Baxter Alums Head, Fund Cardiac Device Startup
By VITA REED
Since spinning off Irvine-based Edwards Lifesciences Corp. two years ago, Baxter International Inc. no longer is a big part of Orange County’s medical device industry.
But the Deerfield, Ill.-based company’s influence lives on here, and not just with Edwards.
Lake Forest-based Orqis Medical Corp., a startup working on treating later-stage congestive heart failure, counts a Baxter alum at its helm and another at the venture capital firm backing the company.
Kenneth Charhut, Or-qis’ chief executive, spent 16 years in various management positions at Baxter Health-care Corp., including serving as president of the Irvine-based Bentley Laboratories division and as president of new business initiatives for the cardiovascular surgery division, now Edwards Lifesciences.
Charhut’s old Baxter colleagues included Michael Mussallem, now Edwards’ chief executive. Another is Olav Bergheim, a partner at Domain Associates LLC, a venture capital firm with offices in Princeton, N.J., and Laguna Niguel. Domain provided Orqis’ $4 million first round of funding in 1999 and most of its $13 million in funding to date.
“This is one that Olav found,” said Brian Dovey, a general partner who works out of Domain’s Princeton office. “He’d seen the principles of their work.”
Orqis is developing what it describes as a cardiac recovery device for patients with relatively advanced congestive heart failure, those who are failing therapy and need a circulatory boost but but not surgery, according to the company.
Orqis’ device comes in external short-term and fully implantable long-term versions. It’s made up of a peripheral access conduit, blood pump and control system. The idea for Orqis came from technology developed by Dr. Steven Bolling, a cardiac surgeon and professor at the University of Michigan School of Medicine.
According to Orqis, the device is a less invasive way of treating congestive heart failure.
“This is a multibillion dollar opportunity without treating even a large segment of the population,” Charhut said.
About 14 million people in the U.S., Europe and Japan potentially are eligible for the company’s treatment, according to Charhut.
A potentially large market for Orqis’ product was one of the things that attracted Domain, according to Dovey. The startup also has what Dovey called good patent protection.
Congestive heart failure is considered one of the major causes of hospitalization and death for people over age of 65. About 7 million people in North America have it. Treating congestive heart failure costs $40 billion to $50 billion annually.
Domain primarily favors investing in life science companies in the early stages of development. Among other things, Domain has what Charhut described as an incubator program for companies it invests in.
“Being incubated gave us an inside track,” Charhut said.
Orqis, which employs 15 people, still is some years away from generating revenue, according to Charhut. He declined to talk about Orqis’ burn rate, but said “we’re well-funded to complete our milestones.”
Among those milestones, Charhut said, is conducting human clinical trials in the next year or so. If the tests are successful, Orqis plans to commercialize its device in Europe by late 2003 and in the U.S. the following year, he said.
Orqis is using contract manufacturers to build its system, rather than “devoting precious resources” to making the product itself, according to Charhut.
Orqis faces a lot of potential rivals but no direct competitor so far, Charhut said.
“There are many people trying to treat congestive heart failure with drugs and other types of devices,” he said. “We don’t perceive a direct competitor.”
