In what is the second development accord between the two companies, Cardica (Redwood City, California) and Cook Medical (Bloomington, Indiana) reported that they have entered into an agreement to develop and commercialize a specialized device designed to close the patent foramen ovale (PFO), a relatively common heart defect present in about 15% to 20% of the general population.

Cardica will receive $900,000 in upfront fees and is eligible to receive about $2.7 million in additional milestone payments during the development effort over the next 12 to 18 months as well as royalties on future worldwide sales of the device.

"We are pleased to once again partner with Cardica, combining Cardica's leading-edge automated closure technology with our clinical and marketing expertise, as we believe it will allow us to provide an effective PFO closure device for the patients at risk for stroke or systemic embolism, as well as potentially those suffering from debilitating migraine headaches," said Brian Bates, senior VP, business development of Cook Medical. "This is an underserved patient population that would greatly benefit from a less invasive, straight-forward procedure to permanently and effectively close a hole in their heart."

The two companies have enjoyed a long-term relationship, with Cook most recently giving Cardica $1.25 million for development and "high-volume" production tooling for the Cook Vascular Access Closure Device (also known as the X-Port), an automated system for closing access openings in femoral arteries after interventional vascular procedures (Medical Device Daily, March 14, 2007).

In December 2005, the companies entered into an agreement to develop the X-Port device, with Cardica responsible for design and preclinical development and Cook responsible for clinical development and regulatory approval. With regulatory approval, which is hoped for sometime in calendar year 2007, Cook will have exclusive commercialization rights to market the X-Port.

Cardica said that it has received about $2.75 million in development milestones and payments for high volume production tooling under that collaboration, and it could receive $500,000 upon completing final product development milestones. It will receive royalties on any worldwide sales.

Bob Newell, CFO of Cardica said his company has enjoyed their partnership with Cook, thus far.

"They're very easy to work with for a big company," Newell told Medical Device Daily. Because Cook is a private company not beholden to a bunch of stockholders, he added, "They're able to make decisions quickly."

Newell said that what Cardica is able to bring to the table in this arrangement is the ability to "make very, very small very reliable closure and attachment devices that can go anywhere in the body. We're also developing ways to deliver these devices through very small openings." He said that the company believes there are "a lot more applications" that its technology can be used for by companies such as Cook than the two it is currently working on.

PFOs are a congenital heart defect. During fetal development, the heart's two upper chambers are connected by a hole which allows blood to be diverted away from the lungs because they are not yet developed. This hole, called the foramen ovale, is necessary for healthy fetal development and closes naturally in about 80% of the general population by the age of two. When it remains open after this period, it is said to be patent, or open.

People with PFO often are asymptomatic, but are at greater risk for stroke and systemic embolism because of the potential formation of blood clots. With larger PFOs, patients may experience labored breathing, recurrent respiratory infections and even heart failure or death. Currently, PFOs are treated by the use of a blood thinning medication (aspirin or warfarin) to prevent blood clots, or the PFO is closed through open heart surgery or via a transcatheter closure procedure.

Cardica will be responsible for the design, production and manufacturing of the PFO closure device, which will be directed by a development committee with representatives from both companies. Cook is responsible for preclinical and clinical development, as well as regulatory approval of the product, and will have exclusive worldwide commercialization rights to market the PFO closure device.

Cardica is best known for its design of automated anastomosis systems for coronary artery bypass graft (CABG) surgery. Its C-Port distal anastomosis systems are marketed in Europe and the U.S. The company also makes the PAS-Port proximal anastomosis system, which is marketed in Europe and Japan and is being evaluated in a pivotal trial in the U.S and Europe. Cardica also is developing additional devices to facilitate vascular and other surgical procedures.

"We look forward to building on our exceptional relationship with Cook as we leverage our proprietary closure technology to facilitate minimally-invasive surgery in the growing field of PFO closures," said Bernard Hausen, MD, PhD, president/CEO of Cardica. "This agreement expands our reach into new areas of cardiovascular health while maintaining our focus on our innovative automated closure technology and has the potential to offer a new treatment alternative for patients who have experienced transient ischemic attack, stroke, paradoxical embolism or debilitating migraines."

Newell said despite the close business relationship his company enjoys with Cook, Cardica, which is a public company, is not looking to enter a combination with them or anyone else at this time.

"We're not looking to be acquired anytime soon until we can create more value for our shareholders," he said, adding that one way to do that would be through more arrangements like the ones the company has with Cook.

Newell noted that the while the company will continue to focus its sales force efforts in the cardiac surgery market, "for any other market … we would [continue to] look to partner with someone who already has a sales force and a market presence."