Medical Device Daily
At first glance CardiOx (Dublin, Ohio) might seem like just another small med-tech company indistinguishable from others in its position. But the firm, which was founded in 2006, is proving itself to be anything but. Armed with a strong team of investors; a ridiculously low burn rate; and a technology that it is calling “revolutionary,“ the company is proving itself to be unique among small med-tech companies.
During a Tuesday discussion with Medical Device Daily, CardiOx CEO Larry Heaton shared what the company was up to and its goals for the coming year.
The firm is poised to close on a $3.5 million series C financing, and is looking to gain approval in both Europe and the U.S. for its noninvasive test designed to detect right-to-left heart shunts or patent foramen ovales (PFO).
The device can also be used to verify if surgery succeeded in patching the hole.
Heaton said at first the company had a much broader scope with the test, but decided to narrow it down, once it saw the impact it could have on PFO patients.
“Somewhere around 2008 the company realized the ability to detect PFOs was a really [significant] technology that could have a lot of benefit and began to focus on this application exclusively,“ Heaton told MDD.
Nailing down a date when the test would be available in the U.S. was tricky said Heaton, but he did give insight on when the product could be on the markets in Europe.
“We expect to get the CE mark in the May or June time frame,“ he said. “Once we have that in hand, that will allow us to build inventory and go to market. We expect to go to market in Europe in September of this year.“
If the company garners approval in both the U.S. and Europe it would have a fairly large patient population to appeal to.
Heaton said that the potential market for this test was $400 million annually in the U.S. and double that amount worldwide.
On top of that, there are other indications that the company could seek beyond just stroke. Those markets include migraines and sleep apnea and could reach up to $1.1 billion annually in the U.S.
Heaton admits that without a strong sense of fiscal responsibility, the company would have never gotten this far.
“We've been very careful to walk the capital efficiency walk, as well as talking it,“ he said. “We've tried to keep the number of full time employees to a minimum. We have four. Now it's not to say we're not making significant use of outsourced resources. For example our chief technology officer; our chief regulatory officer, and our chief financial officer are all consultants to the company.“
That fiscal thinking has paid off for the company, and investors seem to be flocking toward it.
To date the company has raised $5.5 million in venture money and about $1.25 million in nondilutive grants. Investors include Cleveland-based Early Stage Partners and North Coast Angel Fund, plus Columbus-based Reservoir Partners.
The company said that it recently picked up another investor when it closed on $250,000 from Glengary, an Ohio-based investment firm.
Part of the reason the company has been able to raise funding is because of the success of the technology and its results, Heaton said.
“I think the funding for the company has been very milestone driven,“ he said. “The initial funding was to be able to build the prototype and do the animal testing. Once that was done we got another round of financing to go into humans. Now we're working on securing money for the clinical trials and then once we get the clinical trials and the regulatory submissions behind us, we're looking to bring the money in to commercialize the test - to launch in Europe and then in the U.S.“
Funding needs in the future call for the company to raise $7 million.
“Our financing needs as projected as we look into the future are a total of $7 million with $3.5 million anticipated that we would need in the May or June time frame and an additional $3.5 million that we would need to raise at the end of the year or in 2012,“ he said.
The first $3.5 million would be used to launch the product in Europe and the other $3.5 million would be used – depending on whether the company receives FDA approval or not – to launch the domestic sales force.
Heaton would not go into specifics about the possible price point for the test, but did say it would fit reimbursement models.
“It will fit nicely within the current reimbursement coding that exists in the U.S. for cardiac shunt detection,“ he said. “So we can make money, the doctor can make money . . . we're good.“