Varian Medical Systems ($VAR) has reached an agreement with privately-held Augmenix through which Varian will make a $15 million minority equity investment in the Waltham, MA-based company and gain an option to buy the startup completely if certain goals are met.
Augmenix is developing a hydrogel product that is designed to protect the rectum during radiation therapy for prostate cancer. The side effects of this therapy can include erectile dysfunction and loss of control of urinary functions. While Augemix's lead product is approved for sale in certain European countries and Australia, it's still awaiting a regulatory sign-off in the U.S. And it's not hard to see why Varian has grabbed an option to buy Augmenix. Varian is a major developer of products for radiation therapy, a key line of attack against certain prostate cancers.
Palo Alto, CA-based Varian is investing in somewhat of a known commodity in Augmenix. Serial entrepreneur and CEO Amar Sawhney co-founded Augmenix, and he has made a nice living with the underlying hydrogel technology behind the company's cancer radiation product. In 2006, he sold Confluent Surgical, which developed hydrogel sealants for cranial surgeries, to Covidien ($COV) for $245 million.
In an e-mail to his professional contacts on Thursday, Sawhney wrote of Augmenix's deal with Varian. "While the heavy lifting is not finished, it gives (Augmenix), its employees, and investors a clear path forward with a very favorable potential outcome for all involved.... Financially, the company and all its shareholders do well and (Varian) also gets improved economics around its acquisition."
- here is Varian's release