Evalve Raises $20 Million
May 25, 2004 - Med Device Firm Evalve Gets $20M As Part Of $35M Series C
By Estee Pierce
Evalve Inc., a developer of medical devices for the endovascular repair of cardiac valves, has received $20 million in the first part of a Series C financing. Evalve has received total commitments for the round of $35 million, with the full sum to be provided as it reaches key milestones in pivotal trials of its endovascular mitral valve repair system.
Medical device giant Guidant Corp., a new investor, led the financing with an initial payment of $15 million. Evalve's existing investors - New Enterprise Associates, Delphi Ventures, St. Paul Venture Capital, Three Arch Partners, Cutlass Capital and ABS Ventures - together provided $5 million in Series C funds.
Evalve's President and Chief Executive Ferolyn Powell said that Guidant will provide additional investments totaling $15 million upon achievement of key milestones over the next 18 months. While she declined to comment at length on the investment deal, Powell noted that under current arrangements, Guidant holds no rights to the technology. "At this point it's a minority investment, they do have a board seat, and beyond that it's pretty limited," she said.
Prior to the Series C round, Redwood City, Calif.-based Evalve had raised $22.5 million through two rounds of venture financing. Powell said that in earlier negotiations for the current round, existing investors had planned to commit as much as half of the capital for the financing. But, she said, the shareholders agreed to provide the lesser amount in light of the interest "by a large corporate group and a leader like Guidant."
Evalve is developing new technology for the treatment of mitral valve regurgitation, or MR, a disorder in which the mitral valve, which separates the upper left collecting chamber of the heart from the lower left pumping chamber, fails to close properly. This causes blood to flow back into the left atrium from the left ventricle when the heart contracts.
The blood flow to the body, or cardiac output, decreases as a result of MR, and to compensate the left ventricle must pump harder. This continual backflow places an extra burden on the heart that eventually can cause progressive myocardial injury, congestive heart failure, stroke and even sudden death in some patients. According to the company's figures, MR affects 4 million people in the U.S., with approximately 250,000 developing severe MR annually.
Currently, the only effective treatment for severe MR is open, arrested-heart surgery, a procedure that involves significant risk and trauma: cardiopulmonary bypass, cardiac arrest, and a large chest incision all contribute to a high rate of morbidity and mortality. In spite of this, approximately 50,000 patients in the U.S. undergo mitral valve surgery each year.
Evalve's endovascular mitral valve repair system, which includes steerable delivery catheters and an implantable clip, is used by interventional cardiologists to grasp the valve leaflets and fasten them together, replicating the current surgical technique for mitral valve repair. However, unlike surgical repair, with the Evalve system the cardiologist accesses the valve while the heart is beating, without a chest incision or cardiopulmonary bypass.
Evalve is now conducting a clinical feasibility trial in the U.S. focused on safety of its endovascular mitral valve repair system under an FDA-approved Investigational Device Exemption. Clinical experience from earlier feasibility studies has shown that patients using the system tend to require a hospital stay of one or two nights, versus five to seven for open-heart surgery; these patients return to normal activity in about a week.
Powell said that the first milestone money from Guidant is likely to come in the third quarter, following the initiation of a pivotal U.S. trial of the system. If all goes well with these clinical studies, Evalve's devices could be on the market by late 2006. At this point, she said, the firm's five-year plans involve distribution of the products through direct sales in the U.S.