ST. PAUL, Minn. – IntraTherapeutics Inc., a manufacturer of coronary stents, has taken its product development one step further, making it the only private company in the United States to specifically design peripheral stents for various parts of the human body.
Stents are tiny cylinder-shaped devices used to keep constricted arteries open, thus allowing blood vessels to continue functioning. Peripheral stents, for example, can prevent an amputation by restoring blood flow to a blocked passage in the body.
Orginally made for coronary arteries, many pharmaceutical companies now make stents in a variety of sizes for other blood vessels. But unlike the competition, which chiefly enlarges coronary stents to fit veins and arteries throughout the body, IntraTherapeutics custom makes a family of stents – altering their flexibility and strength – for individual vessels, all of which have very specific needs.
Flexibility is a critical characteristic of stents, explained John Erb, the company’s president and chief executive officer. Doctors attach stents to balloons and insert them into vessels. If the stent is too stiff, it can be difficult for a doctor to navigate, forcing him to stop a medical procedure before the stent damages the artery, Erb said.
A stent placed in an artery behind the knee needs to be highly flexible, whereas a stent used in a renal artery needs more strength. IntraTherapeutics has managed to combine strength, known as radio force, and flexibility of a stent in different proportions, something the competition has not taken into account, said Kurt Weiler, an IntraTherapeutics board member and a venture partner at MPM Asset Management.
The company in October completed its sixth and likely final round of venture financing – a private placement of Series F convertible preferred stock totaling $7.5 million. The round was led by MPM Asset Management, which backed the company with $6 million, and included a $1.5 million follow-on investment from Brentwood Venture Capital. Proceeds from the latest round of financing will be used to expand the company’s direct sales force in the U.S. and to conduct clinical trials for new products for the peripheral vascular and non-vascular markets, Erb said. In addition, the company in August obtained a $1.4 million grant from the National Institute of Health to continue developing its medical technology. By the end of the year, IntraTherapeutics will secure 10% of the peripheral stent market and by the end of 2000, the company expects to have 15% of the space, Erb said.
Competitors in the minimally invasive medical device arena include Boston Scientific Corp., Johnson & Johnson Ltd., Guidant Corp. and Medtronic Inc. The largest challenge IntraTherapeutics will face in rivaling these major pharmaceutical companies is keeping up with their marketing dollars not the quality of their products, Erb said.
IntraTherapeutics develops a line of medical devices for the diagnosis and treatment of peripheral vascular disease and relief of non-vascular obstructions. In its peripheral stent line, it pays specific attention to three areas: femoral popliteal arteries that lie behind the knee, iliac arteries that start at the groin area and extend down the legs and renal arteries. The company also has patents pending on a number of its other technologies.
Founded in 1991 as Cardia Catheter Co., the company initially focused on catheters for the heart, but was renamed in 1997 to more accurately describe its broad scope and its ability to focus on a range of markets outside the coronary space.
Having reached a certain stage of commercialization and sales, the company does not plan to seek any additional venture financing because the last round “will take us to cash flow positive,” Erb said. At press time, IntraTherapeutics had sold less than 1,000 stents at a cost of between $800 and $1,500 each, depending on the length and size of the product. Stents are sold directly to hospitals in the U.S., and they are marketed to distributors overseas.
Just three months earlier, the company closed a $10 million series E convertible preferred stock financing led by $6 million from Brentwood. The remaining $4 million came from Crescendo Venture Management, Medical Innovation Partners and from individuals, including some 13 or 14 physicians who were enthusiastic about the company’s potential to succeed, Erb said.
All previous rounds were smaller, starting with investments in 1991 from Mayo Medical Ventures and Medical Innovation, the first two firms to back the company with seed funding, which totaled $1.8 million. During the first six years of operation, the IntraTherapeutics staff comprised only an engineer and a technician who were focused on commercializing a guide catheter used by cardiologists that had been patented by the Mayo Clinic. The company received a $5.6 million second round of financing in 1997, followed by a $1 million third round in 1998 and a $2.2 million fourth round, which closed in March.
Links to Success
MPM’s Weiler, who has been a board member at IntraTherapeutics prior to joining the venture firm, brought the company to the attention of partners at MPM. Brentwood was introduced to the company by investment bank Adams Harkness and Hill Inc., which acted as a placement agent for the fifth round of financing.
Confident that its products will survive the marketplace, IntraTherapeutics expects to go public next year, Erb said, adding that the company has been meeting with and interviewing several large underwriters.
IntraTherapeutics’ 70-member team, which has more than doubled from its 25-member staff just one year ago, is led by Erb, along with Senior Vice President of Sales and Marketing Edward Schrader, Jr., Vice President of Research and Development Fred Kornahrens, Vice President of Regulatory Affairs and Quality Assurance Amy Peterson, Vice President of Operations Robert Garee and International General Manager Peter Lloyd.