Orthopedic Development, a Clearwater, Fla., maker of spinal-fusion devices, raised $8 million in an oversubscribed institutional funding round. The private placement, handled by GunnAllen Financial, was entirely funded by individual investors, VentureWire reports (subscription required).
Orthopedic Development’s operating subsidiary, MinSurg, makes and sells a fusion device called TruFuse, which involves the use of small pieces of human bone, rather than plates and screws, to stabilize the spine. The proceeds of the round will be used to accelerate sales of TruFuse and to fund additional research and development.
One odd note about this company: Its Web site flags a “security alert” (the link can’t be reproduced for some reason, but I’ve uploaded the PDF file here; you can also go to Orthopedic Development’s Web site and click on the red “security alert” text at top right) that warns about “deceptive, inaccurate and malevolent e-mails” recently received by the company’s investment bank and advisors. It doesn’t actually say what mysterious allegations these e-mails are supposed to be pushing, but notes that the company’s independent directors have concluded they contain “no credible information.”
This sort of hysterical overreaction to criticism is rarely a good sign, of course. If anyone knows more, feel free to e-mail or leave a comment.
4 Comments
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SpineMan said:
NOTICE: Civil litigation has been filed against Orthopedic Development Corporation, parent company of the aforementioned product. The Complaint (Case 1:07-cv-00363) was filed In The United States District Court, For The Middle District of North Carolina on May 8, 2007 at 9:14 am Eastern Standard Time.
Danny Wayne Grayson (Plaintiff), former Vice President of Sales for minSURG, a wholly owned subsidiary of Orthopedic Development Corporation, filed the Complaint against minSURG Corporation, Orthopedic Development Corporation and James Doulgeris (Defendants). The Complaint seeks a First Claim for Relief for Fraudulent Inducement to Contract a Second Claim for Relief for Breach of Contract and a Third Claim for Relief for Supplemental State Law Claim Against Defendant minSURG.
Here is a link to the filing:
http://dockets.justia.com/docket/court-ncmdce/case_no-1:2007cv00363/case_id-45848/
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SpineGuru said:
Here’s a link to an article on ShareSleuth.com about Orthpedic Development Corporation that may be of interest:
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MedicalSleuth said:
Medical device’s claims disputed
An investor is suing a Clearwater company over its kit to cure back pain.
By Scott Barancik / St. Petersburg Times
Published June 12, 2007A Clearwater company that raised $8-million this year for a surgical backache cure is battling allegations that it misled investors about the device’s potential.
Marketing materials distributed by Orthopedic Development Corp. say its TruFUSE product - a $2, 500 kit that includes a drill bit and two freeze-dried dowels made from the thigh bone of a donated cadaver - is a cheaper, easier and more effective tool for curing chronic lower-back pain than the metal rods and screws typically used in spinal-fusion surgery.
In most cases, ODC claims, TruFUSE surgery can be completed in no more than 30 minutes and on an outpatient basis, with only a local anesthetic and a tiny incision. “TruFUSE is less invasive, less destructive, less complicated, subjects the patient to minimal risk, promises a superior long-term solution and is less expensive, ” a company brochure says. Hospitals supposedly can save as much as $9, 000 per surgery while charging Medicare or private insurers the same amount they would for a rod-and-screw procedure.
Several parties beg to differ, however. Terje Gronlie, the largest investor in ODC’s $8-million private placement at $900, 000, claims in a lawsuit that the company defrauded him by exaggerating TruFUSE’s track record.
Dan Grayson, a former vice president of sales who filed suit after being fired last month, said in an interview Monday, “They don’t have any clinical evidence that TruFUSE works.” Securities watchdog ShareSleuth.com, a Web site bankrolled by billionaire entrepreneur Mark Cuban, largely concurred in a report published Friday.
But ODC says its critics’ motives are suspect. In its own lawsuit, the company accuses Gronlie and Grayson of masterminding an anonymous e-mail campaign that allegedly defamed the company and certain principals for unspecified economic gain. President and CEO James Doulgeris added in an interview Monday that ODC had in fact designed a clinical study and signed contracts with physicians, but that Gronlie and another former employee assigned to implement it failed to do so.
Negotiations with St. Petersburg-based BayCare Health Systems to perform a separate “cost-and-outcome” study fell through for unrelated reasons.
“It’s not like we just made this up, ” Doulgeris said. “This is all supervised by board-certified spinal surgeons.”
No matter who is right, what’s at stake is a chunk of the 1-million rod-and-screw spinal fusions performed each year in U.S. hospitals. Grayson said hospitals can charge up to $15, 300 for each procedure.
The dispute could ensnare other Tampa Bay area players. According to ODC, chairman and Clearwater surgeon David Petersen is the company’s largest shareholder, as well as TruFUSE’s inventor.
LifeLink Tissue Bank, a Tampa not-for-profit, manufactures the devices. Faculty from the University of South Florida helped test it.
Also playing a role is GunnAllen Financial, a Tampa brokerage firm and investment bank that earned $800, 000 for managing ODC’s private placement. GunnAllen controls one of the six seats on ODC’s board.
According to ShareSleuth.com and confirmed by the Times, a key GunnAllen employee in the transaction was temporarily barred from the New York Stock Exchange in 2003, although he did not admit guilt in the case.
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Akin Ashekun said:
I think the world should know who this gunnallen employee is they are predators.
wolves in sheeps clothing.
dig somw more it goes back to 1999 front running by gunnallen traders and all the bad deals that whipped investors out.
