BioSphere Medical Sold to Utah Device Company

Merit Medical Inc. is entering the women’s health market. The South Jordan, Utah-based firm has acquired BioSphere Medical Inc. for $96 million in cash.

Rockland, Mass.-based BioSphere will be merged into a holding company created by Merit called Merit BioAcquisition Co. Officials with both companies expect the deal to be completed in the third quarter. J.P. Morgan Securities Inc. is acting as a financial advisor for BioSphere Medical, while WilmerHale LLP is acting as legal counsel.

Founded in 1993, BioSphere Medical develops bioengineered microspheres to treat uterine fibroids, hypervascularized tumors and vascular malformations. In March, two high-ranking executives stepped down—Willard Henneman, who served as vice president of new product and business development, and Joel Weinstein, the firm’s vice president of global marketing and sales. Company officials did not give a reason for the resignations.

BioSphere Medical reported revenue of $7.12 million during the first quarter, a 2 percent drop compared with the $7.28 million it recorded in the same period last year. However, its first-quarter net loss slowed by $530,000 compared with the $1.64 million BioSphere lost in the first quarter of 2009.

Merit Medical executives said the acquisition will enable the company to leverage BioSphere’s technology to penetrate the worldwide markets for uterine fibroids and liver cancer. Merit Medical officials estimate those markets to be worth $650 million and $380 million, respectively.

“The acquisition of BioSphere represents a strategic investment for Merit,” said Fred P. Lampropoulos, Merit’s chairman and CEO. “We believe BioSphere offers the most advanced embolotherapy technology available today and represents a valuable platform for therapeutic technologies. Our experience delivering point-of-sale clinical solutions to interventional radiologists, combined with our global distribution channels, position us well to capitalize on the BioSphere technology in the market. We believe we can drive incremental use of the women’s health and oncology applications among interventionalists, while providing significant benefit to patients.”

BioSphere’s chairman said the merger would enable a greater number of patients suffering from uterine fibroids to receive treatment.

“Merit Medical Systems’ reputation and experience in interventional radiology and worldwide distribution network make it an ideal fit for BioSphere,” David P. Southwell said in a news release. “Through Merit, more women suffering from uterine fibroids will benefit from the less invasive treatment solution offered by embolotherapy.”

Richard Faleschini, BioSphere Medical’s president and CEO, added: “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.”

Within hours of the announced merger, however, attorneys with New York, N.Y.-headquartered law firm Levi & Korsinsky said they were investigating the board of directors of BioSphere for potentially failing to adequately shop around for a higher-paying buyer.