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Medical Device Giant Plans $585M CathWorks Buy

Since CathWorks Chief Executive Ramin Mousavi reached a $75 million funding deal with Medtronic PLC a year ago, he’s started a global clinical trial, doubled the size of his cardiac-focused medical device company and moved into new headquarters.

On top of that, Mousavi is working to complete milestones that he believes will soon result in a nearly $600 million sale to Medtronic PLC, one of the world’s largest medical device makers.

For all these reasons, Mousavi was one of five local execs honored during the Business Journal’s ninth annual Innovator of the Year Awards at the Irvine Marriott.

“We can actually make an effect on patient lives,” Mousavi told the audience of nearly 300 on Sept. 7. “So, to anybody who’s trying to do this, it’s not easy. There are more downs than ups, but the ups are really, really fun.”

Newport Beach-based CathWorks is using artificial intelligence to develop a new method to diagnose heart disease in a noninvasive way.

The Innovator of the Year recognition is Mousavi’s second award from the Business Journal; a year ago, he won an Excellence in Entrepreneurship Award.

The Deal

Fourteen months ago, CathWorks reached an agreement for a $75 million investment from Medtronic, which has a $109 billion market cap (NYSE: MDT). Under that deal, Medtronic within five years has an option to buy CathWorks, in a deal that was valued at $585 million at that time.

An acquisition depends on CathWorks accomplishing a couple of product milestones within the next 18 months or so, Mousavi said.

Partnering with Medtronic was a natural choice considering the company has been a key investor in CathWorks since 2018, according to Mousavi.

“We get to globally co-promote our product and have access to Medtronic’s global footprint,” Mousavi said.

Global Study

In June, CathWorks enrolled its first patient in its global All-Rise study using the FFRangio System, a noninvasive method that captures a 3D image of structural problems in the heart.

The randomized controlled trial will compare the clinical outcomes between treatments of patients using the FFRangio System and traditional invasive catheter wires after one year of follow-up.

It is the first and largest trial of its kind to be conducted in the U.S., Europe, Japan and the Middle East.

The study is expected to enroll close to 2,000 patients across 60 sites internationally.

“The executive committee of this study are considered leaders of the field of coronary disease, so we feel very lucky that we have the absolute best of the best involved in what we are doing,” Mousavi said.

OC Benefit

Medtronic’s 2022 funding round helped CathWorks roll out the FFRangio System commercially in over 30 states in the U.S., Europe and Japan.

The strategic agreement is also creating great value for the Orange County community as well as its shareholders, Mousavi said.

Since 2022, CathWorks doubled its global headcount from 75 to nearly 150 employees.

CathWorks partnered with local law firms for the Medtronic deal, including Irvine-based Knobbe Martens for lead intellectual property attorneys and Newport Beach-based Stradling for key employment lawyers.

CathWorks recently moved its U.S. headquarters from Irvine to Newport Beach at the 4000 MacArthur office complex.

The company now occupies a floor of space, nearly triple its prior footprint.

Medtronic, which employs about 2,000 in Orange County, also has its neurovascular division based not far away in the area.

“We’ve established a headquarters for Medtronic at the heart of Orange County where I think there’ll be an opportunity to continue to grow and add talents from the local community,” Mousavi said.

Connections

Mousavi has a personal connection to diagnosing and treating cardiovascular disease.

“My mom suffers from heart disease,” he told the Business Journal.

“As a child growing up, I have experienced firsthand all the challenges that come with having a close family member affected by heart problems in my own home.”

The company is making big strides with noninvasive approaches using artificial intelligence and computational science technology, Mousavi said.

He previously led a team that helped launch the Sapien 3 Transcatheter Heart Valve System at Irvine’s Edwards Lifesciences Corp. (NYSE: EW) and became chief executive of CathWorks in 2021.

Mousavi has “revolutionized healthcare by harnessing the power of technology,” said Ali Nafii, senior vice president and senior portfolio advisor manager of Northern Trust, when presenting the award to Mousavi.

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