Urinary-incontinence device manufacturer Uroplasty hopes to turn a money-losing proposition into a winner.
The Minnetonka, MN-based manufacturer of minimally invasive treatments of urinary dysfunctions and pelvic disorders has announced it will merge with Vision-Sciences, which has struggled financially since its inception.
Under terms of the agreement, each outstanding share of Uroplasty's common stock will be exchanged for 3.6331 shares of Vision-Sciences' common stock. Upon news of the proposed merger, Uroplasty's share price increased 4.68% to $2.46 per share as of 12:54 p.m. Eastern Time. Vision-Sciences' stock fell 13% to $0.878 per share.
The deal is expected to close during the first half of 2015, per a shareholder vote and other customary closing conditions. The combined company will be called Cogentix Medical,
The combined company, to be called Cogentix Medical, will be headquartered in Minnetonka and headed by Uroplasty CEO Rob Kill. The companies expect Cogentix to generate revenue of approximately $50 million for the fiscal year beginning April 1, 2015. That is about double the sales that Uroplasty brought in during its most recent fiscal year.
Cogentix will market Vision-Sciences' flexible endoscopy device to Uroplasty's existing customers. Vision-Sciences' EndoSheath Endoscopy combines an endoscope with a sterile, disposable covering that reduces cross-contamination between patient and endoscope, according to the company.
Vision-Sciences (Orangeburg, NY) has received FDA clearance to market EndoSheath in laryngoscopy, cystoscopy, sigmoidoscopy, colonoscopy, gastroscopy, bronchoscopy, and esophagoscopy, the company's website says.
Vision-Sciences said in a November 13 SEC filing that it "has incurred substantial operating losses" since its founding in 1987 and expected to continue doing so through the end of the 2015 fiscal year. It cited "continued investment in a direct sales force for the U.S. market, spending for marketing, revitalizing a research and development pipeline, and general business operations" as reasons for the losses ($3.5 million for the six months ended Sept. 30).
"There can be no assurance that we will ever achieve or sustain a profitable level of operations in the future," the company said in the 10-Q report.
Uroplasty products include Urgent PC, a neuromodulation system for percutaneous tibial nerve stimulation. It treats overactive bladder and associated symptoms of urinary urgency, urinary frequency and urge incontinence on an outpatient basis.
Its Macroplastique line offers soft-tissue augmentation for the endoscopic treatment of stress urinary incontinence (approved for women only in the U.S.; for men and women outside the U.S.), and an implantation system for non-endoscopic treatment of female urinary incontinence (not approved in the U.S.)
Upon completion of the merger, Uroplasty shareholders will own 62.5% of the shares of the combined company on a fully diluted basis, and Vision-Sciences shareholders will own 37.5%.
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Nancy Crotti is a contributor to Qmed and MPMN.
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