Cytori Therapeutics (San Diego) has garnered $21.5 million in gross proceeds through a registered direct offering of common stock and warrants, largely to push product development and commercialization of its cell-processing system.
The company said it will use the funds primarily for clinical trials of its Celution System, a stem and regenerative cell-producing technology, for cardiovascular disease. It also plans to begin making commercialization plans for Europe, where its launch is expected early next year for reconstructive surgery applications.
Cytori said it also will apply the new funding to preclinical R&D and for general working capital to further its therapeutic-through-a-device business model.
“Looking ahead” to those upcoming clinical trials and commercial launch, CFO Mark Saad told Cardiovascular Device Update’s sister publication BioWorld Today, “to have a little more money on the books made sense now to strengthen our position.” In addition, he said the timing of such catalysts in the coming months presented an opportunity to broaden the company’s institutional investor base.
The new backers were not disclosed, though.
The Celution System is used to separate and concentrate stem and regenerative cells from a patient’s adipose tissue — harvested via a small volume of liposuction — and then re-administer them to the patient about an hour later. Saad said such cells, which are concentrated in high volume in fat, include adipose-derived stem cells, endothelial and endothelial progenitor cells, smooth muscle and smooth muscle progenitor cells, as well as other growth factor-producing cells.
Collectively, they are thought to work principally through angiogenesis, along with secondary mechanisms such as immune modulation, anti-apoptosis and differentiation.
A “significant” body of evidence supports the use of these cells in reconstructive procedures, in which they are used to supplement soft tissue that is to be transferred from one part of the body to another, leading to what Saad termed a “super-charged,” cell-enhanced tissue transfer.
The Celution System, which is regulated as a device, already has been cleared for use in Europe, along with specific therapeutic claims.
Early clinical data from an investigator-initiated study in Japan demonstrated a positive safety profile for adipose-derived stem and regenerative cells in breast reconstruction following a lumpectomy, and more studies are planned in Europe.
That data and the European clearance will allow the company “to drive” toward a launch there in about a year, Saad said. “If you put that all together,” he added, “we see a great foundation for a meaningful launch into a completely unmet need.”
In the U.S., Cytori said it expects to receive product clearance by the end of this year. So, “on the heels of” these regulatory advancements, Saad said, “we’ve significantly accelerated our estimate of a commercial product from the end of 2009 to the beginning of 2008.”
To broaden the Celution System’s uses into cardiovascular applications, clinical testing is under way. A 36-patient study has begun to evaluate the safety and feasibility of using adipose stem and regenerative cells for chronic ischemia, and a 48-patient trial to test them as a treatment for heart attacks is scheduled to begin soon.
In these applications, the cells are delivered through a catheter into the coronary artery or directly into the heart muscle, where they work to revascularize bruised cardiac tissue and “bring it back,” Saad said. Both studies will follow patients for six months before evaluation, and full results are expected next year.
In the longer term, additional applications for the Celution System include any ischemic disease, such as acute renal failure, Saad said, as well as urology, gastrointestinal disorders and orthopedic conditions.
In the financing transaction, Cytori entered definitive agreements to issue 3.75 million common shares at $5.74 apiece, along with 50% warrant coverage representing up to an additional 1.87 million shares. The five-year warrants, which are immediately exercisable at $6.25 each, represent the first such securities issued by the company.
Prior to the deal, Cytori had about 18.7 million shares outstanding and about $18 million in cash reserves, through Sept. 30. Its burn rate had been about $2 million per month ahead of that date. The new money, coupled with existing capital, “definitively gets us into commercialization,” Saad said.
Cytori offered its securities pursuant to a $50 million shelf registration statement, which has been exhausted with this financing and another last summer, and the latest deal is expected to close on or about Wednesday.
Piper Jaffray & Co. (Minneapolis) served as the transaction’s sole placement agent.
More financings flowto cardiovascularsector
In other fund-raising efforts in the cardiovascular sector:
• Bioheart (Sunrise, Florida), which is developing therapies using cells derived from a patient’s body, and related devices, for the treatment of heart damage, in February filed a registration statement with the SEC for a proposed IPO, the number of shares to be offered and the price range not yet determined.
Bioheart’s lead product candidate is MyoCell, a clinical therapy designed to populate regions of scar tissue within a patient’s heart with living muscle tissue for the purpose of improving cardiac function. The company is currently testing MyoCell for treatment of severe, non-acute damage to the heart in New York Heart Association Class II or Class III heart failure patients.
Bioheart said that BMO Capital Markets will act as sole book-running manager of the proposed offering. Janney Montgomery Scott, and Merriman Curhan Ford & Co. will act as co-lead manager and co-manager of the proposed offering, respectively.
• Endovalve (Princeton, New Jersey), a cardiovascular company developing a percutaneous valve-replacement system to treat mitral regurgitation, said it has reached early milestones and is now raising $8 million in a Series B financing round that would fund the remainder of its preclinical development program.
“The company has successfully demonstrated feasibility of concept, has met required milestones and has performed under budget,” said Battelle Ventures General Partner Tracy Warren. Battelle Ventures and its affiliate fund, Innovation Valley Partners, were responsible for spinning the company out of the University of Pennsylvania (Philadelphia) in the spring of 2006 with a $2.5 million investment, and Battelle Ventures has been acting as an incubator for the startup.
Dr. Robert Wilkins, described as Battelle Ventures “entrepreneur in residence,” was named company president/CEO, and the firm provided access to engineering and project management talent, through its relationship with Battelle Memorial Institute, (Columbus, Ohio), from which Endovalve VP of R&D, Todd Tomba, was recruited.
Wilkins, said, “We have successfully completed the first stage of developing the Endovalve mitral valve replacement system, with critical performance criteria achieved with a 4x-scale functional model of the valve and anchor design. Now, in the second stage of development, we are creating a to-scale functional model of the complete system and will demonstrate critical performance criteria via benchtop tests. “
He said the new funding “will allow us to fabricate preclinical prototype systems, and develop engineering and preclinical test protocols designed to demonstrate the safety and performance of the system. We expect to conduct preliminary preclinical studies by the end of the year.”
Edwards receives warning concerning problems at Irvine facility
Cardiovascular device manufacturer Edwards Lifesciences (Irvine, California) last month received an FDA warning concerning conditions at its Irvine, California, facility. The letter states that Edwards won’t receive premarket approvals for devices unless issues, raised in the letter, are resolved. The company said it does not expect this matter to have a material impact on its 2007 financial guidance.
Edwards, which makes a range of products, including heart valves, catheters and stent systems, to treat cardiovascular conditions, didn’t say which products are made at the Irvine facility.
The warning reportedly stems from an inspection that concluded in August and deals with the company’s quality systems, quality systems training, documentation and complaint handling at the Irvine facility. The company said it is involved in a broad review of its quality systems.
“Edwards Lifesciences has a long history of improving the lives of patients with high-quality cardiovascular technologies and we understand the integral role our quality systems play in that mission,” said Michael Mussallem, CEO and chairman, in a company statment. “We are fully committed to continual improvement of our quality systems and to resolving these issues promptly.”
The company said it has also engaged “independent, external resources to assist in implementing best-in-class quality systems.”
Later in the month Pilgrim Software (Tampa, Florida), a provider of enterprise compliance and quality management (ECQM) software, reported that Edwards selected its SmartSolve suite to support its regulatory compliance and quality management processes.
Edwards will initially implement each SmartSolve module at its corporate offices, followed by rollout to multiple global sites, Pilgrim said.
Pilgrim is working with Edwards to implement SmartCAPA first. The automated CAPA solution, and other SmartSolve solutions including SmartComplaints, SmartAudit, SmartDoc, and SmartTrain, will replace Edwards’ existing manual systems to enable the company, Pilgrim said, to meet FDA regulatory and quality system requirements.
SEC files judgement vs.former CEO ofBiopure
The Securities and Exchange Commission last month reported a final judgment by the U.S. District Court of the District of Massachusetts against Thomas Moore, the former CEO of Biopure (Cambridge, Massachusetts) in an action alleging misleading public statements about the company’s efforts to obtain FDA approval for its synthetic blood product, Hemopure. The judgment enjoins Moore from violating antifraud provisions of the federal securities laws and orders him to pay a $120,000 civil penalty.
The complaint, filed Sept. 14, 2005, alleges that, beginning in April 2003, Biopure received negative information from the FDA regarding its efforts to obtain FDA approval of its synthetic blood product Hemopure, but it failed to disclose the information, or falsely described it as positive developments.
The complaint says that in April 2003, the FDA placed a clinical hold barring Biopure from conducting clinical trials of Hemopure in trauma settings because of safety concerns and that during the next eight months Moore and other Biopure employees concealed the imposition of the hold while making public statements about Biopure’s plans to obtain approval for trauma uses of Hemopure.
In addition, in July 2003 the FDA informed Biopure that it had not approved Biopure’s application for use of Hemopure in orthopedic surgery, but instead conveyed serious concerns about whether the materials Biopure had submitted in support of its application were reliable and questioning the safety of Hemopure.
Biopure, however, issued public statements beginning on Aug. 1, 2003, describing the FDA’s communication as good news, boosting its stock by more than 20%. Moore and other Biopure employees then continued to make misleading statements until December 2003. During this period, Biopure raised over $35 million from investors.
St. Jude reports completionof IHE testingprocess
St. Jude Medical (St. Paul, Minnesota) reported completed the testing process established by the IHE (Integrating the Healthcare Enterprise), an initiative promoting the adoption of standards that enable healthcare information to be shared seamlessly across clinical settings. The testing took place during IHE’s annual Connectathon in Chicago.
St. Jude said it is the first manufacturer of cardiac rhythm management (CRM) devices to test a product for conformance with an IHE interconnectivity profile. During the Connectathon, the company joined 75 electronic health record (EHR) companies testing their products for adherence to the IHE’s technical frameworks. The frameworks are aimed at lowering implementation and integration costs, enhancing patient safety and supporting more efficient workflows across the healthcare industry.
Complying with the IHE guidelines will enable seamless integration between data from St. Jude devices and each healthcare provider’s information system, allowing hospitals and clinics to upload implanted device data to third-party EHR systems, thereby providing tools for improved clinical decision making.
The IHE initiative is led by the American College of Cardiology (ACC; Washington), the Health Information Management Systems Society (HIMSS; Chicago) and the Radiological Society of North America (RSNA; Oak Brook, Illinois). Its goal is to drive standards for interoperability to address specific clinical needs, such as those related to cardiology, radiology and laboratory: technologically-advanced, clinical environments that typically house different systems with disconnected data silos.
CryoCor expects FDApanel review of cryoablation
CryoCor (San Diego) reported that its pre-market approval application for its cryoablation system to treat atrial flutter (AFL) will be reviewed by an advisory panel sometime early next month.
Helen Barold, MD, chief medical officer for Cryo-Cor, said, “We believe that our clinical data demonstrate sufficient safety and effectiveness to warrant marketing approval, and we will ask important clinical investigators and key opinion leaders to join us in presenting our data to the FDA’s panel.” The company reported that several physicians are expected to present on its behalf at the meeting.
The Cardiac Cryoablation System is designed to treat cardiac arrhythmias through the use of cryoenergy to destroy targeted cardiac tissue. The system was approved in Europe for the treatment of atrial fibrillation (AF) and AFL in 2002. In the U.S., CryoCor is conducting a pivotal trial to evaluate the safety and efficacy of the system for treating AF.