Heart Device Startup Orqis Raises $25M
By VITA REED
Lake Forest heart device developer Orqis Medical Inc. raised $25 million in a third round of venture funding, bringing its total raised to $38 million.
Orqis plans to use the latest funding to hire managers and advance its Cancion Cardiac Recovery Systems device for treating congestive heart failure. Plans include a clinical trial and a U.S. approval bid.
Cancion’s already approved in the European Union, and part of the latest investment is set to cover the launch of the device there.
Orqis’ funding was “oversubscribed,” according to Kenneth Charhut, the device maker’s chief executive.
“We are very pleased to have closed this round of financing, especially in such an unfavorable economical environment,” he said.
The funding appears to be the largest so far in what’s shaping up to be another down year of funding for Orange County startups.
HealthCare Ventures LLC of Princeton, N.J., a first time investor, led the round. Other new investors include Care Capital LLC, also in Princeton, N.J., and Rho Ventures of New York.
Prior Orqis investors also took part, including Johnson & Johnson Development Corp., an arm of Johnson & Johnson; New Jersey’s Domain Associates LLC, which has an office in Laguna Niguel; and Singapore’s Temasek Holdings Ltd.
Orqis’ third round came easier than the second, according to Brad Sharp, the company’s executive vice president.
“You have to realize that we raised our Series B in March 2000, right on the heels of the dot-com crash,” he said. “A Series B is more difficult because you’re not early stage, but you’re not clinical stage.”
HealthCare Ventures invested in Orqis because of the market potential of its product, said Jim Cavanaugh, a general partner at the firm who also joined Orqis’ board.
“Of the millions of global (congestive heart failure) patients, 500,000 are considered non-responsive to conventional drug therapy, which is the near-term opportunity” for devices, Cavanaugh said.
Orqis “addresses a significant unmet medical need, has a far shorter development horizon than potential pharmaceutical treatments and is protected by a strong intellectual property portfolio,” said Cavanaugh, a former official at SmithKline & French Laboratories-U.S., now part of GlaxoSmithKline PLC.
Orqis has six patents, two “allowance of claim” patents and five pending patents, according to Sharp.
The company’s Cancion device is made up of an access conduit, blood pump and control system. It comes in external short-term and fully implantable long-term versions and is designed for percutaneous insertion, which is less invasive.
Besides Cavanaugh, Mark Leschly, Rho Ventures’ managing partner, and S. Iswaran, Temasek’s managing director, joined Orqis’ board with the latest funding.
Leschly was with HealthCare Ventures before joining Rho in 1999. Iswaran, a member of Singapore’s parliament, handles private equity investments at Temasek.
Orqis expects the new funding “to carry us for quite some time,” Sharp said.
The company intends to generate sales early next year, he said, when Cancion is launched in Europe.
Orqis, which has 18 workers and contracts out production, started raising money in 1999.
