Arbor Surgical Technologies Inc., an Irvine-based heart valve maker, has raised $20 million in a second round of venture funding.
The funding includes money from prior investor Johnson & Johnson and was led by Baird Venture Partners, a unit of Milwaukee-based R.W. Baird & Co. Three Arch Partners of Menlo Park and Kaiser Venture Capital, a unit of Oakland-based Kaiser Permanente, also made additional investments.
New investors include Affinity Capital Management of Minneapolis and Fisk Ventures LLC of Racine, Wis.
Arbor now has raised $34 million. It makes heart valves from cow tissue as well as surgical instruments to implant them.
The company’s approach differs from others that are developing heart valves requiring less-invasive insertion via a catheter. Irvine-based Edwards Lifesciences Corp. and 3F Therapeutics Inc. of Lake Forest are among those working on less-invasive valves, seen as a big part of future heart surgeries.
Arbor’s valves are designed to work with catheters or in open-heart surgery, said Steve Bacich, the company’s chief executive.
“We try to cover the spectrum,” he said.
Arbor plans to use its funding on clinical trials of its valve, Bacich said.
The company has around 30 workers in Irvine and the Bay area city of Portola Valley. Thomas Fogarty, Arbor’s cofounder, lives in Portola Valley.
Fogarty, a doctor who holds more than 100 medical device patents, and Ernie Lane, who designs heart valves, started the company in 2002.
In the late 1960s, Fogarty worked with Warren Hancock, a seminal figure in the Orange County device industry, to invent the first replacement heart valve made from pig tissue. Lane has developed tissue valves.
The device maker still is some years away from bringing its valve and surgical gear to market. The valve itself probably won’t be on the market until 2009, Bacich said.
“The big prize is the U.S. market, and it just takes much longer,” he said. “We’re going to finance ourselves and structure ourselves, really, for the long haul.”
Bacich, who previously was chief executive of Conceptus Inc., a San Carlos-based company that develops permanent birth control devices, is another local medical device executive who has roots in Baxter International Inc.
He worked for Baxter’s American Hospital Supply business and at Edwards when it was Baxter’s cardiovascular unit.
David Chonette, an Arbor board member, also is a veteran of what evolved into Edwards. Chonette serves as an adviser to Versant Ventures, a venture capital firm with offices in Newport Beach and the Bay area.
Arbor is hedging its bets by not solely pursuing a less-invasive valve.
“Some surgeons are going to be doing nothing but open procedures, the way they’ve been doing for years and changing them is going to be difficult,” Bacich said. “The basic mission is to make a much better heart valve replacement system, not only a valve, but the surgical tools that put the valve in.”
Arbor hopes to work with a big valve maker to market its products, go on its own or possibly be acquired, according to Bacich.
“Our task is to make the best system and give ourselves those options,” he said.
Bacich said he couldn’t speak for Johnson & Johnson but said, “I would assume that the reason they made it is that they see a good investment.”
Johnson & Johnson’s made investments in other OC device makers or those that had roots here, including Volcano Therapeutics Inc., which moved from Laguna Niguel to Rancho Cordova last year.
