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10 Oct 2024
Dental laser system vendor initiated Chapter 11 proceedings earlier this month; the two firms were engaged in patent litigation.
Biolase, the Californian company that specializes in laser systems for dentistry applications, looks set to become part of its Los Angeles neighbor Sonendo.
Lake Forest-based Biolase, which has posted financial losses for several years, voluntarily entered Chapter 11 bankruptcy proceedings at the beginning of October, and has signed an asset purchase agreement with Sonendo.
The Laguna Hills provider of alternative root-canal treatment technology plans to acquire Biolase assets for $14 million, while the deal is also intended to cover the settlement value of a patent litigation claim previously made against Biolase by Sonendo and its subsidiary PIPStek.
The transaction will be conducted through a Bankruptcy Court-supervised process. It depends on whether any better offers from competing bidders are received at an auction, as well as approval of the sale by the Bankruptcy Court.
Pulsed laser patents
Back in January 2023, PIPStek had filed a lawsuit claiming that Biolase’s flagship “Waterlase” product infringed three of its US patents, with a court case pencilled in for May 2025.
Reportedly an abbreviation of “Photon Induced Photoacoustic Streaming”, PIPStek was acquired by Sonendo in 2017. Its patents describe a root canal treatment using a pulsed laser to disintegrate pulp without generating any significant heat.
Sonendo’s CEO Bjarne Bergheim noted at the initiation of the lawsuit that the PIPStek laser technologies had not in fact been commercialized, because the company was confident that its acoustic “GentleWave” system was a superior option.
“However, we have made significant investments in our broad intellectual property portfolio, and we will defend those investments and options for future product development and use,” he said.
Biolase has also developed lasers aimed at root canal treatment, with its “EdgePRO” microfluidic irrigation device gaining US Food & drug Administration approval in 2022.
Following the asset purchase agreement, Bergheim added: “If the Court accepts our bid as the winning offer, Sonendo is committed to ensuring a smooth transition that delivers a continuity of support and service to all Biolase customers and their patients, as well as their suppliers and other vendors.
“The Sonendo team is very enthusiastic about the prospect of bringing these two organizations together. We anticipate meaningful cross-selling and significant cost reduction synergy opportunities as a combined company and that we will emerge as a stronger organization that can leverage a more comprehensive technology platform through increasingly focused specialty sales organizations to help advance our mission of saving teeth and restoring health.”
‘Liquidity challenges’
In its most recent financial quarter prior to the Chapter 11 filing, Biolase had posted an operating loss of $3.2 million on sales of $11.6 million, with CEO John Beaver hailing improved margins thanks to recent cost reduction efforts, and a positive response to the recently launched “Waterlase iPlus Premier” laser system.
That left the firm with a balance sheet showing just over $5 million in cash and equivalent assets, against liabilities including $13.3 million now due on its term loan.
Beaver said of the planned Sonendo deal: “After carefully considering a range of alternatives, we are confident that pursuing Chapter 11 provides the most viable long-term path for Biolase to address its liquidity challenges.
“Our portfolio includes some of the most renowned dental laser products in the industry, and we are eager to partner with Sonendo, leveraging their extensive expertise in the dental sector to continue advancing our mission.
“We deeply appreciate the ongoing support from our customers and suppliers throughout this process, and we also want to recognize the dedication of our talented employees.”
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