iCAD, a developer of image analysis and workflow technologies for cancer detection, has signed an agreement to acquire Xoft, a Sunnyvale, Calif.-based developer of an electronic brachytherapy system, for approximately $13.1 million.
Nashua, N.H.-based iCAD plans to acquire 100 percent of the outstanding stock of Xoft in exchange for approximately 8.47 million shares of iCAD common stock and approximately $1 million in cash to certain shareholders, for a total consideration at closing of approximately $13.1 million, based on the average of the closing sale price of its common stock over the 30 trading days preceding the closing date.
Xoft’s portable Axxent system, which delivers electronically-controlled radiation therapy to cancer sites, is FDA-cleared for the treatment of early stage breast cancer, endometrial cancer and skin cancer, and for the treatment of other cancers or conditions where radiation therapy is indicated. Axxent is approved for accelerated partial breast irradiation, which can be delivered twice daily for five days or it can be administered immediately following the lumpectomy procedure, also known as intraoperative radiation therapy.
Upon the close of the transaction, Xoft shareholders will own approximately 15.6 percent of iCAD's outstanding common shares. There is an additional earn-out potential for Xoft shareholders that is tied to cumulative net revenue of Xoft products over the next three years, payable at the end of that period.
The threshold for earn-out consideration begins at $50 million of cumulative revenue of Xoft products over the three-year period immediately following the closing, according to iCAD. The targeted earn-out consideration of $20 million will occur at $76 million of cumulative revenue of Xoft products and the maximum earn-out consideration of $40 million would be achieved at $104 million of cumulative Xoft product revenue over the three-year period.
The acquisition is expected to close by year-end, according to iCAD. The acquisition agreement contains customary representations, warranties, covenants, indemnifications and closing conditions.