Rox Gets Blood Pumping in COPD

Rox Medical is taking an unusual approach to treating COPD by introducing a vascular device that increases oxygen delivery to tissue and cardiac output. The potential has investors' hearts racing as well.

Rox Medical is taking an unusual approach to treating COPD by developing a vascular device that increases oxygen delivery to tissue and raising cardiac output. The potential has investors' hearts racing as well.

By Tom Salemi

The unintended result of an effort to create a pulmonary hypertension model in animals, Rox Medical's FLO2W system might someday be used to treat a wide range of patients with later-stage COPD.

Rather than employing a device to repair diseased lung tissue, Rox Medical's vascular coupler treats a COPD patients hypoxia by improving oxygen delivery to the rest of the body.

Rox's FLO2W system is deployed by interventionalist, not a pulmonologist, bringing in a specialty known for quick technology adoption into the fight against COPD.

The company also is trying to position itself as an attractive acquisition target or partner by pursuing potential applications in hypertension and other large markets.

Venture capitalists have spent the past decade backing a series of companies developing devices to treat chronic obstructive pulmonary disease. To a company, the approaches have followed the traditional device model of identifying a structural problem, and then creating a tool or implant to fix that defect. In the case of COPD, the defects exist within the lung's bronchioles, the thousands of small, thin tubes that draw in and exhale air. At the end of the bronchioles, alveoli, tiny air sacs, serve as the exchange point for blood and air. Blood discharges the carbon dioxide to be exhaled while extracting oxygen from the air. Alveoli and bronchioles struck by chronic bronchitis or emphysema die off or lose the elasticity that allowed the lungs to do their job.

COPD-oriented start-ups hope to at least partially restore the lung's ability to inhale and expel air by blocking off its most diseased – and functionally useless – portions. Companies have developed bronchial valves, drug-coated stents, polymers and other innovative alternatives to highly invasive lung volume reduction surgery. But, despite more than $400 million in venture capital invested in these companies, these approaches still haven't earned an outright approval from the Food and Drug Administration. Two companies, in fact, failed to produce sufficient clinical results in their pivotal trials to warrant FDA approval. Others are setting up commercial operations in Europe and beginning their own approaches to the FDA, but it's clear the COPD market has proved to be more challenging then venture capitalists and entrepreneurs initially thought.

Rox Medical Inc., is charting a completely different course than the rest. Rox sees the potential treatment site not in the diseased lung that others are trying to repair but rather in the blood that runs through that lung. Quite simply, Rox is improving the performance of the lung without touching it. Adding to its innovative approach, Rox is targeting its treatment for a different physician-customer than the pulmonologists who traditionally treat COPD. Rox has developed a catheter-based product that can be implanted by interventional cardiologists and radiologists. Instead of creating devices to be delivered via bronchoscopes, Rox is employing an interventional approach in which COPD patients can be treated in the cardiac cath lab, a strategy that has proven successful for a number of other clinical areas outside of cardiology.

COPD serves as an umbrella term for a number of diseases of the lung. Chronic bronchitis – the inflammation and scarring of the lining of the bronchial tubes – strikes the largest number of the 12 to 14 million people in the US who suffer from COPD. The American Lung Association states that 24 million people report suffering from impaired lung function, suggesting the condition is under-diagnosed. COPD is the third most deadly disease in the US, killing more than 120,000 people in 2007. It is treated primarily with pharmaceuticals such as bronchodilators. The American Lung Association says pulmonary rehabilitation and oxygen therapy also can help but they, too, only treat the symptoms and provide relief. Ultimately, a patient facing the more serious stages of COPD has two surgical choices: lung volume reduction surgery or lung transplant. ( See Exhibit 1.) The former involves the removal of the diseased lung tissue, which keeps the oxygen-rich air and the blood in only healthy lung tissue.

Little Success So Far

Venture capitalists have invested primarily in companies that might someday replace or complement one treatment method – lung volume reduction surgery. The thesis behind the investments is to replace a highly invasive, open-chest surgery with one that's minimally invasive and requires no cutting at all. Instead, the various devices or materials developed by these start-ups would be delivered through the same bronchoscopes many pulmonologists use today for diagnosing lung disease. These start-ups helped spark the growth of a new clinical subspecialty, interventional pulmonology, whose physicians might someday utilize interventional procedures rather than traditional open surgeries to treat lung disease, and in the process, take patients away from thoracic surgeons.

Rox's FLO2W procedure employs a custom-designed delivery system comprised of a targeting guidewire, crossing needle, and a coupler delivery system to create a fistula via a side-to-side anastomosis of the iliac vein and artery. The opening between artery and vein diverts roughly one fifth of the COPD patient's oxygenated blood from the artery to the vein, sending it back up through the heart and lungs again to pick up even more oxygen. Rox already has received CE mark for the FLO2W system and is staging a limited rollout in Germany. ( See sidebar, "Rox Sets Strategy To Sell In Europe.") In addition to its success in Europe, Rox has also been pursuing FDA approval. The company has finished enrolling patients in an FDA-approved pilot study and plans to begin discussions on the pivotal study later this year. By that time, Rox hopes to have secured the capital and resources of a strategic partner. The company is actively engaging in talks with large medical device companies in the hope of securing some sort of partnership and perhaps even an acquisition.

Seeking A Model Approach

The FLO2W approach grew from the pursuit of a disease, not a cure. Like many medical device start-ups, Rox's story starts at Stanford University. In 2003, John Faul, MD, was studying pulmonary hypertension, abnormally high blood pressure in the arteries of the lungs that forces the right side of the heart – which pushes blood through the lungs – to overexert itself. Faul – who has since relocated to the Royal College of Surgeons in Ireland – needed an animal model to test potential treatments, so he sought to increase the blood pressure passing through rats' lungs. Faul took three steps. First, the rats were given monocrotaline, a plant-derived pyrrolizidine alkaloid that's known to cause pulmonary hypertension. Second, researchers removed one of each rat's lungs so all blood would be pushed only through the vessels in the remaining organ. In the third approach, Faul created an arteriovenous fistula. "They literally punched a hole through the aorta and the inferior vena cava so the blood flow would come down and then immediately go back up [into the lung]," Rox president and CEO Rodney Brenneman says. "They thought, `We'll over-circulate and that will create high blood pressure in the lung.'"

Researchers were certain the combination of two surgeries and ingestion of a toxic plant substance would cause the rats to develop hypertension. They were wrong. Brenneman says Faul first thought they'd made a mistake; perhaps the fistula closed up. When every step was double checked indicating the fistula was still open, Faul and his team theorized the arteriovenous fistula was countering – not furthering – the affects of monocrotaline , Brenneman says. Faul immediately realized the combination of higher oxygen content in the returning venous blood and no increase of pulmonary arterial pressure could benefit patients with hypoxia, a shortage of oxygen in the blood supply. Brenneman says the diversion of oxygenated blood into the venous system brought a balance found in people with healthy lungs. "When a healthy person is at rest, there's a modest difference between the venous blood returning and the oxygenated blood in the arterial system. For somebody with COPD, there's a big difference. The oxygen levels in the venous blood are much lower than the arterial blood," he explains.

The potential applications for COPD and hypertension were noted and filed away at Stanford, but were not initially acted upon, although they didn't remain idle for long. Keegan Harper, a serial entrepreneur responsible for starting several successful device companies, including Ablation Frontiers Inc. (now Medtronic PLC's Medtronic Ablation Frontiers LLC) and Cameron Health Inc., came upon the research while reviewing promising technologies for possible new device start-ups. ( See "Cameron Health: Is This The Cure For An Ailing ICD Market?," this issue (Also see "Cameron Health: Is This The Cure For An Ailing ICD Market? " - In Vivo, 1 Mar, 2011.).) Harper saw the potential in this idea and asked to be introduced to Faul, who told him the story of his research with rats. "It resonated with me right away because it has the potential to offer a simple solution to a big problem," Harper recalls. "I did not have a lot of knowledge in pulmonology at the time, so I had no idea if this approach would be clinically effective. But it just made fundamental sense to me, and it seemed to have the potential to benefit patients. I thought it would be a straightforward enough process to figure out if it would work, so it was worth it to bet on the science." Harper recruited Rodney Brenneman, who'd worked with him at TheraCardia, to run the company and reached out to investors Versant Ventures and Prism Venture Works.

The complex and simple approach both confounded and enticed investors. Versant Ventures managing director William Link says, "At first, I couldn't understand how it would work, and I love that." In a meeting with Harper and Faul, the scientist again explained the surprising results of the animal studies to the investors. "It was a fun journey. As we got our minds around it we began to say, `Wow, this is different. This is a very novel way to treat a tough disease if it can work," Link says. Versant and Prism dove right in, supplying a $3.5 million Series A round. "We just launched it. We didn't do a small seed round," Link recalls.

Finding Confirmation

Brenneman left his job at USGI Medical and opened Rox for business in his own garage. Things ramped up quickly as the company sought to confirm the early tests by Faul. Rox conducted a series of large-animal studies in pigs. Company researchers were able to induce a state of hypoxia in the pigs by controlling their breathing through a respirator. With control established, the researchers created the arteriovenous fistula. Next, they lowered the level of oxygen in the air the pigs were breathing, bringing them down to hypoxia level. Then, they closed the fistula. The pigs' condition deteriorated quickly, demonstrating that the fistula helped the pigs to tolerate lower oxygen levels. With that research, Rox worked with a contact to start a feasibility trial in humans in Monterrey, Mexico. "The quality of the work was frankly on par with anything we saw in Europe," Brenneman says. The proximity to Rox's home base in Southern California was welcome. "You could also get in there and make sure that things were being done the way you wanted."

Rox didn't have a product yet to create the fistula, but surgeons replicated the affects by sewing the saphenous vein onto the superficial femoral artery. Arterial blood flowed back to the saphenous vein. This vein is somewhat expendable and is often used by vascular surgeons as a graft in coronary artery bypass surgery. Patients recruited for surgery were suffering from Stage III and Stage IV COPD, the most severe cases. Brenneman recalls one patient – an artist – had such advanced COPD that he could barely function, measuring 20% on the FEV1 scale used to measure pulmonary function. "You probably can't live below about 10 to 15%," Brenneman says. The patient responded immediately to the surgery, which enabled him to get back to painting. The surgical fistula closed up in less than a year, which was expected. But by that time Rox had developed a working prototype of its FLO2W device, which connects the openings in the arterial and venous walls. "He's out over three years now," Brenneman says of the patient-artist. "Not only did he get back into painting, but he had an exhibit recently. So here's a guy who probably had a predicted lifespan of a year or two. He's really out four years since his very first experience and he's functional, he's actually working."

Brenneman says every patient didn't respond as well, but most felt better. But the most important outcome, he says, is no one got worse, a principal concern for companies dealing with a fragile population such as COPD patients, who can spend weeks in a hospital with a chest infection from which they never fully recover. Brenneman says recent data suggest that direct implants in the lungs might trap bacteria, leading to infections and increased hospitalization – or exacerbations – in some patients. "We don't have any indication that we're making that worse. We're not putting patients back in the hospital; we don't have those complications," he explains.

The FLO2W steers clear of the lungs entirely. In the minds of Rox executives and investors, this is doubly beneficial. First, Rox doesn't need to figure out how to manipulate damaged and diseased tissue to improve the lives of COPD patients, a challenge facing other COPD start-ups. Second, Rox can maintain a neutral position and be used effectively with other company's products. Rox's fistula-based approach can complement any device that deals with lung tissue effectively, even surgical interventions like lung volume reduction surgeries or transplants.

Rox, in fact, operates in a completely different space within this specialty than most of the other recent interventional pulmonary-focused start-ups. Its FLO2W procedure is delivered percutaneously, through a vascular access in the groin just as in any interventional vascular procedure. But rather than snake a catheter to the chest, the interventionalist stops just below the hip where the iliac artery and iliac vein run next to each other. In less than an hour, the interventionalist snakes a CrO2ssHair guidewire up the artery to outline the arterial outer wall and show a clear target. Next, an 11-French Rox controller sheath is guided up the vein. A crossing needle is dispatched via the sheath to puncture the venous and then the arterial wall. A second guidewire is advanced through the vein into the artery. With that in place, the first guidewire is removed, making way for the Rox Nitinol Coupler. The coupler delivery device is passed through the opening and then is slowly extracted to deliver the coupler, an elegant looking implant roughly the size of a pen tip. The coupler expands and dilates the opening as the delivery device is withdrawn. The nitinol arms of the Coupler grab hold on each side of the opening, keeping the vessels tight together. Finally, a 4-mm balloon is inserted in the opening and expanded to create the final size of the fistula, which is large enough for roughly 20% of the total cardiac output of oxygenated blood to rush through into the vein and back up to the heart. "The device lies against the vessels," Brenneman says. "It doesn't obstruct them so you can go back in with catheters later." ( See Exhibit 2.)

The procedure may be simple, but understanding why it works is more complex. For a time, even Rox executives and investors didn't understand how the transfer of oxygenated blood into the venous bloodstream improved pulmonary output. Brenneman says analysis of the clinical trial data reveals that the increased venous oxygenated blood returning to the lungs dilates the pulmonary vessels. "The lungs are very sensitive to oxygen levels," Brenneman explains. "When they're low in oxygen, they constrict. When they're high in oxygen, they dilate. It's a protective mechanism. It's called hypoxic pulmonary vasoconstriction." Brenneman says the body diverts blood from lung tissue damaged or impacted by diseases such as COPD and pneumonia.

The oxygen-enriched blood diverted through Rox's fistula in study patients enabled the venous blood to reopen those blood vessels and capillaries that reach deep into the lungs. The result, Brenneman says, is a dramatic drop in pulmonary vascular resistance. This enables the right side of the heart to pass blood through the lungs more effectively, and as a result increase total cardiac output. Brenneman says dialysis patients with AV fistulas see a similar affect.. In Rox's case, Brenneman notes, the heart of a pulmonary patient might go from pumping four liters of blood per minute to six liters per minute because of the lower resistance. This rush of blood is natural, occurring, for example, when a person exercises. Heart rates rise. Cardiac output increases. The body's vascular system dilates to accommodate the blood. The blood passing through a set of healthy lungs makes the gas exchange about one-third of the way through, a little longer if the person is exercising, says David Deaton, MD, a member of Rox's Medical Advisory Board and chief of vascular and endovascular surgery at Georgetown University Hospital. "What the FLO2W system does is send 20% of the blood around a second time, allowing that blood to pick up more oxygen. "You're tapping into a cardiac reserve to make up for your lack of pulmonary reserve," Deaton explains.

James Leiter, MD, a pulmonologist and now professor of physiology and neurobiology at Dartmouth Medical School, says the drawing of those reserves requires Rox to screen trial participants carefully to ensure the heart can handle the extra workload. A few participants in the company's Mexico-based trial showed signs of heart failure, requiring physicians to insert a covered stent to plug the fistula. Similarly, Rox also must screen trial participants for fixed pulmonary hypertension, which would prevent the pulmonary vessels from dilating. Leiter, chairman of Rox's Medical Advisory Board, said the FDA required Rox to examine all potential trial participants first with a right heart catheterization, which involves an interventionalist to guide a catheter through the chambers of the heart and the lungs' larger blood vessels to measure the pressure within the heart and lungs. If a patient meets the criteria – not having high pulmonary arterial pressure (measured as greater than 35 mm Hg) or weak heart (measured as a pulmonary wedge pressure >15 mm Hg) – the interventionalist could then create the fistula. If not, the patient would be excluded from the trial and no further work would be done. Brenneman estimates this excludes roughly 10% of the eligible COPD patient population. Rox might someday be able to create smaller fistulas that strain the heart less, Deaton speculates. But the company's settled right now on obtaining approval for the 4-mm fistula.

Rox's approach comes closer to replicating the affects of a drug rather than a device. The company's device is helping to restore lung function by dilating the vessels and capillaries carrying blood throughout the heart. However, the Coupler device is able to do this without actually coming into contact with the lungs. Brenneman suggests that the Rox device actually does more than many other therapies, including bronchodilators and vasodilators, because the increased oxygen levels not only open blood vessels, but they also enable the heart to operate more effectively. "You can give somebody adrenaline to speed the heart rate up, and then it'll pump more blood, but it's flogging the heart, and it really hasn't done anything to reduce resistance. So nothing else has this same effect," he claims.

Getting Clinical Proof

Rox's next challenge is proving this to the FDA. At this point, no COPD-oriented company has obtained full FDA approval. Emphasys Medical Inc. was the first to try, having raised $75 million in venture capital and even more in venture debt before failing to secure the FDA's approval for its Zephyr valve. ( See "FDA Panel Vote on Valve Disappoints Emphasys," START-UP , December 2008 (Also see "FDA Panel Vote on Valve Disappoints Emphasys" - Medtech Insight, 1 Dec, 2008.).) Investors sold the assets of the company to rival Pulmonx Corp., which is selling the Zephyr valve in Europe in conjunction with a diagnostic tool that is said to improve its efficacy. [See Deal] About a year later, Broncus Technologies Inc., which was testing a stent-based system to reopen lung passageways, reported disappointing results of its pivotal US trial, which did include a double-blinded, sham-controlled randomization design. The company effectively shelved the COPD system that had convinced investors to commit more than $100 million and now is marketing a navigational tool for lung surgeries. Spiration Inc. is next. The company, which was acquired last year by Olympus Corp. of the Americas, the North American subsidiary of Olympus Corp., has completed pivotal trials in the US, although the results haven't been revealed yet. [See Deal] That should happen later this year. (Spiration did obtain a Humanitarian Device Exemption for its IBV Valve System to control prolonged air leaks of the lung, or significant air leaks following lung surgery.) The price paid for Spiration, which is in the process of adopting a new name – Olympus Respiratory America, wasn't disclosed, but the company was said to fetch around $100 million, roughly the same amount venture investors poured into the company since 1999.

Rox has been successful to date in obtaining financing, having raised $48.5 million over three rounds. Domain Associates led the company's Series B in 2006, while Essex Woodlands Health Ventures stepped up in 2008 to acquire 24% of the company in a $35 million Series C. [See Deal] Rox represents the only pulmonary device company in both firms' portfolios. Kim Kamdar, now a partner at Domain Associates, says the firm was drawn to Rox's approach of treating patients with COPD while not actually implanting any devices in – or even touching – the damaged lungs. "At the time of the investment, we hadn't made many new investments in medical device companies for our sixth fund," Kamdar says, saying that many promising companies had valuations that were very high at the time. "But we really appreciated the elegant yet simple approach to address a huge unmet need like COPD."

Rox has used the capital to conduct three clinical trials including a 49-patient pilot study in the US that it finished last summer. As of December 1, Rox has treated 130 people with Stage III or VI COPD. Patients treated with Rox' FLO2W procedure presented with clinically meaningful increases in the delivery of oxygen to tissue, a measurement called DO2. "We're seeing encouraging changes in quality of life, exercise capacity, and breathlessness, dyspnea, as well as DO2," Brenneman says. "We're dramatically improving delivery of oxygen to tissue by around 200 mL per minute." This increase manifests itself in COPD patients having the energy to resume activities that once would have been exhausting.

Rox intends to combine the data from its US pilot study with an ongoing 46-patient study being conducted in Germany to make its case to the FDA. ( See Exhibit 3.) Brenneman says the company will file an Investigational Device Exemption application for its pivotal clinical trials later this year. The trial design, while yet undetermined, is likely to share many of the features of earlier trials including one treatment arm and one controlled arm. Brenneman says Rox isn't likely to include a sham arm if the FDA doesn't require it. Brenneman says the principal reason for not including a blinded, sham arm is patients who undergo the FLO2W procedure actually can feel the change in blood flow. "If you have a fistula, you literally feel a little whoosh of blood," Brenneman says. The FDA already has acknowledged this limitation. He didn't rule out Rox blinding investigators who are following up on the patients.

As noted, Rox is in talks with several large medical device companies about a potential strategic investment. Brenneman says the company has enough capital to last through the third quarter of this year, and is actively pursuing additional funding. A fourth venture round remains a possibility, particularly given the interest in this space shown by investors in PneumRx Inc. and Pulmonx. [See Deal] [See Deal] ( See "Pulmonary Device Companies Take It To The Streets In Europe," START-UP , February 2010 (Also see "Pulmonary Device Companies Take It To The Streets - In Europe" - Medtech Insight, 1 Feb, 2011.).)

"But Rox has something different in mind and has retained Robert W. Baird & Co. Inc. to help secure the next round. Board member Kevin Wasserstein, a general partner at Versant Ventures, says Rox is exploring a strategic partnership based on its clinical and commercial progress. "We are now commercially available and launching in Europe, and we're entering into a period where we will be making significant decisions around our US pivotal clinical trial design," he says. Wasserstein adds that larger device companies have often historically expressed interest in being involved in clinical trial designs earlier rather than later. "They'd like to have their fingerprints on it, to ensure the study design and outcomes are consistent with their objectives," he notes.

Olympus and Boston Scientific Corp. would be obvious targets with their demonstrated interest in respiratory devices. Olympus acquired Spiration while Boston Scientific last year agreed to pay $443.5 million for Asthmatx Inc. (only $193 million up front) to incorporate the company's Alair system into its endoscopic division. [See Deal] ( See "Asthmatx Acquisition By Boston Scientific Is Source of Many Happy Returns," IN VIVO , October 2010 (Also see "Asthmatx Acquisition By Boston Scientific Is Source of Many Happy Returns" - In Vivo, 1 Oct, 2010.).) Asthmatx had obtained FDA approval for the radiofrequency-based system a few months earlier and had raised more than $90 million from its venture investors.

Rox believes it has several financing options. In the course of conversations with prospective investors, Rox isn't positioning itself as a pulmonary company but rather as an interventional or even peripheral vascular company that can bring COPD patients into the cath lab. The FLO2W procedure won't be performed by a pulmonologist, rather the pulmonologists would refer their patients to the interventionalist, who will perform the procedure and send the patients back to the pulmonologists for further treatment. "This is clearly an expansion of the practice of the interventional cardiologist, radiologist or vascular interventionalist," explains Guido Neels, managing director for Essex Woodlands Health Ventures. "This would be a whitespace for a company that is strong in that area or a company aspiring to enter the space."

Rox also hopes that adopting this strategy will increase physician adoption of its device. Interventional pulmonology is still a growing field. Pulmonologists currently manage their patients with pharmaceuticals and take biopsies or images with bronchoscopes. For most pulmonologists, the prospect of implanting a bronchial device may not be appealing. Interventionalists, on the other hand, are among the most eager adopters of new device technology, and interventional cardiologists, in particular, are currently looking for additional procedures since the drug-eluting stent boom has waned. "My exposure to pulmonologists as a group is that they're not interventionalists," Brenneman says. "And they're quite happy to focus on performing bronchoscopies. They're really not trying to get their hands into more things." Leiter, the former practicing pulmonologist, disagrees slightly, saying some pulmonologists are eager to treat patients with interventional tools. However, those physicians aren't any less likely to refer their patients to an interventionalist to undergo Rox's procedure. Both Brenneman and Leiter note that the higher oxygen delivery levels brought on by the fistula could complement other bronchial devices like valves. "I really don't see them as competing," Leiter says.

Having A Broad Vision

Rox's primary focus, COPD, presents a huge target. The American Lung Association says $49.9 billion was spent in the US on COPD treatment in 2010, including $29.5 billion in direct health care expenditures. The economic opportunities led venture capitalists to pour more than $400 million into eight device companies trying to treat COPD with valves, glues, steam-based sealants, and other still unproven approaches during the past few years. But Rox sees other applications for the FLO2W system, with the most interesting being hypertension.

The company has started collecting clinical data on patients presenting with hypertension, which would take Rox back to its earliest roots. Brenneman, citing data from roughly a dozen patients, says the early results are promising but premature. "We knocked their systolic and diastolic numbers down by about half what Ardian's getting," he says, referring to the clinical success demonstrated by Ardian Inc.'s Symplicity Catheter System. Patients treated with Ardian's catheter-based system experienced an average drop in blood pressure of 32/12 mm Hg compared with an increase in blood pressure of 1/0 mm Hg in the control group of patients treated with medical therapy alone ( p<0.0001). Brenneman says Rox has nine months of follow-up on an admittedly small population of patients, but it's encouraging. "To quote a physician, `It's bigger than anything in pharmaceuticals,'" he says. "It's a nice little teaser, and we're willing to follow it up with a larger series of just hypertension patients." The exact reason for the improvement is unknown. But data suggest the fistula is felt to restore some of the compliance back into the vascular system by dropping the systemic vascular resistance.

Brenneman doesn't shy away from comparisons to Ardian. Clearly, any venture-backed start-up would want to be mentioned in the same sentence with a company compelling enough to warrant an $800 million acquisition by Medtronic as Ardian did last year. [See Deal] The final price tag could top $1 billion if Ardian meets revenue-based milestones laid out in the deal. "We're not totally at dissimilar points," Brenneman says. "Probably the one benefit they had is they certainly had a much more established indication – blood pressure. There are well-known metrics that you're measuring up against a very mature market of pharmaceuticals." Medtronic also had acquired 11% of Ardian's shares when it led its Series C in 2009. Strategic investments from corporates have become increasingly important in a capital-strained market. [See Deal]

Brenneman says he has a list of venture capitalists interested in investing in the company, and he doesn't believe Rox will have a problem finding willing investors, but the price is a concern. The company's post-valuation was $75 million following the 2008 Series C. That might be difficult to top. More to the point, the company would need a large round to complete the pivotal studies, as other pulmonary companies have required around $100 million to get through clinical studies and onto the US market. "I know I could get more VC dollars, but the valuation is a question market and it could get ugly," he says. "Can I get investment dollars from a strategic partner? I'd say there's a high likelihood of that. Is there a good chance of getting some staged exit? Feels like there is. An outright acquisition would be more of a wild card."

COPD, so far, has been a tough area for venture capitalists and their start-ups. But Rox does have a unique approach and a tried-and-true path to potential customers. It's far too early to tell whether hypertension is a legitimate target for Rox or a nice option to stick on the window for perusing shoppers to consider. The same could be said for heart failure, another potential area for Rox to explore. As pie-in-the-sky as those applications might appear, Rox's primary goal – developing an innovative approach to solving one of the world's most deadliest diseases – looks promising, which given the problems facing other pulmonology start-ups, would be a fine accomplishment on its own.

SIDEBAR: Rox Sets Strategy To Sell In Europe

It's becoming a much more common practice these days that US medical device start-ups are launching products in Europe before obtaining – or even seeking – regulatory approval from the US Food and Drug Administration. But the way those products are rolled out can be vastly different, even if they're developed by the same entrepreneur.

Martin Chambers, vice president of sales for Rox Medical Inc., held the same position for Ablation Frontiers (now Medronic Ablation Frontiers LLC) when that cardiac ablation company rolled out its innovative line of ablation catheters prior to being acquired by Medtronic PLC in 2009. [See Deal] Just as Ablation Frontiers did, Rox is rolling out an innovative system for interventionalists, the FLO2W system. But Chambers says the strategy behind the two rollouts is completely different.

"With Ablation Frontiers, we had a game-changing technology," Chambers recalls, a set of multi-electrode catheters that could ablate a ring of tissue simultaneously rather than have an interventional cardiologist do it point-by-point. But Ablation Frontiers' strategy recognized that the key opinion leaders in Europe – the physicians skilled enough to successfully perform point-by-point ablation – might not be receptive to a new type of procedure.

Chambers says Ablation Frontiers intentionally avoided the key opinion leaders in Europe, choosing instead to work with lesser-known physicians who agreed to sign non-disclosure agreements to keep the device's approach a secret. Through this network of physicians and centers, Ablation Frontiers successfully accumulated the clinical performance data to prove the soundness of its approach. "The risk of adopting that strategy is you need to justify to the key opinion leaders why you did what you did," Chambers says. "Key opinion leaders generally are not tolerant of experimentation. When there is experimentation, they like to be in at the ground level where they can help create a product, not be in the position to only validate a product."

Rox, however, requires a completely different approach because it's creating a new market for its interventional treatment of COPD. "It's imperative to work with key opinion leaders right from the start," he says. The company is working with these influential physicians to build a critical mass of papers and clinical data to demonstrate the superiority of its treatment.

Rox secured its CE mark for the FLO2W system in 2010, but the company is rolling product out slowly so it can collect post-approval data from 300 patients in seven major centers across Germany. As in its US pilot study, Rox will screen patients for high pulmonary arterial pressure (measured as greater than 35 mm Hg) or weak hearts (measured as pulmonary wedge pressure >15 mm Hg). The test is performed through a right heart catheterization. The FDA – in Rox's US pilot trial – required the company to test patients' heart and pulmonary vessels to ensure they were capable of handling the additional load.

Chambers says Rox's more open approach has allowed the company to establish a central commercial registry to tally the data as they come out through the centers. Despite the gradual, clinical focus of the product release, Chambers says this is a commercial release. "This is a clinical rollout," he says. "They are paying for the device. But we're going to do it under a controlled basis. We're not going to rush it out."