Financings roundup: ALung raises $15.8M to support Hemolung RAS

12 September 2013 Recent News

Like most medical device executives, Peter DeComo, chairman/CEO of ALung Technologies (Pittsburgh), a developer of respiratory assist devices, knows how difficult it can be to attract investors in the current environment. But with the right strategy and a differentiating technology, raising money is not impossible. ALung proved that with its recently closed $15.8 million Series B-1 financing round. The round is one of the largest this year in Pittsburgh’s life sciences market, the company noted.

The proceeds of this round will primarily support ongoing global commercialization of the Hemolung Respiratory Assist System (RAS), a new extracorporeal carbon dioxide removal system that provides a dialysis-like alternative or supplement to mechanical ventilation. Allos Ventures led the financing, with West Capital Partners, Birchmere Ventures, BlueTree Capital Group, PLSG Accelerator Fund, Smithfield Trust Company, and several additional private investors also participating.

ALung says it has established direct commercial operations in Germany, France, and the UK, and is entering additional markets in conjunction with distribution partners. To date, the company has raised a total of $56 million in equity capital.

“We appreciate the support of our new investment partners, along with our current investors, and their belief in the potential for the Hemolung RAS to help the large number of patients suffering from acute respiratory failure,” DeComo said. “This new capital represents a strong vote of confidence in ALung. In addition to supporting our global launch of the Hemolung RAS, this financing will permit further development of next-generation products and platform technologies for providing less-invasive extracorporeal lung support.”

ALung noted that the Hemolung RAS provides respiratory dialysis, a minimally invasive form of extracorporeal carbon dioxide removal (ECCO2R) and has indications for use in patients with acute respiratory distress syndrome and acute exacerbation of chronic obstructive pulmonary disease. The device is approved for sale in Europe and Canada.

“We are actually starting in a very slow and controlled manner,” DeComo told Medical Device Daily when asked about the company’s current commercialization strategy. He explained that ALung recently started a reference center program in which it engages with “very prestigious institutions” in the company’s target markets, which initially include all of Europe, Canada and Australia. “We want to provide them the opportunity to have initial use of our technology and to conduct therapy sessions on appropriate patients who have the appropriate indications,” he said.

ALung plans to include between 20 and 30 key opinion leaders in the reference center program and has already installed its system at 20 centers on its way to 30. In the two to four months since the program started, DeComo said 20 patients have been treated already. “The clinical results have been superior, according to the key opinion leaders. The feedback regarding ease of use has been extremely positive,” he said. “We’ve been very pleased.”

The reference center program is not designed to generate revenue or to force broad scale adoption of the technology, DeComo explained. Instead it is intended to validate the therapy and use the data from those early cases to support a broader commercialization launch in 2014 and also to test the company’s distribution channels. The program is expected to run about six months and include about 50 patients worth of data, he said.

ALung was founded in 1997 as a spin-out of the University of Pittsburgh, and DeComo has been the company’s CEO since 2009 (Medical Device Daily, Dec. 23, 2008).

“We are pleased to be working again with Pete on another innovative medical device,” said John McIlwraith, managing director of Allos Ventures. McIlwraith was also an investor in Renal Solutions (Pittsburgh), a medical device company formerly led by DeComo and acquired by Fresenius Medical Care in 2007 for $190 million (MDD, Nov. 30, 2007). “We estimate that the market for ECCO2R is upwards of $4 billion, and ALung is poised to capture a substantial portion with the Hemolung RAS, which saves both hospitals and insurers money by avoiding intubation and invasive mechanical ventilation, while greatly improving the quality of care for patients.”

ALung did not invent the artificial lung of course, that type of device has been around for quite some time. But DeComo says the Hemolung RAS is “truly the only low-flow carbon dioxide removal system. Competitors will say their system is low-flow, he said, but ALung’s integrated centrifugal blood pump provides circuit flows of 350-550 mL/min when paired with the Hemolung catheter.

DeComo also noted that other devices in this space are referred to as passive oxygenators, which he says are inefficient by their basic design. “You’ll see a constant decrease in CO2 removal in a passive oxygenator,” he said. The Hemolung RAS, by contrast, is designed with the company’s ActivMix™ technology to provide highly efficient extracorporeal COremoval at dialysis-like blood flow rates. “We see no deterioration of CO2 removal over time,” DeComo said. “We can get a very, very highly efficient CO2 gas exchange, typically two times higher than a passive oxygenator.”

And because of the lower blood flow rate, the system is able to use a much smaller catheter compared to competing systems, making it a less invasive therapy option.

So far the key opinion leaders participating in the company’s reference center program have expressed satisfaction with the simplicity and ease of use of the Hemolung RAS, and the fact that patients can be monitored by the ICU nurse, DeComo added.

The features that set the Hemolung RAS apart from competing systems are just the beginning, DeComo noted. He said the technology could someday be portable and wearable, allowing patients to go to a clinic for the therapy, just like kidney dialysis patients often do, or carry a portable device or have an at-home version of the system, he said.

Of course future fundraising rounds will be needed to further develop and support expansion of the technology, DeComo told MDD. But, he said, as long as ALung continues to execute its strategy well it should be able to continue to attract financing like the round it just closed.

Source: Medical Device Daily