Caprius sells breast MRI program to investment firm Pacific Republic

New owners intend to further develop Aurora

MRI technology developer Caprius is on the verge of divesting itself out of existence. The Wilmington, MA, company late last month found a buyer for its Aurora MR mammography program in the form of Pacific Republic Capital, a California investment firm. Caprius is now left with one breast imaging center as its primary asset, and company executives say they are looking to sell off that business as well.

Caprius sold all the assets related to the Aurora program to Pacific Republic on April 27 for $850,000 in cash and the assumption of about $1.1 million in debt. Pacific Republic also gains Caprius’ ownership interest in four Aurora breast imaging clinics that are joint ventures between the company and hospitals. Caprius retains the Strax Institute in Lauderhill, FL, a facility that Caprius owns outright.

Caprius had been looking for a buyer for the Aurora program since last year, when the company began experiencing cash-flow problems (SCAN 12/16/98). Caprius and its predecessor companies, Advanced Mammography Systems and Advanced NMR, developed Aurora to target what the company believed was a promising niche in MR breast imaging. But sales of the 0.5-tesla scanner never caught on, and the program became a financial drain.

Despite Aurora’s lackluster sales record, Pacific Republic believes that it is a promising technology whose commercial fortunes were limited by lack of adequate funds to properly market it. Pacific Republic is based in Newport Beach, CA, and already owns three medical instrument companies, although Aurora is its first holding in the medical imaging industry, according to Olivia Cheng, executive vice president.

Pacific Republic was attracted to Aurora because of the low price of the acquisition relative to the value of the technology, Cheng said. Pacific Republic paid about $2 million for Aurora, less than half the value of a $5 million divestiture agreement that Caprius had reached with investment firm Mi3 in December. That deal ultimately broke down, however. Caprius and Advanced Mammography Systems spent some $25 million developing Aurora over the years.

“We looked at the amount of money that was spent for the development of this technology, and the amount that we could buy it for, and it appeared to be a good opportunity for us,” Cheng said.

Pacific Republic has named its new business Aurora Imaging Technology, and plans to relaunch the systems with a new sales and marketing effort. It will retain the four joint-venture breast imaging clinics, and will pursue new joint-venture relationships with hospitals, Cheng said. Pacific Republic has also launched a search for a chief executive to lead the Aurora business.

“We believe the technology is pretty advanced. Due to its special design, it deals with breast scanning very efficiently,” Cheng said. “Our plan is to further improve the technology and identify more sites to do either joint ventures or outright sales.”

Meanwhile, Caprius is on the verge of becoming a shell company, an unhappy demise for a firm that once hoped to be a pioneer in the development of advanced MRI technology. While the divestiture of Aurora will help the company in the short term, Caprius is left with limited funds, according to the firm. It plans to focus its energies on finding an acquisition candidate “who can help utilize the company’s assets as a vehicle for the enhancement of shareholder value.” Caprius executives were unavailable for further comment on the company’s future.