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Thursday, Dec 7, 2023

CathWorks Gets $585M Valuation, Medtronic Boost

Devices: $75M investment with purchase option by '27

Medtronic PLC, one of the world’s largest medical device makers, is adding to its Orange County footprint.

The Minneapolis-based firm (NYSE: MDT), valued around $120 billion, this month said it would be investing $75 million in Irvine-based CathWorks, a cardiac-focused device maker that’s developed a new, noninvasive way of diagnosing heart disease.

It’s the largest funding deal to date for CathWorks, which was founded in 2013 in Israel and last raised $30 million in a Series D round, in 2021. The company is still in the early stages of rolling out its product, dubbed the FFRangio System.

Medtronic, which has been part of a prior CathWorks funding rounds, said it will also immediately begin co-promotion of CathWorks’ FFRangio System in the U.S., Europe and Japan, where it is commercially available.

“This long-term partnership opens up the door for exciting development activities,” CathWorks Chief Executive Ramin Mousavi told the Business Journal.

“As we launch this fourth-generation FFRangio System, it’s become clear that the product is ready for globalization.”

As part of the July 12 agreement, Medtronic has the option to buy CathWorks in the next five years, at a $585 million valuation, plus other earn-out payments.


Building a Team

The Medtronic deal marks the latest win for Mousavi, who has a long history in medical devices for heart diseases. He previously led a team that helped launched Sapien 3 Transcatheter Heart Valve System at Edwards Lifesciences Corp. (NYSE: EW), the largest publicly traded company based in Orange County, and a frequent competitor of Medtronic.

Since he was named CathWorks CEO last year, he’s hired several top executives such as Chief Financial Officer Mike Feher, a former executive at Santa Ana global security giant Allied Universal and Irvine’s Edwards; U.S. Sales Chief Duraid Antone, former co-founder of BioStructures and Radius Medical and a member of the board of trustees; and head of Advanced Analytics Fabian Ngo, an architect of one the first medical device industry analytics team at Edwards.

“We put together this dream team with the hope of making an impact,” Mousavi said. “A group of people did something amazing in such a short amount of time.”

Mousavi around the start of the year moved the company’s headquarters from Aliso Viejo to Irvine’s Boardwalk office complex, where it sits a few blocks down Jamboree Road from the new $1.3 billion medical complex being built for the University of California, Irvine’s health center.

The deal with Medtronic “will be good for Orange County as a whole because local partners have contributed to this,” said Mousavi, who has bachelor’s degrees in computer and electrical engineering, as well as an MBA from UCI.

Mousavi was one of five honored at the Business Journal’s 21st annual Excellence in Entrepreneurship Awards held on May 26 at the Irvine Marriott.


Local Base

“We believe strongly in the potential of the technology and are committed to strengthening our relationship with CathWorks to provide new, innovative technologies and solutions from diagnosis to treatment,” Jason Weidman, president of the Coronary and Renal Denervation business at Medtronic, which is part of the Minneapolis company’s Cardiovascular Portfolio.

Medtronic employs about 2,300 in Orange County, and its local operations include a heart valve unit in Santa Ana.

An acquisition of CathWorks would be the largest local buy for Medtronic in over a decade; in 2009 it bought CoreValve Inc., an Irvine heart valve company, for $700 million, plus add-ons.

Medtronic also has a large neurovascular division in Irvine.



CathWorks was founded in 2013 by Israeli inventors. It opened its U.S. headquarters in Aliso Viejo under the guidance of Jim Corbett, a former president at Boston Scientific.

About 19 million people globally, including 1 million in the U.S., die every year because of heart diseases, about 35% of total global mortality, making it by far the world’s biggest killer.

The potential addressable testing market is around $5 billion to $6 billion, Mousavi estimated.

In the standard testing procedure, a catheter is inserted into a heart and drugs are administered to dilate blood vessels to monitor blood flow. Physicians eyeball X-rays to determine if a stent should be inserted. The nature of the invasive measurements with wires and stimulation with hyperemic agents has resulted in its underutilization, CathWorks said.

By contrast, CathWorks’ FFRangio system uses a combination of advanced algorithms, artificial intelligence, machine learning and cutting-edge user interface to provide a 3D image of the heart that is color coded. It’s a noninvasive 5-minute procedure that doesn’t require drugs.

“Data and AI-enabled technologies have been shown to drive improved workflow and patient outcomes across the healthcare ecosystem,” Medtronic’s Weidman said. “In cardiology specifically, these new advances in technology provide clinicians with the opportunity to gain additional information to improve and evolve the diagnosis and treatment of patients with coronary artery disease.”


Growing AI Hub

While Medtronic has a broad range of coronary-related products, it’s lacking in a diagnostic-related product like CathWorks’ product, Mousavi said.

“AI and data enabled are a priority for Medtronic,” Mousavi said. “This is a perfect fit for its portfolio. It’s very complementary.”

Orange County business leaders are pushing to build OC into a leader in AI-driven healthcare ventures (see story, page 20).

According to clinical data published in the Journal of the American College of Cardiology, CathWorks’ FFRangio showed diagnostic accuracy of 93%, sensitivity of 91%, and specificity of 94%.

The CathWorks test costs about $800, half the normal test procedure using a catheter, Mousavi said.


Standard of Care

Going forward, CathWorks will have co-promotions with Medtronic in markets such as Japan.

It’s growing its commercial team rapidly in the U.S. and Europe. Its current headcount around 75 could double in the next 18 months, Mousavi said.

It’s also expecting new research that will be published in the coming months.

“Clinical studies will elevate this technology to become the standard of care,” Mousavi said.

“It could change the entire space. That’s our focus right now.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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