Freshly armed with a $30 million private financing infusion, TherOx Inc., an Irvine medical device maker, is moving ahead with plans to boost manufacturing, conduct clinical studies and seek federal approval of its therapeutic oxygen system.
TherOx, which is privately held, completed its new funding round this month. It is among this year’s larger private equity investments in Orange County companies.
TherOx has a proprietary technology for infusing water or other liquids with large amounts of oxygen. The company is focusing on the development and manufacture of minimally invasive devices to deliver that so-called aqueous oxygen to specific areas of the body. Its first practical application of the technology is a system to minimize the damage to cardiac muscle in the aftermath of a heart attack.
The device maker’s market is “very specifically interventional cardiologists. There are a lot of those,” said Paul Zalesky, TherOx’s president and co-founder.
Other plans for the funding, according to Zalesky, include a Phase II clinical study set to start in the middle of next year, and gearing up distribution in Europe, where marketing approval is expected in the second quarter. He said he hopes that TherOx will be able to start selling its devices in the United States in late 2002.
The company also is planning animal studies of the aqueous oxygen technology’s usefulness in stroke treatment, cancer therapy and wound care.
American Express Financial Corp. led the round with a $10 million investment. Hambrecht & Quist Capital Management Inc. kicked in $5 million, as did existing investors including Kleiner Perkins Caufield & Byers. Citigroup Investments Inc. invested $3.5 million, while Wheatley Capital and Clique Capital each invested $2.5 million, Zalesky said.
TherOx secured its investment through ProMed, a Boston-based transaction agent that links investors with companies. Zalesky said he and Frank Fischer, TherOx’s chairman, “traveled all over the map, even France,” to introduce the firm to potential investors.
Zalesky said TherOx’s financing shouldn’t be considered venture capital.
“We’re too late-stage for that. Most VCs are interested in early-stage companies,” he said.
Zalesky and Dr. J. Richard Spears, a Detroit cardiologist, founded TherOx in 1994. Zalesky said the company will employ 34 people at the end of this year, and hopes to employ 80 to 90 by 2002, adding that at least 25 of the hires will be a United States direct sales force. TherOx has a certified cleanroom at its Michelson Drive corporate office for manufacturing, he added.
“Our big hope is to do an IPO within an 18- to 24-month time frame,” Zalesky said. “But that depends on the financial markets.”
As for competition, Zalesky said he wasn’t aware of any company that produces devices that elevate oxygen levels like TherOx does. n
