Sphere raising £18 million fighting fund

Sphere Medical, the Cambridge UK medical technology business, is piling up the millions to ensure it cashes in globally on the potential of its next generation product, Proxima 4.

A combination of new fundraisings, backing from Big Pharma and negotiation of a fresh equity financing facility hands Sphere Medical a near £18 million haul to exploit a highly rated device.

A collaboration with a major Johnson & Johnson subsidiary also adds muscle to Sphere Medical’s expansion strategy.

At the heart of the latest moves is Proxima 4 – a disposable patient-dedicated arterial blood gas analyser for use in the hospital intensive care units, theatres and other acute care settings.

Johnson & Johnson subsidiary Ortho Clinical Diagnostics, Inc. (OCD), is collaborating on the development of Proxima 4 and the enhancement of Sphere’s operational and production capabilities. The alliance also provides a framework for the partners to negotiate a proposed global commercialisation deal for Proxima 4.

In connection with the collaboration, Sphere Medical has conditionally raised around £5.1m before expenses through a placing with new and existing institutional investors and approximately £3.3 million through a subscription by Johnson & Johnson Development Corporation.

Sphere Medical is also seeking to raise up to a further £4.2m by way of an additional open offer to qualifying shareholders. The company has also entered into a £5m equity financing facility with Darwin Strategic Limited, a company majority owned by funds managed by the Henderson Volantis Capital Team (a subsidiary of Henderson Global Investors).

Around £7.9m net proceeds of the fundraisings will be pumped into development of Proxima 4 and the enhancement of Sphere’s operational and production capabilities.

The company has high hopes for commercialisation of its current Proxima 3 version but OCD’s involvement really raises the bar with a rapid acceleration towards a version 4.

Sphere Medical CEO Stuart Hendry said: “The board’s principal strategic objective is to transition the group to becoming revenue generating and ultimately a cash generative company through the exploitation of its products and intellectual property.

“We are now in advanced preparations for Proxima 3 CE Marking and expect to launch Proxima 3 into the UK market in H1 2014. Our collaboration with OCD and the accompanying equity investment by JJDC and new and existing investors, points to a strong future for Proxima and consequently for Sphere.”

The company is also making encouraging progress on several fronts with other diagnostic devices for critical care markets globally.

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