Category: Deals

Sphinx Medical enters fast growing market following successful fund raising with DC Consulting.

Sphinx Medical was started last year to focus on the development, manufacture, and distribution of implantable silicone devices for the management of severe incontinence.

The company has raised £600,000 in an initial financing round led by Borders-based angel syndicate TRI Cap, with members of the Kelvin Capital syndicate, investing through TRI Cap, contributing the majority of the private equity to the deal. The round also included investments by the Scottish Investment Bank’s Scottish Co-Investment Fund and by management.

Sphinx’s initial product is an artificial anal sphincter (AAS), which addresses a problem that is forecast to increase rapidly as the population ages. Incontinence can affect women after childbirth when the sphincter muscles are unable to recapture their full strength, but it is with the elderly that the problem becomes more widespread. Incontinence causes acute embarrassment to its sufferers; colostomy is available for the most severe cases, but otherwise there are few effective treatments that can restore a patient’s dignity. Sphinx’s device is intended to play a major role in doing exactly that.

The AAS replaces the anal sphincter muscles with a silicone pump operating silicone gel pads, which can be manually activated. The device was developed in Glasgow by Dr Ian Finlay and it has been successfully implanted in more than 20 patients, some of whom have benefited for a period in excess of ten years. The device has been issued with a CE mark and the procedure has gained recognition from NICE.

The centres which have used the trial devices in the past, and have staff already trained and approved to carry out the procedure, are keen to order more when the finished product is available early next year, meaning that the company has a ready-made sales pipeline in place. The market is in effect new, and Sphinx has only one direct competitor, with a product based on old technology, over which the AAS is believed to have significant competitive advantages.

Whilst closing the investment the executive team continued to explore adjacent options to enhance the overall Sphinx offering and secured Heads of Terms to acquired a complementary device for the treatment of urinary incontinence.

According to DC Consulting, which advised Sphinx on its fundraising, the product development process and timeline for the AAS is similar to that of the gastric band, which took 18 years to launch into the market, and was subsequently purchased just two years later by Johnson and Johnson for $110 million. The AAS device has a significantly larger market opportunity than the gastric band, and Sphinx’s board believes that a trade sale within a five year period is the most likely exit route for investors.

Sphinx has assembled an experienced management team led by chief executive Jonathan Lintott and chief operating officer Joseph Gallagher. The company is building a dedicated manufacturing facility at its site in Bellshill, and is planning to start shipment of the devices in early 2012. Joe Gallagher said “We are moving rapidly to install and validate our new manufacturing facility and we target gaining regulatory approval for its use by the end of 2011. This will allow us to meet our goal of commencing manufacture during 2011.”
CEO Jonathan Lintott said “I am very excited that we have received this support from our investors. This will allow us to build a new medical device business aimed at meeting the needs of patients across the world and further reinforcing Scotland’s position in the biomedical field.”

Dr Finlay, who will be involved in the future direction of the company, added “I am pleased to be part of this venture. Sphinx will ensure this device – which has the potential to dramatically improve the quality of life – is available to patients “. TRI Cap is represented on the board of Sphinx by member Dr John Hall, who brings with him extensive experience in the pharma and life sciences sectors. Sphinx has been supported in its development by Scottish Enterprise’s National High Growth team.

DC Consulting recently completed the re-financing of a client’s residential property portfolio, securing debt funding of £725,000.

May 2011

DC Consulting, as lead corporate finance adviser, negotiated an equity investment and extension of bank facilities for a corporate hospitality business.

April 2011

VueKlar Cardiovascular is developing cardiovascular implants with proprietary features that bring substantial benefits to patients, to clinicians, and to hospitals.

The company recently completed its first round of funding, a £300,000 package of equity, loan, and a SMART grant award. Three Israeli investors, professional contacts of VueKlar’s founder and chief medical officer Dr Andreas Melzer, were joined in the investment by the founders and by the Scottish Investment Bank’s Scottish Seed Fund. The principal investor is one of Israel’s leading surgeons in minimally-invasive procedures, and is a successful entrepreneur and medical device investor. His co-investor is another leading Israeli physician, and the third is a medical device entrepreneur who was most recently CEO of a surgical implant business.

Andreas Melzer has 25 years’ experience researching and developing technologies and procedures for minimally invasive therapies. His particular speciality is MRI-guided therapies. He has been involved in eight companies founded on the back of his IP, and he is the inventor of VueKlar’s core technology. His co-founder Richard Boyd has expertise in the commercialisation of new products and technology. At PRTM, an operations management consultancy, he helped bring over 20 new products successfully to market for several large technology companies like Agilent Technologies and Nokia. In Scotland Boyd started a business, Mainstay Innovation, providing interim management and business development services to research organisations and young tech companies.

Cardiovascular implants include occluders, stents, prosthetic heart valves, and filters. They are all implanted in a minimally invasive procedure, in which the implant is compressed into a tube or catheter which is inserted into the body, often at the top of the leg, and threaded through the blood vessels to the point where it is positioned and released.

X-ray and ultrasound-based imaging techniques are used to see inside the body and guide implant placement and carry out subsequent follow-up examinations. MRI would be a better technique, because of the drawbacks of using x-rays (radiation dosages, and toxic contrast agents for the imaging) or ultrasound (probes are inserted down the throat, causing serious discomfort, infection and sometimes tissue damage). Aside from the patient problems associated with other methods, MRI gives clinicians superior images, with excellent soft tissue imaging and blood flow data. Overall, using MRI is less invasive and safer for patients, offers better imaging for clinicians, and better financial outcomes for hospitals.

The problem – well recognised by clinicians – is that cardiovascular implants do not image well in an MRI. The metallic structures of implants interfere with the MRI signals and severely compromise the images in and around the implants. So whereas MRI is the method of choice for diagnosis and the planning of surgery, the imaging issues mean that MRI has not up to now been a viable option for guiding implant placement or for follow-up examinations. Furthermore, future diagnostics by MRI are prevented if there is an implant in the region of interest.

VueKlar has developed MR-enhancement technology which not only removes the interference, but also increases image contrast by 3 to 4 times the native MRI image. As a result, it is possible to make a detailed examination of the implant and of the tissues around it, without the need for contrast agent. The immediate benefit is to enable the use of MRI for follow-up examinations and any future diagnostics in the same part of the body; this is better for the patient, better for the clinician, and actually cheaper for the hospital, and no change is needed to the hospital’s equipment set up. MR-enhancement in the right hand half of the pictured stent shows how MRI can now be used to check for common complications such as a blood clot (as shown). VueKlar implants also open the door to MRI-guided implantation, so MRI can become a ‘one stop shop’ for all the procedures, with the attendant benefits for patients, clinicians and hospitals.

The company’s initial business model is contract development, licensing and potentially manufacturing MR-enhancement technology for other implant manufacturers. A partnership with a reputable implant manufacturer validates the demand for the technology; the subsequent commercial launch of a device and its success in the clinic validates clinical and commercial benefits.

The company estimates that a single implant could bring contract development worth over £1m, and future royalties of between £1m and £5m per year. Further revenue is anticipated from manufacturing the technology. The company has developed prototype stents, filters, heart valves and occluders and has successfully demonstrated these through animal trials. Its technology is protected by a portfolio of nearly 50 granted or pending patents, and significant proprietary expertise. It has begun approaching manufacturers about integrating its technology in next generation devices, and has recently signed its first deal.

The £300,000 investment completed in February is being used to secure an initial development agreement with an implant manufacturer, to develop a demonstrator of one of its own, proprietary implants, and to identify key hires for the next stage in the company’s development. Assisted by DC Consulting, VueKlar is preparing for the next funding round in the second half of this year, to build its development operation in support of its contract development and licensing business model.

CIQUAL, an international mobile broadband customer service solution closes significant round of funding Continue reading “CIQUAL, closes significant round of funding from global parties”

One of Scotland’s leading independent corporate finance specialists, DC Consulting advised the owners of Braemore Property Management in the recent sale of their business to Lomond Capital. The deal, led by Harry Linklater and Chris Clark follows soon after DC’s recent expansion into the Edinburgh corporate finance market.

Braemore is a leading Edinburgh Lettings business which currently manages over 800 properties and is renowned for its client service excellence. William Frame, majority shareholder and former Chairman, will retain a consultancy role and will work closely with the Lomond team going forward.

Commenting on the deal, William Frame said: “Consolidation is well overdue in the lettings sector across the UK. Braemore will be used as a bridgehead by Lomond Capital to acquire quality property letting businesses. Their business plan in very sound and backed by a strong well proven Management Team. The Braemore team of Karel Broughton and Colette Murphy along with the entire Braemore staff will be assisting Lomond in driving through the acquisition strategy. Like all deals we had our good and bad days on the way – especially as we had not prepared the business for sale. Without the steady hands of DC Consulting’s Chris Clark and Harry Linklater, getting the transaction over the line would have been somewhat challenging.”

Lomond Capital paid an undisclosed sum for the firm and has promised similar deals are in the pipeline.
Lomond Capital chairman Roger Lane-Smith commented: “The acquisition is the first of a clearly defined strategy that will see Lomond Capital look to significantly grow its presence in Edinburgh and other major UK cities. In difficult economic times, we’re delighted to be in a position to invest in the UK economy.”

3D Diagnostic Imaging, currently quoted on the PLUS market, will transfer to AIM at the end of this month. 3D Diagnostic Imaging plc (www.3ddiagnosticimaging.com) was incorporated in the Isle of Man on 17 June 2008, and has a single wholly owned trading subsidiary, CarieScan, incorporated in Scotland and based in Dundee. 3D has conditionally raised £2.71 million (before expenses) by way of a placing of 45,248,318 shares at 6p per share with existing and new investors, giving the company a market capitalisation of £10.23 million. 3D is currently a PLUS-quoted company; subject to an EGM, trading on PLUS will cease at the close of business on 19 November and trading of the company’s shares on AIM will commence on 22 November.

3D Diagnostic Imaging was formed to acquire the assets of IDMoS, a spinout from the University of Dundee, which had been placed in administration in April 2007. 3D’s subsidiary CarieScan (www.cariescan.com) has developed and taken to market the CarieScan PRO, a hand-held battery operated device, which enables dentists to measure and monitor the effect of treatment regimes to show decay advance or regression, and optimise individual treatments for different patients.

The device was developed by IDMoS, which raised significant capital and floated on AIM, but due to the prohibitive conditions of a commercial agreement which it was unable to renegotiate was forced into administration. The funds from the placing will allow CarieScan to expand its operations and to invest, both in additional tooling to increase its manufacturing capacity, and in the process of designing down the cost of manufacturing PRO sensors. The company’s primary focus is on achieving wide-scale adoption of the PRO
by dental practitioners in the USA and in Canada, and it has already partnered with leading dental distributor, Patterson Dental, to achieve adoption in these markets, with first product having been shipped.

The 3D Group’s ultimate objective is to develop, market and commercialise a series of products based on its technology with a range of different applications, such as the early detection of osteoporosis, or of malignant melanomas, the state of health monitoring of battery systems for electric vehicles, or early detection of corrosion within building materials.

Ciqual has latched on to one of the fastest growing technologies in communications, the use of mobile
networks for broadband connections.

The Edinburgh based company has developed a system, Session Insight, which enables mobile operators and their manufacturers to get a real-time view of the service provided and the user experience. This enables providers to assure the operation of their network and deliver a high level of service, and it enables manufacturers of the wireless ‘dongles’ which plug into mobile laptops to ensure that their pre-launch testing
has been successful.

The company was started in September 2007, and secured £1.25 million funding in March last year from Par Syndicate, an informal group of angel investors managed by Par Equity, and SE’s Scottish Co-investment Fund . A second round of funding from the same investors has been provided to fund the lengthy process of securing sales into large mobile operators, where projects have had to go through more levels of approval
than previously.

One effect of the global economic downturn seen by Ciqual is that mobile operators have purchased its system as a managed service, rather than an outright purchase, resulting in a regular revenue stream rather than discrete capital purchases.

During this period, the growth of data traffic has outpaced the growth of voice on mobile networks, with the consequent growth in demand for mobile broadband. Data traffic on mobile networks is set to double every year for the next five years according to a recent report by Cisco*, with laptop and wireless ‘dongle’ users generating 70% of this traffic growth.

Ciqual has this year had a major breakthrough, which could transform its business. This is a contract with one of the world’s largest telecom equipment manufacturers for the supply of its products under a ‘white label’ arrangement. Details of the deal are closely guarded until the first sales are secured, with Ciqual recently completing its first live trials at a Spanish mobile operator for its new partner. The equipment manufacturer in question had been developing its own technology for testing network performance, but decided to check what was available from third parties. After assessing a number of products, it was decided to work with Ciqual – not only a big win for the company in terms of business, but also a welcome technical endorsement.

The second funding round, complete in May, was an equity investment of £700k from Par Syndicate and SCF, of which £400k has been paid now, with the second tranche payable in September/October against agreed milestones. Ciqual was advised in this fundraising by DC Consulting.

Lochglen Whisky Company is a sales and marketing company set up to export blended scotch whisky to the US, South America and China.

Established in late 2009 by serial entrepreneur John McHattie, Lochglen is intended to be a niche exporter to target markets and has an extensive distributor network in place capable of achieving significant revenues in the next three years.

Earlier this month the company secured funding of an undisclosed amount from a business angel for the purchase of stock and initial working capital and to fund the initial start-up of the business.

To allow the business to survive, ICS2’s directors set about the task of seeking new investment to place the company on a level keel and return the business to profit. The original owners and private investor in the business, working closely with Dundee Council, the Scottish Executive, and Barwell plc, and with DC Consulting as advisers, negotiated a new funding package that was acceptable to the Bank of Scotland and all relevant parties involved. As a result a total refunding package of £500k was achieved. Continue reading “ICS2: £500k Refinancing Package”