010, the FDA announced that Guerbet LLC has acquired the Ethiodol
NDA from Nycomed U.S., Inc. effective May 7, 2010 and that Guerbet
is working with FDA to resume manufacturing of Ethiodol in the near
future to ensure continued availability for U.S. patients. The
Company does do not know whether or when Ethiodol will become
available for sale again in the U.S. for cTACE procedures. The
Company also continues to work with the FDA to obtain an approval
for a study using its QuadraSphere® Microspheres for the treatment
of primary liver cancer. Based on discussions with the FDA, the
Company has determined that the study protocol will include as a
primary endpoint patient survival. Furthermore, the Company is
continuing to discuss with the FDA the protocol requirements for
the trial, and thus has not yet determined whether or when to
undertake the clinical trial.
- Worldwide sales of delivery
systems were $0.36 million for the quarter, which includes U.S.
sales of $0.14 million and sales outside of the U.S. of $0.22
million. This is up 8% from worldwide sales of $0.33 million in the
prior year.
About BioSphere Medical, Inc.
BioSphere Medical, Inc. seeks to pioneer and commercialize
minimally invasive diagnostic and therapeutic applications based on
proprietary bioengineered microsphere technology. The Company’s
core technologies, patented bioengineered polymers and
manufacturing methods, are used to produce microscopic spherical
materials with unique beneficial properties for a variety of
medical applications. BioSphere Medical’s principal focus is the
use of its products for the treatment of symptomatic uterine
fibroids using a procedure called uterine fibroid embolization, or
UFE. The Company’s products continue to gain acceptance in this
rapidly emerging procedure, as well as in a number of other new and
established medical treatments.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this press release about future expectations,
plans and prospects for BioSphere Medical, including statements
about the expected timetable for consummation of the proposed
transaction among Merit Medical Systems, Inc., Merit BioAcquisition
Co. and BioSphere Medical, Inc., benefits of the transaction, and
any other statements about Merit Medical Systems, Inc., Merit
BioAcquisition Co. and BioSphere Medical, Inc., or about
managements’ future expectations, beliefs, goals, plans or
prospects, constitute forward-looking statements within the meaning
of The Private Securities Litigation Reform Act of 1995. These
statements may contain the words “believes,” “anticipates,”
“plans,” “expects,” “will” and similar expressions. Actual results
may differ materially from those currently anticipated due to a
number of risks and uncertainties that are subject to change based
on factors that are, in many instances, beyond the control of Merit
Medical Systems, Merit BioAcquisition Co. and BioSphere Medical.
Risks and uncertainties that could cause results to differ from
expectations include: the occurrence of any event or proceeding
that could give rise to the termination of the merger agreement;
the inability to complete the merger due to the failure of the
closing conditions to be satisfied; the outcome of any legal
proceedings that may be instituted in connection with the merger;
uncertainties as to the timing of the merger; uncertainties as to
how BioSphere Medical stockholders will vote their shares with
respect to the merger; the determination to call for redemption the
series A preferred stock and uncertainties as to whether such
shares may be converted into shares of common stock prior to such
redemption; the risk that competing offers will be made; the
effects of disruption from the transaction making it more difficult
to maintain relationships with employees, customers, suppliers,
other business partners or governmental entities, other business
effects, including the effects of industry, economic or political
conditions outside of the control of Merit Medical Systems, Merit
BioAcquisition Co. and BioSphere Medical; transaction costs; actual
or contingent liabilities; or other risks and uncertainties
discussed in documents filed with the U.S. Securities and Exchange
Commission by BioSphere Medical, including risks relating to: the
failure of BioSphere Medical to successfully develop, commercialize
and achieve widespread market acceptance of its products; the
failure of BioSphere Medical to achieve or maintain necessary
regulatory approvals, either in the United States or
internationally, with respect to the development,
commercialization, manufacture and sale of its products and product
candidates; risks related to BioSphere Medical’s ability to
successfully obtain approval for and commence its planned clinical
trial of QuadraSphere(R) Microspheres loaded with doxorubicin for
the treatment of primary liver cancer; BioSphere Medical’s ability
to obtain and maintain patent and other proprietary protection for
its products and product candidates; the absence of, or delays or
cancellations of, product orders; delays, difficulties or
unanticipated costs in the introduction of new products;
competitive pressures; the risk of adverse outcomes in product
liability claims against BioSphere Medical; and risk factors
described in the section titled "Risk Factors" in BioSphere
Medical’s Annual Report on Form 10-K for the year ended December
31, 2009, as filed by BioSphere Medical with the Securities and
Exchange Commission, and described in other filings made by
BioSphere Medical from time to time with the Securities and
Exchange Commission.
In addition, the forward-looking statements included in this
press release represent BioSphere Medical’s estimates as of the
date of this release. BioSphere Medical anticipates that subsequent
events and developments may cause its forward-looking statements to
change. BioSphere Medical specifically disclaims any obligation or
intention to update or revise these forward-looking statements as a
result of changed events or circumstances after the date of this
press release.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE
SEC
BioSphere Medical plans to file with the SEC and mail to its
stockholders a Proxy Statement in connection with the transaction.
The Proxy Statement will contain important information about Merit
Medical Systems, Merit BioAcquisition Co., BioSphere Medical, the
transaction and related matters. Investors and security holders
are urged to read the Proxy Statement carefully when it is
available.
Investors and security holders will be able to obtain free
copies of the Proxy Statement and other documents filed with the
SEC by Merit Medical Systems, Merit BioAcquisition Co. and
BioSphere Medical through the website maintained by the SEC at
www.sec.gov.
In addition, investors and security holders will be able to
obtain free copies of the Proxy Statement from BioSphere Medical by
contacting Martin J. Joyce at 781-681-7900.
Merit Medical Systems and BioSphere Medical, and their
respective directors and executive officers, may be deemed to be
participants in the solicitation of proxies in respect of the
transactions contemplated by the merger agreement. Information
regarding Merit Medical Systems’ directors and executive officers
is contained in Merit Medical Systems’ Annual Report on
Form 10-K for the year ended December 31, 2009 and its proxy
statement dated April 10, 2010, which are filed with the SEC.
Information regarding BioSphere Medical’s directors and executive
officers is contained in BioSphere Medical’s Annual Report on
Form 10-K for the year ended December 31, 2009 and its
proxy statement dated April 16, 2010, which are filed with the
SEC. As of February 1, 2010, BioSphere Medical’s directors and
executive officers beneficially owned approximately 2,144,493
shares, or 10.4% percent, of BioSphere Medical’s common stock. A
more complete description of the interests of the officers and
directors will be available in the Proxy Statement.
BioSphere Medical, Inc. SELECTED FINANCIAL
INFORMATION CONSOLIDATED CONDENSED BALANCE SHEETS
As of March 31, 2010 and December 31, 2009 (in thousands,
unaudited) March 31, December
31, 2010 2009 ASSETS Cash, cash equivalents and
investments $ 16,560 $ 18,088 Accounts receivable, net 4,223 5,183
Inventories 3,390 3,713 Prepaid expenses and other current assets
745 639 Property and equipment, net 725 829 Goodwill 1,443 1,443
Other assets 558 552 Total
assets $ 27,644 $ 30,447 LIABILITIES AND
STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 4,451
$ 6,028 Deferred revenue 770 764 Capital lease obligations 5 8
Stockholders' equity 22,418 23,647
Total liabilities and stockholders' equity $ 27,644 $
30,447
CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS For the three months ended March 31, 2010 and
2009 (in thousands, except per share amounts, unaudited)
Three Months Ended March 31, 2010
2009 Revenues $ 7,121 $ 7,283 Costs and
expenses: Cost of revenues 1,790 1,840 Research and development 718
985 Sales 2,498 2,718 Marketing 1,407 1,513 General and
administrative 1,838 1,897 Patent 203 172
Total costs and expenses 8,454
9,125 Loss from operations (1,333 ) (1,842 ) Other
income and expenses, net 220 202
Net loss before income taxes (1,113 ) (1,640 ) Income
tax benefit 27 - Net Loss (1,086
) (1,640 ) Preferred stock dividends (145 )
(145 ) Net loss applicable to common stockholders $ (1,231 )
$ (1,785 ) Net loss per common share Basic and diluted $
(0.07 ) $ (0.10 ) Weighted average common shares outstanding
Basic and diluted 18,085 18,012
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