Medical Device Daily Executive Editor

A company positioning itself to provide help for heart failure patients before they need a ventricular assist device — and seeing that group as “a big market opportunity” —yesterday reported adding a ‘B’ round of $20 million to its coffers.

CircuLite (Hackensack, New Jersey), an early-stage company developing a tiny circulatory assist device, the Synergy, said it will use the new funding to launch a first-in-man trial in 2007 and then move on to pursue investigational device exemption status from the FDA.

Paul Southworth, president/CEO of CircuLite — the “Lite” suggesting what is a relatively miniscule size for a heart pump — described the Synergy as comparable in size to a standard AA battery.

“Side by side, they’d look reasonably the same size,” he told Medical Device Daily. And he said that the first generation of the device is being designed to be driven by a six-pound ion battery pack that can be worn discretely beneath a sweater or sport coat.

“The pump itself is hemodynamically, hydrodyanmically, magnetically levitated,” Southward explained — much like the technology used in some VAD pumps — and, though small, capable of delivering up to three liters of blood flow per minute. The device itself is placed in the “pacemaker pocket” of the body and then connected, using a minimally invasive approach, to the left atrium and the subclavian artery.

Southworth said the minimally invasive implant approach is being developed by the company in two stages, first via mini-thoracotomy and ultimately through even smaller entry points in a transeptal strategy in future iterations of the pump.

The later-generation devices could also receive power wirelessly through what Southworth called “transdermal electrical transfer.”

He said that a first-in-man trial with just two patients would be launched in mid-2007, followed by a 10-patient trial. The company said in a statement that the goal is to return “the acute decompensated hospitalized patient to the chronic, ambulatory heart failure patient.”

Southworth said these are essentially very ill, “stage three” patients who can’t play with their grandkids or take walks and they have run out of therapeutic options, with the Syngergy’s goal to return them to improved quality of life. Further out, he sees the possibility of a therapeutic improvement enabling heart remodeling and even removal of the Synergy.

He said that the company’s schedule calls for completion of enrollment in a trial supporting CE-marking in 3Q08 and hoped-for CE-marking in 2Q09.

CircuLite licensed the technology for the Synergy from the Helmholtz Institute (Aachen, Germany) where it has been under development for seven years, Southward said, with the system then protected by patents covering device implantation and a variety of cross-licensing agreements. Much of the engineering of the device is being done at a subsidiary in Germany.

Southworth was reluctant to predict future financial probabilities for the device, but noted that with a pool of half of 2 million heart failure patients and relatively little manufacturing expense, the devise offers large-margin potential and “a big market opportunity.”

“We want to get to patients way before the VADs,” Southworth told MDD. “We want to get to patients early.”

He said that until now, the company has not put a lot of energy into publicity, with its main target being contacts with physicians who are enthusiastic about the possibilities for the Synergy.

Bartley Griffith, MD, chief of the division of Cardiac Surgery and director of Heart and Lung Transplantation in the Department of Surgery at the University of Maryland (Baltimore), called the device “a truly unique technology,” citing its small size and minimally invasive placement. “This should be attractive to a large group of heart failure patients who currently are not well-treated by conventional medicine.”

He said the Synergy is designed “to provide increased cardiac output for these patients reducing their heart failure symptoms . . . and has the potential to significantly improve the quality of life of millions of chronic heart failure patients.”

CircuLite was founded in 2004 by Accelerated Technologies, and it’s A-round of funding totaled $11.235,000.

The B-round financing came from existing investors, including Forbion Capital Partners (formerly ABN AMRO Life Sciences) and Oxford Biosciences Partners, as well as new partners, Foundation Medical Partners, the lead investor, and SB Life Science Ventures.

Foundation Medical is an independent venture capital investment firm focused on healthcare, with special interest, it says, in medical devices and “ventures that demonstrate the capability to improve the practice of medicine.”

SB Life Science is a venture capital firm backed by institutional investors from Japan, investing in businesses, it says, with “the potential to transform the practice of medicine and healthcare.”

In other financing activity:

• Crdentia (Dallas) reported completing additional private placements of common stock to raise $1 million.

When added to the $2 million of financings completed earlier this year, the company has raised a total of $3 million during 2007.

The financing included an initial private placement of 1,283,332 shares of Crdentia common stock at a price of 60 cents a share, which closed on Jan. 25. A second traunch of the transaction, which closed on Feb. 7, consisted of a private placement of 2,049,999 shares at 60 cents a share. A third traunch of the transaction, closed on March 2, consisted of 1,666,667 shares at 60 cents a share.

Crdentia said it plans to use the proceeds from the placements for general working capital purposes and debt refinancing.

TerBeest said, “This financing adds to working capital to allow us to drive organic growth in 2007. We will also continue to seek targeted strategic acquisitions in the staffing industry that will leverage our infrastructure already in place.”

Crdentia is a provider of healthcare staffing services to 1,500 healthcare providers in 49 states. Crdentia provides high temporary healthcare staffing comprised of travel and per-diem nursing, locum tenens and allied healthcare staffing.