A Medical Device Daily
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 yesterday reported that it has released its staff – estimated at about 50 following layoffs two years ago – and will 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 Friday, 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.
Somewhat more than a year ago, Cardima received word from the FDA that its premarket approval application for its Revelation Tx Microcatheter system was “not approvable”. Most recently, it reported that it had met with the agency and that the agency repeated the necessity of the company conducting an additional randomized trial to demonstrate the effectiveness of the Revelation TX system used to treat AF.
That meeting, the company said, had provided “a useful opportunity to exchange views” and that it was exploring “all options.” Cardima said in its statement summarizing results of the meeting: “We are disappointed, but not discouraged”.
However, with “cessation of company operations,” it said in yesterday’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, which was 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.
Cardima said it is in discussions with Agility concerning these matters.
The company also said that its interim CFO and secretary, Barry Michaels, had resigned on Friday 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.