29 Apr TomoTherapy joins new proton therapy venture
Madison, Wis. – TomoTherapy, a Madison-based medical device manufacturer, will be part of a new venture to accelerate the development of a low-cost compact proton therapy system for the treatment of cancer.
The new venture, Compact Particle Acceleration Corp., will be financed in phases marked by technological milestones.
The new proton therapy system will feature a dielectric-wall accelerator that resulted from defense-related research at Lawrence Livermore National Laboratory, which is collaborating with TomoTherapy. The accelerator offers a high-energy form of proton therapy in a compact structure that fits in a standard therapy treatment room.
TomoTherapy, which currently develops the Hi·Art radiation therapy system for the treatment of a variety of cancers, will contribute intellectual property to CPAC in exchange for its interest in the company. In addition to TomoTherapy, the new corporation will be supported by private investors and potential customers that will commit a total of $50 million. Outside investors will contribute cash in exchange for common stock of CPAC.
CPAC has two series of common stock – Series A common stock and Series B common stock. Potential customers may choose to purchase Series A common stock, at a $1 per share, or Series B common stock at $0.57 per share.
Fred Robertson, CEO of TomoTherapy, said the new venture would reduce risk to the company because the accelerator will have applications beyond the healthcare industry. Varian Medical Systems, a competitor based in Palo Alto, Calif., has developed a radiation therapy product called the RapidArc system to rival TomoTherapy’s Hi-Art. The RapidArc system has gained regulatory clearance the Food and Drug Administration.
Even though the accelerator will have non-healthcare applications, TomoTherapy has the option to acquire medical applications resulting from the accelerator. TomoTherapy retains, any time after April 27, 2010, the right to obtain exclusive rights to the underlying intellectual property for the medical field in exchange for the obligation to purchase all of the Series A common stock held by customers and a small portion of the Series B common stock held by investors.
Under that scenario, CPAC would continue to commercialize accelerator technology in fields other than the medical field.
CPAC will have a five-person board of directors with members appointed by shareholders. Shawn Guse, vice president and general counsel of TomoTherapy, will serve as the initial chief executive officer of CPAC.
If the accelerator is successfully developed, the company still would need 510(k) clearance from the FDA before it is placed on the market.
Related stories
• TomoTherapy sales up, but Q4 income down from 2006 performance
• New product competition drives down TomoTherapy stock
• TomoTherapy signs distribution agreements in six new markets
• TomoTherapy reports 86% revenue jump, $131M net loss in Q1