Orange County’s reputation as a hotbed for medical-device makers has produced a cluster of companies with products for treating heart and blood-vessel diseases.
Local heart-and-vascular players include large companies such as Edwards Lifesciences Corp. in Irvine, and Minneapolis-based Medtronic Inc.
Edwards is the biggest device maker overall here, with more than 2,500 employees in OC. Medtronic ranks No. 7 with about 700 workers.
The local cluster also features smaller companies such as CardiAQ Valve Technologies Inc. in Irvine, a startup with 13 employees.
“There is a bit of a cluster that is forming [and] has formed here,” said William Link, a managing director for the Newport Beach office of Menlo Park-based venture capital firm Versant Venture Management LLC, one of several here that fund medical device makers.
“Usually when that happens, it stems from a corporate presence. It’s not unusual to see small projects, small companies spring up in a location where there’s a corporate leader,” Link said.
The bigger, anchor companies have drawn “a population of engineers and technical people that were schooled in product development,” said veteran Orange County device executive Raymond Cohen, who now runs Laguna Hills-based vascular startup Vessix Vascular Inc.
Cameron
And smaller, growing companies attract the attention of bigger players across the U.S.
Natick, Mass.-based Boston Scientific Corp. acquired San Clemente heart defibrillator maker Cameron Health Inc. in March for up to $1.35 billion, including possible milestone payments.
Versant was an original investor in Cameron, which had about 160 workers here when it agreed to the sale.
Medtronic picked up Irvine-based startup CoreValve Inc.—which sells a less-invasive heart valve that competes with Edwards in Europe—for $700 million in 2009.
“The success of some of the startups really is a leading indicator and it draws additional talent,” said Link, who suggested that Boston Scientific’s Cameron acquisition will draw wider interest in the local heart-device cluster, continuing a pattern.
OC’s growth into a heart cluster stems in large part from the original Edwards Laboratories, a heart-valve developer that came about from the efforts of electrical engineer Miles “Lowell” Edwards, who sought to build the first artificial heart beginning in 1958.
He worked with cardiovascular surgeon Albert Starr in developing the Starr-Edwards artificial heart valve. Starr-Edwards was implanted in a patient in 1960, spawning the creation of Edwards Laboratories.
Edwards was bought in 1966 by American Hospital Supply Co., becoming American Edwards Laboratories. Baxter International Inc. bought American Hospital Supply in 1985, and Edwards remained as Baxter’s cardiovascular unit until it was spun off 12 years ago as today’s Edwards Lifesciences.
A number of veterans from the original Edwards Laboratories established OC-based cardiovascular and vascular startup companies. Alums include Don Shiley, whose Shiley Laboratories made disc-driven heart valve, and Jim Bentley of Bentley Laboratories, which produced membrane oxygenators.
Edwards’ diaspora of device entrepreneurs features “talented and innovative thinkers with big dreams, deep experience and a shared passion to improve the lives of patients,” a company spokesperson said.
Edwards Laboratories’ influence even touched one of its fiercer competitors, via Edwards alumnus Warren Hancock, an engineer who went on to start heart-valve maker Hancock Laboratories in 1969.
Hancock Laboratories was bought by New Brunswick, N.J.-based Johnson & Johnson in 1979. Medtronic picked up the Hancock valve portfolio a few years later, which set the stage for the growth of its local presence.
“If you look at a lot of the heart valve technology and the medical technology that occurred in Orange County, a lot of that has come from legacy employees of Medtronic’s heart valve facility, as well as companies that have just partnered with Medtronic over the years,” said John Mack, a Santa Ana-based vice president of business development, strategy and portfolio management for Medtronic’s structural heart division.
“Orange County is very well positioned, whether it’s with a larger entity like us [and] Edwards, or smaller entities,” said John Liddicoat, president of Medtronic’s structural heart division.
Special Skills
Among the cluster’s smaller companies, CardiAQ is developing a tissue mitral replacement heart valve. Brent Ratz, CardiAQ’s co-founder, president and chief operating officer, said OC has proved to be a good home base.
“For us, it was a combination of facility and skill set—with the emphasis being on the skill set,” he said. “We needed [employees having expertise with] a biological tissue-based heart valve.”
Orange County has people with “big company experience but an entrepreneurial mindset,” he said.
CardiAQ Chief Executive Rob Michiels, another Edwards alum, noted that CardiAQ “moved right back into the original CoreValve facility” in the Irvine Spectrum.
MedFocus
“From those early startup companies that were successful, people branch out,” said Michael Henson, managing director and founder of venture capital firm MedFocus Fund LLC in Irvine. “What really start these clusters are successes.”
Henson has established 18 medical-device companies, most locally launched. His portfolio includes startup MiCardia Inc., which is working on a surgical approach for mitral valve repair.
He also co-founded Irvine-based Endologix Inc., a maker of stents to treat aortic abdominal aneurysms that has about 190 workers here.
