Orqis Recovers with $25M Series C

Orqis Medical Corp. seems ready to move its cardiac recovery device from the drawing board to the hospital bed. The 6-year-old company received clinical trial clearance last fall from European regulators, and more recently was granted conditional FDA approval to begin stateside feasibility trials.

“We are now starting the recruitment process in the States, and we’ll begin trials once we have patients,” says Todd Canfield, an Orqis Medical product manager who works out of the company’s Lake Forrest, Calif. headquarters.

In order to support its efforts on both continents, Orqis Medical recently raised $25 million in a third-round financing led by new investor HealthCare Ventures. Other new backers included Care Capital and Rho Ventures, while previous investors Domain Associates, Temasek Holdings and Johnson & Johnson Development Corp. also participated.

This Series C deal brings the company’s total venture capitalization up to about $35 million. No future rounds are planned until the conclusion of clinical trials, at which time Orqis Medical may need to secure additional funds. “We financed the company assuming that if we have success with the early trials, then we should be able to capture all of the clinical costs,” explains Mark Leschley, managing partner with Rho Ventures and a new Orqis board member. “At that point, we’ll decide whether or not to raise money for a commercial launch.”

If all goes according to plan, Orqis Medical would become a major player in a largely ignored therapeutic space. In general Orqis Medical is focused on sufferers of severe congestive heart failure (CHF), a condition in which the heart stops effectively pumping blood through the body, thus resulting in a buildup of fluids around the heart and/or lungs. The American Heart Association estimates that 4.9 million Americans currently experience some form of CHF, and Orqis believes that around two million of those are considered to be particularly advanced cases. Most such people can have their disease managed via existing pharmaceuticals, but approximately 10% are either resistant to such treatment or experience particularly bad side effects.

“If you had to pick between our device and drugs, you’d always choose drugs if you could,” Canfield says. “The problem is that drugs aren’t an option for everyone.”

Until now, most drug-resistant patients essentially took their chances and waited until an acute episode to have a permanent device installed via major surgery. Orqis’ flagship Cancion CRS product, however, may offer an alternative that more resembles drug therapy than a medical device. Patients using the system are required to stay in a hospital for up to five days, but the only invasive procedure involves the interventional use of catheters. How the technology works is still underwraps, except that it doesn’t actually touch the heart, yet nonetheless manages to get the blood pumping again.

It’s an idea that seems to have excited investors enough to keep Orqis’ valuation steady through the recent funding round. The company’s $5.15 million second-round deal in May 2001 had received a post-money valuation of more than $22 million, which means that the company now is valued at approximately $48 million.

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