VirtualScopics, a leading provider of quantitative imaging, today announced they have finalized the initial closing in their sale of a new series of convertible preferred stock to the Merck Global Health Innovation Fund. The stock will be purchased for $3 million, with an additional $3 million investment contingent on the achievement of certain milestones. This sale is a portion of a larger investment to deliver funding for VirtualScopics' efforts to grow its quantitative imaging technology into new markets, such as personalized medicine.
VirtualScopics' existing model employs its quantitative imaging technology for the characterization of structural and functional information, facilitating early efficacy determination and studies evaluation drug mechanism of action. The company will use assets from the investment to usher quantitative imaging into the realm of individual physicians and patients. VirtualScopics believes this new application of their technology will make a substantial impact on the personalization of medicine, as well as certain therapeutic areas that offer the potential for early diagnosis.
"We are very excited to announce this strategic investment in support of our personalized medicine initiative. The proceeds will be used to develop and commercialize a quantitative imaging center which will use VirtualScopics' proprietary technology to provide objective interpretations of medical images to patients across the globe," said Molly Henderson, chief business and financial officer. She added, "With the continued emphasis on controlling the increasing cost of healthcare, products and services that assist in patient stratification and rapid determination of efficacy or futility for expensive therapies are critical."
"This investment is a key enabler to our goal of applying our technology into the personalized medicine market," said Jeff Markin, president and chief executive officer. He further stated, "We believe our image-based software applications will play a critical role in assisting physicians with an earlier determination of response to therapy and ultimately help us achieve our mission of improving the lives of people across the globe that suffer from life threatening or debilitating diseases."
The terms of the first closing include conditions for a second closing of an additional $3 million of new Series C-2 Preferred Stock, if particular milestones are achieved towards the development of the company's quantitative imaging center on or before April 3, 2013. The earnings from this financing will be used for the validation of VirtualScopics' blood perfusion/oncology application and related marketing as well as to establish the IT and software platform that supports the use of quantitative imaging as a personalized medicine and diagnostic tool.
In the transaction, the Merck Global Health Innovation Fund acquired 3,000 shares of Series C-1 Preferred Stock, which are initially converted into 2,491,073 shares of common stock and warrants that are initially exercisable for 1,361,316 shares of common stock. Summer Street acted as a financial advisor in the transaction.
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