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news.Cyberkinetics Neurotechnology Systems has formed a strategic alliance with NeuroMetrix, under which NeuroMetrix has made an investment of $2.5 million in Cyberkinetics’ common stock.
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Cyberkinetics and NeuroMetrix have also agreed to negotiate a joint venture to develop and commercialize a therapeutic product for peripheral nerve injury based on Cyberkinetics’ Andara Oscillating Field Stimulator neurostimulation technology platform.
The investment of $2.5 million made by NeuroMetrix was for the purchase of 5.4 million newly issued shares of Cyberkinetics’ common stock, or approximately 13% of the company’s issued and outstanding shares, at a price of $0.46 per share. NeuroMetrix also received a warrant to purchase up to an additional 2.7 million shares, or 50% of the total shares purchased.
The warrant is exercisable at $0.46 per share and has a term of five years. However, NeuroMetrix will be required to exercise the warrant if Cyberkinetics receives FDA approval of the HDE for the Andara OFS System for acute spinal cord injuries.
In the proposed joint venture, the two companies will each own 50% of the joint venture. Cyberkinetics contributes intellectual property, know-how and scientific expertise to the joint venture while NeuroMetrix funds up to $1 million annually in spending for the first two years of the joint venture. Both the companies share further development costs equally and NeuroMetrix will obtain an option to negotiate for exclusive rights to commercialize any products that are developed within the joint venture.
NeuroMetrix also received certain rights with this strategic investment, including a right of first negotiation for the acquisition of Cyberkinetics, or any other change of control transaction. NeuroMetrix also received a right of first negotiation for the commercialization of the Andara OFS System for the treatment of acute spinal cord injuries. These rights are active through December 31, 2008.
Timothy Surgenor, president and CEO of Cyberkinetics, said: “This alliance offers Cyberkinetics a tremendous opportunity to expand the potential of the Andara OFS therapy by initiating development of a new indication, the treatment of peripheral nerve injuries.”