San Clemente’s AtaCor Medical Inc. has completed the largest reported funding deal of an Orange County medical device maker since COVID-19 restrictions went into place domestically.
The company, which is making a noninvasive, temporary pacing system that does not require hardware to be placed inside or onto a patient’s heart, brought in a $25 million investment on April 28.
AtaCor has raised about $34 million to date. The company launched in 2014.
The latest financing had been in the works for months and wasn’t delayed because of the pandemic, said Chief Executive Rick Sanghera.
With a great team, solid technology and positive data from trials, the company was able to “put those three things together and communication happens with venture partners and corporates. Then it’s just a matter of crossing the finish line,” Sanghera said.
Pool of Investors
The company’s recent Series B financing round was led by an unnamed strategic partner, with participation from current investors Broadview Ventures in Boston and Israel-based aMoon Fund.
“AtaCor is pioneering the transformation of cardiac pacing—both in terms of safety and patient comfort,” said Ray Wiesner, managing director of aMoon.
New investors include Durham, N.C.-based Hatteras Venture Partners, Catalyst Health Ventures near Boston, and London-based Longview Ventures, an affiliate of Broadview.
All of the venture firms have filled seats on the company’s board of directors, including Maria Berkman, who represents both Broadview and Longveiw.
AtaCor is one of at least three area companies that have reported funding rounds in excess of $20 million over the past month.
Movandi Corp., an Irvine-based telecom equipment maker that makes products to help wireless carriers deploy 5G technologies, raised $27 million last month and was profiled in the April 27 print edition of the Business Journal.
Westminster-based Clever Care Health Plan Inc., a provider of Medicare Advantage insurance plans, said it raised $20 million in Series A funding on April 24 (see story, page 10).
Pacemakers are made to control slow heartbeats and speed up the heart rate.
Physicians typically insert a pacemaker by making an incision along the upper chest, and guiding a lead, or a small insulated wire, through the vein to the heart. There, the pacemaker is attached onto or inside of the heart and delivers small amounts of energy to regulate the heartbeat.
Here’s the problem: “If the heart beats 100,000 times a day—that’s 35 million times a year—and that wire is constantly flexing, over time, as the wire flexes, the hardware breaks down,” Sanghera said.
“Think of [wires] like a paper clip. It can only bend so many times before it breaks.”
Once the hardware breaks down, physicians need to make a new incision and remove the old device before inserting a new one, and detaching the lead from the heart itself can lead to a series of complications.
Sanghera thought, “If I can get energy to the heart without putting the lead inside of the heart … is that even an option?”
AtaCor’s temporary pacing device does exactly that. The extracardiac, or outside-of-the-heart device, is inserted through the sternum and placed between the ribs and the pericardium.
The lead is positioned toward the heart and attaches to a pacemaker, so it “deploys energy to the heart without invading the vasculature,” Sanghera said.
“The data’s been good,” he added.
In an early feasibility study, the company demonstrated that 166 out of 174 patients had “a viable lead access path” for insertion.
Furthermore, five cadavers and three humans achieved “successful implantation” using a custom delivery tool and without X-ray imaging; and with no damage to the lung, pericardium, heart or internal thoracic vessels.
The company plans to announce additional clinical trial results this month.
AtaCor plans to use the new funds to wrap clinical work this year and launch a new study in 2021. It aims to obtain regulatory clearances in the U.S. and EU by the end of 2021.
It is pursuing clearance for temporary pacing support, of which there are about 210,000 cases in the U.S. every year.
Potential users of the company’s pacemakers include patients getting transcatheter aortic valve replacement (TAVR) surgery—using products such as those made by Irvine’s Edwards Lifesciences Corp. (NYSE: EW)—and those recovering from a heart attack.
These are the areas where AtaCor thinks it can make a significant difference.
Pacing leads are one of the most common complications for TAVR patients, added Sanghera.
“You have patients stuck in ICU beds, not because of their cool new valve, but because of their restrictive pacing leads. We can change that, we can remove bed-rest restrictions and speed recovery for these patients.”
Since the company’s products don’t require hardware to be placed inside or onto a patient’s heart, there is no need for medical imaging. That also speeds up the delivery process, according to the company.
CEO Sanghera previously served as director of research for San Clemente’s Cameron Health Inc. and held senior engineering titles at Guidant; both companies were acquired by Boston Scientific Corp.
Alan Marcovecchio, vice president of clinical, regulatory and quality and Chief Financial Officer Sean McGeehan, who also serves as general counsel, have ties to Cameron Health and Boston Scientific as well.
The company’s scientific advisory board, led by Chief Medical Officer Martin Burke, is made up of practicing physicians and cardiologists with expertise in cardiac rhythm management, leadless pacing and TAVR procedures.
AtaCor moved into a new office at 635 Camino de los Mares in San Clemente last year and will likely expand in the next few months.
The company nearly doubled its workforce to nine employees, and is in a good position to double its team again with remote work options, Sanghera said.
Though COVID-19 has impacted hospitals to a great extent, and brought about declines in local emergency room visits, the need for cardiac interventions—and improvements in treatments and patient safety—is constant, officials note.
For AtaCor, transition to a remote working environment during the pandemic wasn’t too much of a transition, Sanghera said.
“We started remote work last year, and we already have team members in all four time zones across the globe. You just hit a button and their face pops up on screen, and you conduct your business, as if you walked down the hall to their office.”