CVRx (Minnesotta) continues its upward momentum in scooping up funding, as the company reported closing in on an $84 million financing Wednesday.

Yesterday's funding announcement follows a $65 million financing the company received last year, which helped catapult the Midwest region, in which it resides, into a record-breaking year of $1 billion in healthcare investment (Medical Device Daily, July 25, 2007).

Company officials say since CVRx was founded in 2001, this 5th-round Series E financing led by Johnson & Johnson Development Corp. and New Enterprise Associates brings total investment in the company to more than $209 million.

Other participants in this round included existing investors BBT Fund, Thomas Weisel Healthcare Venture Partners, InterWest Partners, Frazier Healthcare Ventures and SightLine Partners.

CVRx plans to use the financing to help complete the hypertension trial for its Rheos Baroreflex Hypertension Therapy system, which it said is the only implantable device designed to control hypertension. The trial is enrolling 300 patients at 30 different sites, with four of those being based in Europe. The patients would be followed for a year.

"We plan to use this financing for the completion of the Phase III trial and to initiate another study for the device to be used for heart failure patients," President/CEO Nadim Yared told Medical Device Daily. "With this financing and the [$65 million funding] we received last year, we will have enough funds to take us through FDA approval."

Yared added that filing for an IPO wasn't even a consideration at this point — but it could be an idea the company visits in the future.

The technology the company is offering includes a small pulse generator implanted under the collarbone; two thin lead wires that are implanted at the left and right carotid arteries and connecting to the pulse generator; and the Rheos Programmer System, an external device used by doctors to non invasively regulate the activation energy from the generator to the lead wires.

The Rheos System uses the patented Baroreflex Activation Therapy technology that is designed to activate the carotid baroreceptors, central components of the body's natural cardiovascular regulation system. When the baroreceptors are activated, signals are sent through neural pathways to the brain and interpreted as a rise in blood pressure.

The brain works to counteract this perceived rise in blood pressure by sending signals to other parts of the body (heart, blood vessels and kidneys) that relax the blood vessels and inhibit the production of stress-related hormones. These changes enable the heart to increase blood output, while maintaining or reducing its workload, thereby reducing blood pressure when it is elevated and alleviating the symptoms of heart failure.

"What we do with out product is akin to cooling off a room by holding a match under the thermostat," Rob Kieval, founder and CTO of the company, told MDD. "Our product sends suggestions to the brain that it needs to intervene on the cardiovascular system's behalf."

While FDA approval is pending, the company reported late last year that it had received the CE mark for the device (MDD, Nov. 5, 2007).

"We received the CE mark, but we haven't made the decision to start commercialization of the product yet," Yared said.

The first-available two-year data from the European clinical trial evaluating the Rheos System were presented in June at an international hypertension conference in Berlin. Two-year results showed that systolic blood pressure, a leading indicator of patient risk, was reduced by an average of 35 mmHg (191 mmHg vs. 156 mmHg), and diastolic blood pressure declined by an average of 24 mmHg (116 mmHg vs. 92 mmHg among patients who completed two years of Rheos Therapy. Similar results were found at three months and one year.

Additional data from the European and U.S. feasibility studies presented at the Berlin conference showed heart function was notably improved. Blood pressure was reduced significantly and left ventricular hypertrophy (LVH) significantly regressed.

LVH, a process in which the heart becomes enlarged and does not work efficiently, increases the risk of heart attacks, heart failure and sudden cardiac death, and regression of LVH reduces these risks.

Such favorable news is only bolstered by the fact that CVRx has received some of the largest financings of the Midwest sector and is a strong magnet for investors.

"I think there are four elements why this is so," Yared said. "First we're going after high-interest markets — hypertension and heart failure. Second, we have a unique technology. Although it is similar to an ICD or a pacemaker, it is different because it is trying to provoke a response from the body, which is very unique. Third, we have a strong team in place, who have been in some of the top companies, including Medtronic (Minneapolis), St. Jude Medical (St. Paul, Minnesota) and Guidant ... which is now Boston Scientific (Natick, Massachusetts). The fourth element is that we have investors that have a deep commitment to what we're trying to accomplish here at CvRx."

In other financings:

PSS World Medical (Jacksonville, Florida) reported the pricing of a private placement of $200 million aggregate principal amount of 3.125% convertible senior notes due 2014 to qualified institutional buyers.

PSS also has granted the initial purchaser of the notes an option to purchase up to an additional $30 million in aggregate principal amount of the convertible senior notes. The private placement is expected to close on Aug. 4, subject to customary closing conditions.

The notes will pay interest semiannually at a rate of 3.125% a year. The notes will be convertible under certain circumstances into cash up to the principal amount of the notes and shares of PSS common stock for any conversion value in excess of the principal amount.

The initial conversion rate of 47.1342 shares of PSS common stock per $1,000 principal amount of notes represents an initial conversion price of roughly $21.22 per common share, a 27.5% premium over the last reported sale price of PSS common stock on July 29.

In connection with the transaction, PSS World Medical will enter into convertible note hedge transactions with the initial purchaser and/or its affiliates. PSS World Medical also will enter into a separate transaction with the initial purchaser and/or its affiliates to sell warrants to purchase its common stock.

No Comments