Fund raising for an early stage medtech company

201505.06
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Background: Tractus was engaged on a retainer plus success fee model by Mardil Medical Inc., a Minnestoa-based, venture-backed medical device company that has developed an innovative therapy for the treatment of functional mitral valve regurgitation (FMR) to help the company develop and implement a fund raising strategy to raise US$5 million. Food and Drug Administration (FDA) approvals have grown more costly and uncertain, as witnessed in several controversial, high-profile rejections of proposals in recent years. The difficult regulatory environment has dampened the funding appetite of the venture capital (VC) community, which was already sagging in the aftermath of the global financial crisis. PricewaterhouseCoopers estimated that the dollar value of US medical device venture deals was lower in the third-quarter of 2012 than at any point since 2004. With many Initial Public Offerings (IPOs) either cancelled or postponed, much of the VC funds’ remaining capital is reserved for follow-on funding for existing portfolio companies, leaving early stage ventures in the lurch.

Project: Tractus collaborated with Mardil to provide a full suite of services that covered the entire cycle of the project. Tractus introduced Mardil’s management to the intricacies of the Asian markets and navigated various investor channels to deliver a successful private placement. The cornerstone of the engagement was to align the client’s interests with those of foreign investors.

Mardil’s interest in seeking world class facilities to conduct clinical trials with its technology, having an Asian medical site to lead training of Asian cardiac surgeons on new therapy, raising capital to move through regulatory pathways, and seeking addition of regional R&D teams aligned with associated interests of research partners at the National Heart Institute (IJN) to exploit extensive IP estate. Tractus assisted in structuring a partnership with the IJN in Malaysia that included setting up a center of excellence (COE) model, which was key to obtaining an investment from the Malaysian government. Malaysia’s National Innovation Agency, also known as Agensi Innovasi Malaysia or AIM, took strategic interest in the client’s product and provided the next stage funding as a result of the achieved partnership. Tractus led negotiations and due diligence efforts for the client’s private placement and set up a Malaysian entity for Mardil’s Kuala Lumpur based subsidiary and research office.

Solution: Mardil received US$5 million in funding from Malaysia’s AIM and is undertaking clinical trials and plans to sell its device in the Asian and European markets before entering the USA. Mardil began first-in-man trials in 2013. It opened a research office in Kuala Lumpur and a regional center for excellence in partnership IJN Kuala Lumpur. Top global business media outlets such as Bloomberg and the Wall Street Journal have reported on the client’s Asian private placement describing it as the next generation model of fundraising for American firms.

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