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THURSDAY, MARCH 2, 2006 DIAGNOSTICS &IMAGING WEEK PAGE 2 OF 13Sarbanes-Oxley changes areproposed by SEC committeeBy AARON LORENZODiagnostics & Imaging Week Washington WriterWASHINGTON – Smaller life sciences companies sooncould see some relief from one of the Sarbanes-Oxley Act’smore burdensome regulations, if the SEC adopts recommendationsput forth by an advisory committee last week.Importantly for the industry, the SEC’s 21-memberAdvisory Committee on Smaller Public Companies has proposedchanges to Section 404 of the corporate governancelaw, which has been criticized for its sweeping approach.The <strong>Medical</strong> <strong>Device</strong> Manufacturers Association(MDMA; Washington), which counts among its membersmostly smaller device firms and has been active in pushingfor reforms because of its charge that Sarbanes-Oxley waswritten without forethought to such companies, is largelybehind the recommendations.Mark Leahey, the association’s executive director, toldDiagnostics & Imaging Week that the proposals are “a stepin the right direction.” He added that the intent underlyingSarbanes-Oxley “is pure,” but stressed that the resultingunintended consequences have placed “extremely burdensomehurdles and costs associated with them” on smallercompanies, funds that instead would go toward researchand development.Therefore, he said it was critical that the committeerecognized that the law’s one-size-fits-all approach is notthe solution to better corporate governance. Section 404reform is atop the committee’s list of the draft report recommendations.Notable are definitions of smaller public companies,which if adopted would encompass 80% of all U.S. publiccompanies, though reforms would impact only a few ofthem. Specifically, the committee proposed that micro-capcompanies have common stock (or equivalent) equal to thelowest 1% of total U.S. equity market capitalization (cur-rently about $128 million), and small-cap companiesinclude those with common stock (or equivalent) thattotals the next lowest 5%. Therefore, smaller public companies– micro-cap and small-cap – would comprise the lowest6% of U.S. market cap.Certain smaller public companies would benefit fromthe committee’s recommendations for reforming Section404 of Sarbanes-Oxley, viewed by many as its most onerousaspect. Section 404 calls for upper management to attest tofinancial statements and employ external auditors.The management attestation provision is essentiallyrepetitive, as Section 302 of Sarbanes-Oxley alreadyrequires the filing of financial reports, and the externalaudit provision has proven overly costly to companies withlittle to no revenue.The committee’s endorsements include an outrightexemption to Section 404’s requirements to micro-capcompanies with less than $125 million in annual revenueand small-cap companies with less than $10 million inannual revenue, provided that their corporate governancecontrols include adherence to additional standards underearlier laws. The committee further suggested that smallcapcompanies be exempt from external auditor involvementin the Section 404 process if their annual revenueranges between $10 million and $250 million, subject tocompliance with the same aforementioned corporate governancestandards. An additional category would excusecompanies with revenues of less than $10 million but witha market cap up to $787 million.The SEC commissioned the advisory committee morethan a year ago to consider Sarbanes-Oxley reforms. Acommittee meeting scheduled for this week will include avote on this draft, followed by a 30-day public commentperiod. Leahey said MDMA would use that period to submitfurther thoughts on Sarbanes-Oxley reform. A final reportto the SEC is due by April 30.MDMA’s efforts are borne in part through a coalitionformed by the Biotechnology Industry OrganizationSee Sarbanes-Oxley, Page 7DIAGNOSTICS &IMAGING WEEK is published weekly by Thomson BioWorld ® , 3525 PiedmontRoad, Building Six, Suite 400, Atlanta, GA 30305. Opinions expressed are not necessarilythose of this publication. Mention of products or services does not constitute endorsement.DIAGNOSTICS &IMAGING WEEK is a trademark of Thomson BioWorld ® , a Thomson HealthcareCompany. Copyright © 2006 Thomson BioWorld ® . All Rights Reserved. No part of this publicationmay be reproduced without the written consent of Thomson BioWorld ®ATLANTA NEWSROOM: Executive Editor: Jim Stommen. Managing Editor: Don Long.Associate Managing Editor: Holland Johnson. Staff Writer: Karen Young.Production Editor: Kim Urquhart.BUSINESS OFFICE: Vice President/Group Publisher: Donald R. Johnston.Marketing Manager: Chris Walker.Account Representative: Steve Roberts.REPRINTS:For photocopy rights or reprints, please call Stephen Vanceat (404) 262-5511 or e-mail him at stephen.vance@thomson.com.SUBSCRIBER INFORMATIONPlease call (800) 688-2421 to subscribeor if you have fax transmissionproblems. Outside U.S. and Canada,call (404) 262-5476. Our customerservice hours are 8:30 a.m. to 6:00p.m. EST.EDITORIALDon Long, (404) 262-5539Fax: (404) 814-0759VP/GROUP PUBLISHERDonald R. Johnston, (404) 262-5439INTERNETwww.ahcpub.comTo subscribe, please call DIAGNOSTICS &IMAGING WEEK Customer Service at (800) 688-2421; outside the U.S. and Canada, call (404) 262-5476.Copyright © 2006 Thomson BioWorld ® . Reproduction is strictly prohibited.
THURSDAY, MARCH 2, 2006 DIAGNOSTICS &IMAGING WEEK PAGE 3 OF 13Report from IsraelRace still on for non-invasiveblood glucose monitoringBy RAE FISHMANDiagnostics & Imaging Week Contributing WriterZICHRON YAAKOV, Israel – A feverish race continues fora stand-alone, non-invasive monitoring device that doesnot need to be used along with conventional blood glucosemonitoring of blood samples, and three Israel companiesare among the participants.Start-up OrSense (Nes Ziona, Israel) just completed a$6 million private financing for its non-invasive electroopticaltechnology that provides spot or continuous monitoringof blood constituents such as glucose, hemoglobin(Hb), hematocrit (Hct) and oximetry (SpO 2 ), using the fingeras a testing site.Israel Healthcare Ventures (IHCV; Tel Aviv, Israel) ledthe in-vestment, along with STAR Ventures and Lewis TrustGroup and others.OrSense Chairman Shimon Eckhouse is enthusiastic.Eckhouse, who recently was voted Ernst & Young’s entrepreneurof the year for Israel in life sciences, said, “Webelieve that this additional investment will help us establishOrSense as the world leader in non-invasive glucosemonitoring, able to eliminate multiple needlepricks tomonitor blood sugar levels throughout the day. This is asignificant improvement in the quality of life for peoplewith diabetes, a trend we see extending into the future.”So far OrSense is on track to become another Eckhouseblockbuster. Even if it does not take all, there is plenty ofspace to maneuver in this $8 billion monitoring market.The company’s intellectual property portfolio consistsof 18 granted patents, with another 25 in process. OrSenseproducts are based on its occlusion spectroscopy technology.Other of its products focus on non-invasive monitoringof other critical blood parameters, such as hemoglobin.Carlo Salvi, a director at Teva PharmaceuticalIndustries (Petach Tikva, Israel), has been named to theOrSense board. He said, “The prospect of working withOrSense as a director and an advisor is exciting. I have alsodecided to increase my investment in the companythrough IHCV, because I believe that their unique non-invasivemonitoring systems address major unmet medicalneeds and represent a potential for rapid market acceptanceand profitability.OrSense is running in this race of tell-but-don’t-touchblood sugar monitors with two other Israeli-born endeavors.Glucon (Boulder, Colorado), developing a continuous,non-invasive, glucose monitoring technology for home andclinical use, was founded in 2000 by two Israelis, companypresident Ron Nagar and vice president for R&D, BennyPesach. Glucon has R&D offices in Petach Tikva, Israel.The company’s technology uses photoacoustics toread glucose levels directly from a blood vessel. Gluconwas granted a patent and its flagship product, the GlucoseMonitoring Watch, a digital watch/meter that constantlychecks the glucose level in the bloodstream, is currently inclinical trials.Called Aprise, it will display a continuous reading ofthe patient’s real-time blood glucose level, enabling thepatient to take the necessary measures to remain withinglucose-safe limits. Ultrasound imaging is employed toidentify a blood vessel and optical spectroscopy is used toquantify the glucose concentration within the blood vessel.Pesach said the company has demonstrated excellentprospective clinical results. These include the most recentstudy of 23 subjects, 309 capillary blood tests yielding precise(20mg/dL) and accurate results.The start-up raised $14.8 million financing in round C.NetRegulus, an established provider of enterprise compliancesoftware for regulated industries, said that Gluconhas selected the new NetRegulus NetRM Software as aService (SaaS) Study solution to manage the next phase ofits aggressive clinical trial schedule.“NetRegulus’ experience and significant knowledge ofregulated life sciences was a key factor in our decision process.The NetRegulus SaaS solution promises to helpreduce time to market while simultaneously improving theability to successfully manage critical data in preparationfor successful FDA submissions,” said Glucon CEO DanGoldberger.Another group of Israeli entrepreneurs saw the marketpotential and founded Integrity Applications in September2001. Its non-invasive device for measuring bloodglucose levels, GlucoTrack, has a triple cross-checkingdevice for measuring blood glucose levels.Integrity Applications co-founder, CEO Avner Gal, saidthe three separate measuring technologies are neededbecause “the human body is a complex target, as well asone that demands extreme accuracy.” The technology forseparate cross-checking and the processing algorithm thatsupports them has a U.S. patent for the combination of thethree technologies.Gal said that more than 10 companies worldwide aretrying to develop a viable solution. “We have a final modelwith 100 units ready for clinical trials,” he said, developed ata cost of under $2 million invested from private investors.Integrity Applications is holding another financinground of $1.5 million, “which ought to be our last roundbefore we go to market,” he said. “We prefer strategicinvestors with strategic capabilities.”Israeli firm in telemedicine effortVisonic (Tel Aviv), a maker of electronic security systemsand home management systems, reported strengtheningits position in home healthcare by entering theSee Israel, Page 7To subscribe, please call DIAGNOSTICS &IMAGING WEEK Customer Service at (800) 688-2421; outside the U.S. and Canada, call (404) 262-5476.Copyright © 2006 Thomson BioWorld ® . Reproduction is strictly prohibited.
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