“I love it when a plan comes together.”
-- John ‘Hannibal’ Smith, from the 1980’s hit television series, ‘The A-Team’
Don’t we all? For CV Ingenuity, the plan certainly came together, as a very promising 2012 culminated in an agreement to be acquired by Covidien, one of the company’s strategic investors. Our very own ‘A-Team’ is the founders and senior leadership team behind CV Ingenuity, a medical device company whose core technology is a proprietary, tunable system for creating drug-coated angioplasty balloons that show the potential to be a best-in-class treatment for peripheral vascular disease. Whether the company’s CEO, Duke Rohlen, is Face or Murdock is something we’ll leave to the rest of management team to sort out…
In September 2011, NEA led CV Ingenuity’s Series B financing alongside a strong syndicate of angel and Series A investors, as well as strategic investors Covidien and Volcano. As is customary in our approach to investing in medical device companies, we had expected to serve as CV Ingenuity’s financial partner through the FDA’s PMA approval process and commercial launch. However, strategic interest in drug-coated balloons has been strong, and when our partner, Covidien, proposed a highly compelling early acquisition along with a commitment to continue our development plan, it was an offer that was too good to refuse. While deal terms have not been publicly disclosed, this is a fantastic outcome for CV Ingenuity’s management team and investors, including NEA’s LPs who stand to see an up to 6.5x return on our $15 million of invested capital.
The CV Ingenuity success story is a credit to the technical expertise, market insight, and sheer hustle of the management team. But there are two other important ingredients that helped make this investment work for NEA that merit additional discussion: enduring relationships and regulatory clarity.
First, a guiding principal for NEA’s investment strategy is that outstanding people and enduring relationships matter most. NEA takes great pride in its entrepreneurs, and we could not be more proud that Duke Rohlen is now a successful serial entrepreneur within the NEA family. Prior to CV Ingenuity, Duke was a member of the senior team and eventually President of FoxHollow Technologies, an historic NEA portfolio company focused on peripheral vascular atherectomy whose IPO and eventual acquisition by EV3 made for one of our largest outcomes in the medical device sector. NEA General Partner and my fellow board member at CV Ingenuity, Ryan Drant, sponsored NEA’s investment in FoxHollow, and thanks to his hard work and the trust he built with Duke, NEA was in pole-position to partner with him again on this opportunity.
Even more importantly, Duke and his co-founders deserve great credit for the first-class team they brought together based on prior collaborations at companies including Xtent and Abbott Vascular. Similarly, when Covidien acquired EV3 for its leading vascular franchise in 2010, Duke had laid the groundwork for confidence and trust between CV Ingenuity’s management team and board and that of Covidien, who we know is an excellent partner that will maximize the potential for CV Ingenuity’s platform.
Second, gaining clarity on FDA’s regulatory requirements for drug-coated balloons was critical to NEA’s investment in CV Ingenuity. A competing company in the drug-coated balloon space, Lutonix, was the first mover in approaching the US market. Lutonix did an admirable job in blazing the trail with FDA and drug-coated balloons. However, the process of laying out preclinical and clinical study designs and performance criteria for drug-coated balloons—despite being predicated on analogous approved products in uncoated angioplasty balloons and drug-coated stents—took years of back and forth discussion with FDA.
At NEA we had watched the drug-coated balloon space and these regulatory discussions evolve with interest, believing firmly in the biology, the clinical need, and the market opportunity. However, without some clarity on the regulatory path, we did not want to wade into a prolonged discussion with FDA and the commensurate uncertain timelines and capital requirements that would ensue. When Lutonix received FDA’s blessing to begin their US pivotal trials in mid-2011, we moved quickly to seize the fast-follower advantages that would accrue to CV Ingenuity and made our investment. And since that time, our progress with FDA has been very smooth. While CV Ingenuity provides only one anecdote to share with FDA and our legislators, we hope this message is clear: when regulatory requirements, timelines and related development costs are clearly defined, capital will flow to innovative technologies that can provide tremendous clinical benefits to patients and physicians.
We are proud to have contributed to the success of CV Ingenuity, and we look forward to seeing this important technology improve the lives of patients around the world. Thank you to the CV Ingenuity management team and to our partner Covidien for making a good plan come together.