April was an aggressive fund-raising month for the cardiovascular sector, with five device companies in the sector raising about $225 million in equity and debt financing. And they were joined by a blood substitute company which gathered in another $50 million, despite the multiple difficulties that have been encountered in that arena.
CardioMEMS in IPO
CardioMEMS (Atlanta), a manufacturer of wireless sensing devices for cardiovascular patients, launched an initial public offering to raise $70.6 million in an initial public offering (IPO) via the sale of about 6 million shares. According to its Securities and Exchange Commission filing, an additional 900,000 shares will be offered to the underwriters to cover over-allotments.
With that amount raised and the underwirters exercising their rights to the additional shares, the total amount raised would be $81.5 million.
The company said it would use the proceeds to support product R&D, sales and marketing activities, working capital and other corporate purposes. It also will use some proceeds for acquisitions, although it has not agreed to any purchases. The company filed for the IPO in January.
The company's EndoSure wireless sensing system has been approved by the FDA since 2005 to measure intrasac pressure during repair of abdominal and thoracic aortic aneurysms. The company says it has a pipeline of cardiovascular products building on the sensing technology. And it said it plans on conducting clinical trials to seek FDA clearance for measuring pressure after the procedure.
It said it is adapting EndoSure for use in patients with heart failure and in patients with hypertension. The heart failure and hypertension sensors are further miniaturized versions of the EndoSure sensor that use the same materials, manufacturing methods and operational concepts as the EndoSure AAA sensor.
The company, based at the Georgia Tech Advanced Technology Development Center (Atlanta), said it has raised more than $50 million in venture capital since its 2001 launch. In November, it closed on $22.6 million in venture capital, nearly half coming from Arcapita Ventures.
CardioMEMS incurred net losses in each year since its inception in 2000, including losses of $3.3 million in 2003, $5.1 million in 2004, $8.8 million in 2005 and $13.3 million in the nine months ended Sept. 30, 2006. In 2006, the company had losses attributable to common stockholders of $105.9 million and revenue of $3.4 million.
In November 2005, the company entered into a license and development agreement with Medtronic, as well as a related supply agreement, to adapt the sensor technology for use as a wired pressure sensor system capable of working with Medtronic's implantable devices to address impaired cardiac function, hypertension, or both.
Medtronic is funding the efforts under this joint development program through a series of milestone payments totaling $3 million. CardioMEMS also is entitled to receive royalties on sales of Medtronic devices incorporating its technology, subject to the terms of the license agreement including a cumulative royalty cap of $25 million. Medtronic is a 15.1% stakeholder in the company.
The company now lists on the NASDAQ under the symbol SENS.
Abiomed raises $64.6 million
Abiomed (Danvers, Massachusetts) reported that the underwriters of its recent stock offering partially exercised their over-allotment option and purchased 80,068 additional shares of common stock from the company. The over-allotment option was granted to the underwriters in connection with the offering of 5 million shares of stock initiated at the end of March.
Net proceeds from exercise of the over-allotment option were about $1 million, after deducting underwriting discounts and commissions and estimated offering expenses, bringing the total offering value to about $64.6 million
After giving effect to the closing of the sale of 80,068 shares resulting from the partial exercise of the over-allotment option, Abiomed said it has about 32,336,501 shares of common stock issued and outstanding.
$47.5 million raised by ev3
ev3 (Plymouth, Minnesota), focused on endovascular treatments of vascular diseases, priced its previously disclosed secondary offering at $19 per shares. The company initially filed for the secondary offering of up to $175 million in early April, the company then saying it would offer $50 million in stock and two stockholders -- Warburg Picus and the vertical Group -- offering $125 million instock.
A total of 6.25 million common shares were sold by Warburg Pincus and The Vertical Group with an additional 2.5 million shares offered by the company. Warburg Pincus has granted the underwriters an option to purchase up to an additional 1,312,500 shares of common stock to cover any over-allotments. ev3 raised up to $47.5 million before expenses through the offering
The company said it will use net proceeds from the stock it sold for working capital and general corporate purposes. It will not receive any of the net proceeds from the sale of common stock by the selling shareholders.
CircuLite garners $25 million
CircuLite (Hackensack, New Jersey), focused on the development of circulatory assist technology for the management of chronic heart failure, closed on an additional $5 million placement, completing a $25 million Series B private placement.
Crédit Agricole Private Equity joined Forbion Capital Partners (formerly ABN AMRO Life Sciences), Foundation Medical Partners, the lead investor, Oxford Biosciences Partners and SB Life Science Ventures in the $25 million Series B funding.
The company said the funds from this latest round will support its first-in-man trial in 2007, the initiation of the U.S. investigational device exemption Phase I Feasibility trial enrollment in 2008 and the initiation of CircuLite's endovascular system preclinical evaluation.
"The additional $5 million investment will take CircuLite well into the U.S. Phase I Feasibility trial and allow us to obtain the initial patient follow-up data," said Paul Southworth, president/CEO of CircuLite. "It will also allow us to start our preclinical evaluation of the endovascular system."
CircuLite is developing what it calls "a superficially-placed circulatory assist device for the treatment of chronic heart failure." The company's Synergy pocket circulatory assist device is in preclinical studies, and the company is preparing for the first-in -man implant in 2007. The Synergy device features a micro-pump that is placed superficially in the "pacemaker pocket". The micro-pump is minimally invasively connected to the left atrium and the subclavian artery, and can pump up to 3 liters of blood flow per minute. CircuLite says that minimally invasive placement of the device will allow the transformation of the treatment of chronic heart failure patients from the acute decompensated hospitalized patient to the chronic, ambulatory heart failure patient.
$8 million in secured debt for MedicalCV
MedicalCV (Inver Grove Heights, Minnesota) , manufacturer of surgical ablation systems using laser energy to create lesions on cardiac tissue, reported selling $8 million of senior secured debt to an affiliate of Whitebox Advisors, owner of about 11.5% of MedicalCV's stock.
The company also issued a five-year warrant to purchase 1.2 million shares of common stock at $4 a share to Whitebox. Whitebox had the right to purchase another $2 million of senior secured debt on the same terms within the 45 days.
The debt has a three-year term. Interest at 11% per year is payable quarterly in arrears. During the first year, interest will accrue and be added to the principal balance. At the end of the first year, based on the sale of the $8 million note, MedicalCV will issue a five-year warrant to purchase 137,546 shares of common stock at $4 per share to Whitebox.
During the second and third years, MedicalCV has the option to pay interest in cash, or have the interest accrue and be added to the principal balance. Based on the sale of the $8 million note, MedicalCV will issue additional five-year warrants for the purchase of between 36,783 and 44,475 shares of common stock for each quarter in which it determines that the accrued interest should be added to principal during the second and third years.
The company said that the net proceeds of the offering will be used for working capital purposes.
Sangart gathers in $50 million
Blood substitute development has been one of the most difficult regulatory roads to travel in med-tech, but its obvious difficulties have not dissuaded investors from getting behind Sangart (San Diego), which raised $50 million in a Series F round of financing. The financing included warrants that would add $50 million more in funding to the company.
Sangart in February launched a Phase III trial in Europe of Hemospan, its human hemoglobin-based product whose oxygen delivery is designed to mimic that of red blood cells.
"The field we work in has become fairly cynical now, with a number of prominent failures in the last decade among companies developing blood substitutes," Robert Winslow, president/CEO and chairman of Sangart, told CDU. But, he added: "We believe we've solved the significant problems [in the effort], and we're fortunate to have significant investors who share that belief. We believe the data support our conclusions."
The round was led by existing investor Leucadia National (New York), a holding company involved in a number of business areas. Leucadia is Sangart's largest shareholder, Winslow said. Sangart has raised more than $120 million since its founding in 1998.
Hemospan consists of unmodified hemoglobin derived from human red cells, to which polyethylene glycol polymers are attached and is designed to deliver oxygen effectively to tissues at risk of oxygen deprivation. The company says that Hemospan works because its oxygen delivery mimics that of red blood cells, presenting the right amount of oxygen to the blood vessel wall and preventing blood vessel constriction so blood flow can be maintained through capillary beds.
A Phase II trial in 90 patients in Sweden undergoing hip arthroplasty procedures demonstrated a statistically significant reduction in the number of hypotensive episodes in the Hemospan groups (46% in the 250 mL group, 42% in the 500 mL group) vs. 87% in controls (p<0.025). Data from the trial released in November also showed the incidence of intraoperative vasopressor use was less in the Hemospan groups, but not at a statistically significant level. It did show that mean heart rate was less in both treated groups vs. controls.
Sangart also is developing technology to allow more user-friendly storage mechanisms.
Winslow said that Sangart's product is distinguished by a focus not just on the blood product, but also on the transport system. He said the chemistry at Sangart is also advanced compared to some of the older products. A breakthrough, the company said, came from the understanding of the mechanisms of vasoconstriction caused by cell-free hemoglobin, and the development of simplified production methods.
Winslow said his company is open to a collaboration for Hemospan and has had discussions with potential partners. But they have become "as cynical as everyone else. We need more data than were needed a decade ago. And we're okay with that."