Orqis Medical Corp., a Lake Forest heart device developer, has raised $10 million in what it called “venture debt” financing.
The company plans to use the money to speed up development of Exeleras, an implantable pump for patients with mid- to late-stage chronic heart failure.
Orqis hopes to get the device into a patient outside the U.S. next year and start a domestic clinical trial in 2008.
Exeleras, the product Orqis was started around, has seen good progress so far, Chief Executive Kenneth Charhut said.
“Being implantable, (Exeleras) took a little bit longer to develop,” he said. “Earlier this year, we made some really big development strides in that program, faster than expected. That’s what prompted the venture debt.”
In all, Orqis has raised $60 million since 1999. Investors include Boston Scientific Corp. and Johnson & Johnson Development Corp., the venture arm of Johnson & Johnson.
Lighthouse Capital Partners, a prior Orqis investor with offices in Menlo Park and Cambridge, Mass., led the company’s latest funding.
Under the deal, Lighthouse is loaning Orqis money at “much more agreeable terms” than a bank loan, Charhut said. Lighthouse also ups its stake in Orqis by a small percentage.
“It was a nice way to do a less dilutive financing to take advantage of the opportunity we had here,” Charhut said.
Lighthouse made the deal because Orqis has “one of the most exciting opportunities” in heart devices, said Cristy Barnes, a Lighthouse principal.
Orqis expects to raise more money to market Exeleras if regulators approve the device, Charhut said.
Another Orqis product, the Cancion System, is being studied in the U.S. under a clinical trial. Cancion, which is inserted through the skin to treat acute congestive heart failure, has European Union approval.
Congestive heart failure is the breakdown of the heart’s ability to pump blood through the body. Figures from the American Heart Association show some 5 million Americans have the disease. It’s responsible for nearly 4 million hospital admissions a year.
Orqis, which was founded in 1997 and has around 30 workers, hasn’t set any plans for an initial public offering.
“We can’t predict when the window is,” Charhut said. “But, being a late-stage company, we obviously evaluate all the potential options.”
Those options could include acquisition by some of the industry’s big players.
Earlier this year, venture-backed heart valve maker 3F Therapeutics Inc. was bought by ATS Medical Inc. of Minnesota for $60 million.
In June, Orqis investor Johnson & Johnson paid $100 million for San Juan Capistrano-based Vascular Control Systems Inc., a surgical products maker that’s since moved to a J & J; facility outside OC.
