ALung poised for sales in Germany

3 February 2012 Investment News, Recent News

ALung Technologies Inc. closed on a $10 million fundraising round last week as it prepares to begin selling its artificial lung in Germany this year, the company said on Thursday.

The South Side medical-device company has raised $40 million from investors since its founding in 1997. ALung, though, expects to need at least $25 million more before it’s ready to start selling in the United States, said CEO Peter DeComo.

“It’s become much, much more expensive to get a product fully approved” by the European Union and the U.S. Food and Drug Administration, he said.

Not only is approval more expensive. It’s difficult convincing investors to fork over millions of dollars to a start-up after the financial crisis of 2008 and resulting recession, DeComo said.

The latest $10 million fundraising round, though, took about four months, he said, an “indication of investor satisfaction” in ALung’s performance so far.

The company’s artificial lung functions like a kidney dialysis machine, DeComo said. A patient’s blood is pumped through the machine to remove carbon dioxide and add oxygen. The device is for patients who are having trouble breathing or as a supplement to a ventilator.

Many patients who have reduced lung function, because of COPD or other lung diseases, are placed on ventilators because there is no other option, DeComo said. But ventilators can cause lung infections and often, once a patient is on a ventilator, their lungs become dependent on it.

ALung’s device is targeted at patients who still have some lung function and could be kept off a ventilator, which DeComo said would save money.

“In 60 to 80 percent of cases, we estimate our device could replace or supplement the ventilator,” DeComo said.

The U.S. market for ALung’s device could be $2.5 billion a year, but the company won’t be selling the device here for several years. DeComo said many medical device companies introduce their products in European markets first to gain some sales before starting clinical trials in the United States — a process that DeComo estimated would cost at least $25 million.

North Shore medical device company Cohera Medical Inc. began selling its surgical adhesive TissuGlu in Germany in September and could gain FDA approval by the end of 2013.

Before coming to ALung, DeComo founded Renal Solutions Inc., a Cranberry company that he sold to Fresenius Medical Care AG & Co. KgaA of Germany in 2007 for $190 million. ALung has 28 employees, all in Pittsburgh.