ImaSight CEO John Brooks. (Darren Brown, OBJ)

After Liponex-ImaSight union, what's next for consolidated company?

One of Ottawa's longest-running tech dramas of 2008 came to a close last week with the completion of the much-anticipated, $10-million merger between Ottawa biotech firms ImaSight, a Gatineau digital X-ray maker, and Ottawa-based 'good cholesterol' drug firm Liponex.

The merger saw Liponex, a University of Ottawa Heart Institute spinoff company, swallowed up by ImaSight. Liponex shares, meanwhile, were consolidated on a five-to-one basis. The combined company has received permission to begin trading on the TSX Venture Exchange by this week.

CEO John Brooks sat down with OBJ to talk about the course he's charted for the consolidated company, and where ImaSight – along with its newly acquired portfolio – goes from here.

OBJ: What's next for ImaSight, following this merger?

BROOKS: The primary focus of the company is in digital X-ray opportunities. We've got some exciting distribution plans in the works for that. And the secondary opportunity is on the Liponex side – I've had a chance to review their patent portfolio, and I believe there's substantial value there. Preliminary talks with pharmaceutical representatives have confirmed that. And we look forward to doing some partnership deals in the not-too-distant future on the Liponex side.

OBJ: Could you go into any potential deals in more detail, or is it simply too early to say at this point?

BROOKS: There's of course limited detail I can go into, but I've had preliminary discussions with a major pharmaceutical firm. The interest is definitely there in terms of a partnership, in which the costs of development would be funded by the pharmaceutical company. Also, the management would be carried out by them, which is the way they tend to operate. They want to be in control and, personally, I don't have the bandwidth to run two distinct operations. And so if we can partner the Liponex technology, while retaining some research focus at the Heart Institute, and a position in it for our shareholders, I think that's the best situation.

OBJ: What opportunities do you see in the next year or so in terms of the digital X-ray market?

BROOKS: There are three distinct marketplaces that we're going after with our digital X-rays. The first is the veterinary space, in which we're just finalizing a number of distribution agreements in addition to AFP imaging, which has been carrying us to date. We'd like to significantly expand the distribution of our X-ray through the veterinary space.

In the chiropractic space, which is almost as large as the veterinary, we have made our initial sales. We've developed a wall stand and certain chiropractic software specifically for the market that nobody else has brought (to market), and we'll be looking forward to having almost our own niche in the chiropractic space.

And finally, on the international front, certain second- and third-world countries have huge distribution opportunities for our product. There are multibillion-dollar opportunities. As you can imagine, when you're out in certain third-world hospitals that may not have air conditioning, and trying to develop films – of which they are in short supply – and trying to keep chemicals cool so they operate properly ... it doesn't work very well. And an affordable digital solution is what they need.

OBJ: Tell us a little of the past six months or so, since the initial serious rumblings of this merger. It's obviously been an ongoing story – has it been a bit of a roller-coaster ride for you?

BROOKS: I wouldn't say there were any substantive issues, but the legal work involved in putting this deal together was just incredible. It has really occupied my life, and certainly I wouldn't want to have to go through this again. But now, it's done. And now I can focus on running the company.

OBJ: What does the deal say about the strength of the industry in Ottawa, and in Canada?

BROOKS: The life sciences industry in general is undergoing a bit of a shift. The industry is finding it very difficult to raise funds for development, and that phase of the biotech industry seems to be in a bit of a downturn. The funding is just not there. Whereas, I think we're seeing a shift more towards the medical devices market, where the time to market is much shorter.

I don't think investors have that kind of (long-distance) horizon today. Several years ago, they did. And they looked not at the time to product sales, but rather the time to a liquidity event such as a take-out, or a listing on the market. Now, we're seeing a trend more towards the therapeutic side, but the money isn't there for development in-house. So it's necessary to bring in a pharma-partnership earlier.

OBJ: Any inklings of any future financing deals for ImaSight in the near future?

BROOKS: The first order of business, in terms of financing deals, will be with the Liponex technology. There will be ongoing discussions with bankers and so forth, in terms of financing our operations, and beyond that, hopefully several months down the road we'll be in the position to do an equity-type financing. But I don't see that happening for at least the next six months. N

---

JUST THE FACTS

John Brooks, CEO, ImaSight

Appointed: June 29, 2006

Previous employment: VP at CIBC Wood Gundy, CEO of Adherex Technologies (Ottawa)

Awards: Ottawa Innovator of the Year, Ottawa Businessperson of the Year (finalist)

ImaSight (formerly ImaScope Inc.)

Founded: 2002

Main market: Digital X-ray systems

Flagship product: 4600 Series digital X-ray systems