HyperMed Inc. hoisted the white flag, filed for Chapter 11 bankruptcy protection Dec. 22 after logging nearly $3 million in debt, including a $2 million bridge loan with its largest shareholder.
The move follows a special board meeting last week, when directors at the Burlington, Mass.-based company concluded “it was in the best interests of the corporation, creditors and other interested parties” that HyperMed seek bankruptcy protection. Board members also authorized Michael Goldblatt, an independent director and chief executive of a biotech company in suburban Baltimore, to file documents and oversee operations during the Chapter 11 process.
While a Chapter 11 petition often indicates a company is seeking to shed debt while keeping its doors open for business, HyperMed’s future plans were unclear. The company’s website on Dec. 23 stated only that “HyperMed has ceased operations,” and eliminated all other information and business pages.
HyperMed launched in 1997 and has been working to commercialze OXyVu, a new medical imaging device using advanced optics and mathematical algorithms to measure changes in reflected light and assisting physicians in distinguishing healthy and diseased tissues. U.S. regulators cleared the device in November, 2006, to assess oxygen levels in tissues of patients with diabetic foot ulcers, leg pain or other symptoms of poor blood flow. After a slow start, revenues for the venture-backed company surged to $1.3 million last year, but fell sharply during the first nine months of 2009.
Through the first three quarters this year, HyperMed recorded a $1.4 million net loss on about $243,000 in revenues and has had virtually no manufacturing or sales activity since June, according to its bankruptcy petition. The company had nearly $2.9 million in total liabilities, listing just over $1 million in assets, including $603,000 for seven patents issued between March, 2003, and March, 2006.
HyperMed’s largest creditor is also its biggest benefactor. GBP Capital, a Greenwich, Conn.-based venture capital firm, owns a 52 percent stake after leading a $3 million Series A investment round in February, 2007, and a $3.3 million follow-up in May, 2008. Since making those initial investments, the venture fund also provided $2 million to the company through a bridge loan, although details of when the loan was made and its due date were not disclosed in the bankruptcy petition.
Unconventional Concepts Inc., a technology consulting business with offices in Florida and Washington, D.C., owns an 11 percent stake in HyperMed. The only other equity holder with a double-digit stake is former CEO Jenny Freeman, who left HyperMed in mid-2007.
The current CEO is Mark Carbeau, previously U.S. president of the advanced wound care business at Kinetic Concepts Inc. in San Antonio, Texas. He received about $188,500 from the company between October, 2008, and June, 2009, acccording to the petition, but nothing since that time — likely indicating he is now working without pay or has already left the company.
Richard Lifsitz, at one time the executive in charge of corporate development at HyperMed, recently joined SimulConsult Inc. in Chestnut Hill, Mass. Lifsitz was paid about $162,000 by the company through Dec. 15.
