A Medical Device Daily

CryoCor (San Diego), a medical device manufacturer developing technologies to treat cardiac arrhythmias, last week filed with the Securities and Exchange Commission for an initial public offering (IPO) of up to $46 million.

Details about the number of shares offered and estimated price range for the IPO weren't disclosed.

The company said that proceeds from the offering would be used to continue product development and ongoing clinical trials, build sales and marketing capabilities, provide working capital and go to other general corporate purposes.

CryoCor's products use cryogenic technology to treat arrhythmia, a disorder of heart rate or rhythm which causes the heart to pump blood less efficiently and can result in a stroke.

A fairly large portion of the risks enumerated in the company's SEC filing relate to hurdles to be overcome in obtaining FDA marketing approvals for its cryoablation products, none of which has been cleared thus far. These include "concerns" expressed by the agency regarding its clinical trials. And the company said it would need "separate FDA approval supported by a separate clinical trial for each proposed indication."

It also noted the existence of "numerous U.S. patents owned or licensed by third parties in areas potentially related to the technology used in our cryoablation system."

These third parties include CryoCath Technologies (Montreal), Johnson & Johnson (New Brunswick, New Jersey), the Regents of the University of California (Oakland, California) and Spembly Medical (Andover, UK). It specifically noted "statements" by employees of CryoCath, indicating that CryoCath "may believe that aspects of our cryoablation systems may be covered by one or more U.S. patents [related to cryosurgery] owned by CryoCath." This offers the risk of expensive litigation, CyroCor said.

The company's shares are expected to list on the Nasdaq under the symbol CRYO.

For 2004, CryoCor posted a net loss of $15.77 million, compared with a loss of $11.17 million for 2003.

Staar Surgical (Monrovia, California) closed on its sale of 4.1 million shares of common stock at $3.50 a share for gross proceeds of $14.35 million in a private placement to certain institutional investors.

The new financing comes about a month after the troubled ophthalmic device manufacturer reported that it was exploring "strategic and financial alternatives" and attempting to resolve issues presented in an FDA warning – that letter, it acknowledged, is a possible prelude to agency action against it (Medical Device Daily, March 7, 2005).

The FDA warning letter was issued by the agency more than a year ago (MDD, Jan. 9, 2004), with resolution of cited problems still not reported.

Staar is the developer of a phakic intraocular lens (IOL) for which it has received an FDA panel thumbs-up. But the follow-on agency approval of its premarket approval (PMA) application has not been forthcoming.

The FDA letter cited "flaws" at the company's Monrovia facility, which makes the IOL. Specifically, it said that Staar had not thoroughly investigated adverse reactions related to its IOL products, as well as injuries or malfunctions attributed to its cartridges and injectors associated with the lens. The letter thus put on hold the company's request for expedited handling of its PMA application for the implantable IOL.

Further potential FDA actions looming for the company – and acknowledged in its SEC filing – include another inspection, seizure of products or injunction of the Monrovia facility to compel compliance.

Pacific Growth Equities (San Francisco) acted as the exclusive placement agent for the recent funding transaction.

In other financing news:

• Curon (Fremont, California) reported signing agreements for the placement of stock to institutional investors for gross proceeds of $11.3 million. The placement is structured to be completed in two closings, with the first having taken place on April 8, and the remaining closing subject to stockholder approval.

In this first closing, Curon raised about $3.2 million by issuing nearly 5 million shares of common stock at 65 cents a share, a 19% discount to the company's April 7 closing price of 80 cents a share. Investors received five-year warrants to purchase somewhat more than 2.48 million shares at $1 a share.

SVB Alliant and The Robins Group served as placement agents for the transaction.

An additional amount of about $8.1 million has been deposited to escrow and will be released to the company in the event that Curon obtains stockholder approval for the subsequent sale of securities. The company said it intends to seek stockholder approval at its annual meeting next month.

Larry Heaton II, president and CEO, said that the proceeds would be used mainly to fund company initiatives for its core business related to the use of radio frequency energy for the treatment of acid reflux, or gastroesophageal reflux disease, with the Stretta System, and the treatment of bowel incontinence with the Secca System, in addition to other working capital needs.

"This round of funding strengthens our balance sheet and will provide capital to execute our operating plan," Heaton said. "With the addition of the funds being held in escrow pending stockholder approval, we believe that we will have satisfied the going concern issue that we raised in our year-end 2004 financial statements."

The Stretta System, cleared in April 2000, consists of the Stretta Catheter, a disposable, flexible catheter, and the Curon Control Module. Using the Stretta System, the physician delivers temperature-controlled radio frequency energy to create thermal lesions in the muscle of the lower esophageal sphincter.

The Secca System received FDA clearance in March 2002 for the treatment of bowel incontinence in patients who have failed more conservative therapy such as diet modification and biofeedback. The Secca System uses the same technology and treatment concepts as the Stretta.

• Community Health Systems (Brentwood, Tennessee) reported the expiration of its offer to exchange its outstanding $300 million of 6-1/2% senior subordinated notes, due 2012, for its 6-1/2% senior subordinated, notes due 2012.

The exchange offer expired at 5 p.m. EDT on April 8. As of that time, all $300 million in principal amount of the outstanding 6-1/2% senior subordinated notes, due 2012, had been tendered in the exchange offer.

Community Health operates general acute-care hospitals in non-urban communities throughout the country. Through its subsidiaries, it owns, leases or operates 68 hospitals in 21 states.