CABG Medical plans to cease some operations, review strategic alternatives

By Lisa Kerner

Erie, Pa., Feb. 8 - CABG Medical, Inc. on Wednesday announced it will substantially reduce the scope of operations in anticipation of a possible dissolution of the company. At the same time, it will begin a formal process to evaluate strategic alternatives, according to a company news release.

CABG said it will terminate seven of its eleven full-time employees and eliminate research and development efforts involving the Holly Graft System.

The company has engaged Goldsmith, Agio, Helms, an investment bank, to assist CABG's board of directors in identifying and evaluating potential strategic alternatives.

If CABG is unable to complete an acceptable transaction, it intends to distribute its assets, including existing cash and investments, to shareholders, estimated to be roughly $1.47 per share, the release stated.

While there is no assurance that CABG will be able to resolve all of uncertainties satisfactorily, it does not believe that the distribution will be lower than $1.20 per share except for unusual circumstances.

CABG said it determined that the extensive design efforts required to re-engage human clinical trials, coupled with associated risks, did not justify further investment in the Holly Graft System.

"I am deeply saddened by this event and regret that we will not be able to fulfill our commitment to our investors, our surgeons and most importantly the patients that we aspired to treat," said Manny Villafana, chairman and chief executive officer.

"It is well known that the treatment of coronary artery disease is very difficult, and ultimately our device was not successful in clinical trials."

Minneapolis-based CABG is dedicated to the discovery and commercialization of novel cardiac surgery products.

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