Two companies in the vascular/cardiovascular device sector plunged into the initial public offering (IPO) waters last month, both fairly successfully, while a third withdrew its plan to test those waters. ev3 (Plymouth, Minnesota) raised about $165 million and Micrus Endovascular (Sunnyvale, California) about $31 million, while HemoSense (San Jose, California) opted to postpone its proposed IPO.
ev3 priced 11.8 million shares at $14, below the estimated $16-$18 range. The stock opened at $13.50 and climbed to $14 in recent trades. ev3 and one of its stockholders also granted to the underwriters a 30-day option to purchase up to another 1,764,750 shares of common stock at the IPO price to cover over-allotments. ev3 has been acquiring and developing a variety of catheter-based technologies used in the treatment of coronary, neurological and peripheral vascular diseases. Its cardiovascular products include the SpideRx, the X-Sizer, the Diver C.E. and the PLAATO. It also is developing a variety of stents used in the peripheral vasculature: a family of Prot g devices and a family of balloon angioplasty catheters.
In its IPO, Micrus offered 3.25 million shares. It opened at $11.06, above its $11 offering price and raised $36 million with net proceeds of nearly $31 million. The stock traded at $11.01 in recent action, and the company granted he underwriters the option to sell an additional 487,500 shares of the stock at the IPO price to cover over-allotments. The company - which manufactures implantable and disposable medical devices used in the treatment of cerebral aneurysms -- filed for the IPO in March.
HemoSense, a maker of hand-held blood coagulation monitoring systems, chose to postpone its IPO of 2.6 million shares at the range of $9 to $13. The company filed for the offering in April and then in June dropped the price range to $8 to $10 a share, down from $9 to $13, but boosted the number of shares from 2.6 million to 3.5 million.
Lederman leaves Abiomed
Near the eve of a major milestone for heart pump developer Abiomed (Danvers, Massachusetts), the company reported that founder Dr. David Lederman was leaving the company, stepping down as company chairman and director. The announcement that Michael Minogue, president and CEO of the company, would take over as chairman came exactly a week before the company would make its presentation before an FDA panel consideration of the company's humanitarian device exemption (HDE) for the firm's AbioCor artificial heart, a device it bills as the only artificial heart totally implantable in the human body.
As founder of Abiomed, Lederman created the company more than 20 years ago "to fulfill his dream of developing a totally implantable artificial heart," the company said in a statement reporting the changes. Under Lederman's leadership, Abiomed developed the AbioCor, which the company specifies as "the world's first, battery-powered, fully implantable replacement heart system," as well as other systems for short- and long-term support of the heart. "David's passion and commitment to patients is a legacy that will continue to inspire Abiomed employees," Monogue said in the statement. "It is an honor and privilege to follow him as chairman of the company." Abiomed also said in its statement that it has named its employee award and recognition program after Lederman.
The departure of Lederman underlines the ongoing shift in Abiomed's emphasis, from the AbioCor program to more aggressive marketing of its commercialized, cash-producing products in the heart assist market. While over the past several months Abiomed's name has been mainly linked to development of the AbioCor a recognition that has brought it a wealth of major media headlines the company is yet to achieve commercialization of the device, long in development.
The company is one patient enrollment short of completing the 15-patient trial of the artificial heart that trial now nearly reaching its fourth year since launched in July of 2001 with the implantation of patient Robert Tools at Jewish Hospital (Louisville, Kentucky). Since becoming Abiomed's president in April 2004, Minogue has made frequent presentations emphasizing that the company "wants you to go home with our own heart" rather than an artificial one. With that mantra, he also has emphasized the development of "profit-generating revenue" for the company with the sale of its BVS heart support technology and other heart "recovery products and services."
Equity unit launched by Angiotech
Angiotech Pharmaceuticals (Vancouver, British Columbia) last month reported launch of a new venture investment and "venture relationship development and management" unit. Dubbed ADDVANCE for Angiotech Drug Device Venture and Capital Enterprises. The new venture fund unit validates Angiotech's success in supplying paclitaxel drug technology to Boston Scientific (Natick, Massachusetts) for that company's Taxus drug-eluting stent, and it launches an effort to attract early-stage med-tech companies that would link up well with that drug/device effort, said Todd Young, vice president of investor relations and communications for the company.
"We're sitting on a bit of cash," Young told Cardiovascular Device Update last month, through the hubbub of a New York hotel where the company was presenting its story to analysts. In a press statement, the company said it looks to put venture funding of up $50 million into emerging med-tech firms over the next three years. Targets will be early-stage organizations likely to mesh with Angiotech's drug/device focus, he said, as well as drug/biologics combinations. The investments are then expected to build the company's already well-developed intellectual property portfolio.
Other than the match-up with Angiotech's technology, there will be no geographical or technological restrictions for the companies funded, Young said, while pointing to "orthopedics and vascular intervention" as choice opportunities. He emphasized the relative autonomy that ADDVANCE will have. "[W]e're really committed to creating an internal venture group that acts semi-independently, that has its own personnel that runs the venture group," Young said. ADDVANCE also will pursue outside collaborations or joint ventures, or establish, fund and spin off new companies, along with selected outside venture capital investor partners, Angiotech said in its statement.
"These opportunities will pursue selected Angio-tech research programs or product opportunities that may benefit by being developed and funded by an entity independent of the parent organization," it said. It said that its completion, nearly a year ago, of a $25 million equity investment and establishment of a distribution relationship with Orthovita (Malvern, Pennsylvania) is a model for this type of opportunity. Orthovita, a developer of orthopedic biomaterials, sold somewhat more than 5.68 million shares of its common stock to Angiotech for gross proceeds of $25 million.
Angiotech also reported formation of a license agreement with Broncus Technologies (Mountain View, California), allowing Broncus to incorporate Angio-tech's paclitaxel technology with its own Exhale system used to treat emphysema.
Cardima furloughs staff
Failure to win FDA approval of its Revelation microcatheter technology for treatment of atrial fibrillation (AF) has pushed Cardima (Fremont, California) from the "going concern" category to more active concern that it is unable to keep going. The company last month reported that it has put its staff estimated at about 50 following layoffs two years ago on "indefinite furlough"and said it would be unable to continue operations without an "immediate cash infusion." This worst-case scenario was foreshadowed by a "going concern" statement issued by its independent auditor, BDO Seidman, in April. The company's statement said that, as of mid-June, its cash balances, plus funds that have been frozen by its secured lender, Agility Capital (Santa Barbara, California), will render it "unable to continue operations" without the addition of new financing. Cardima said that on June 17 it received notification of default on its secured loan of $300,000 from Agility. With "cessation of company operations," it said in last month's statement, its common stock "will have no value."
Cardima entered into a secured loan agreement with Agility Capital in May for Agility to fund $300,000 of the loan at closing. To secure its obligations, Cardima granted Agility a security interest in substantially all of its assets, including its intellectual property. Agility, according to its web site, provided a total loan of $1.5 million to Cardima, structured as a tiered bridge facility. The agreement provided that the company would pay Agility an "exit fee" upon default, and certain other expenses and fees. The exit fee was set at $450,000, based on the amount of loans outstanding. Cardima said that Agility's letter, dated June 16, demanded all amounts outstanding due immediately. Agility also froze the company's bank accounts, containing about $350,000, and Agility said it would not fund further loans to the company.
The company said that its interim CFO and secretary, Barry Michaels, had resigned and that its board had appointed Gabriel Vegh, chairman and CEO, to the additional positions of acting CFO and secretary.
In late 2004, Cardima reported a placement to accredited investors raising net proceeds of $4.1 million. It had revenues in 2004 of $2.4 million with a net loss of $9.7 million. Revenues were $2.2 million in 2003 and 2002. The company's cumulative net loss for those two years was $25.8 million. In 2004, it employed about 54.
Cardima has developed the Revelation Tx, Revelation T-Flex and Revelation Helix linear ablation microcatheters, the Naviport deflectable guiding catheters, and the Intellitemp energy management system for the minimally invasive treatment of AF. These systems have received CE-mark approval for European marketing. The company also has developed and obtained FDA approval for its Surgical Ablation System, which targets market application by cardiac surgeons to ablate cardiac tissue during heart surgery using radio frequency energy.
Somewhat more than a year ago, Cardima received notification from the FDA that its premarket approval application for the Revelation Tx Microcatheter system was "not approvable." Most recently, it reported that it had met with the agency and that the FDA repeated the necessity of the company conducting an additional randomized trial to demonstrate the effectiveness of the Revelation TX system used to treat AF.