AIM takes 12% stake in US cardiac device start-up
By Karamjit Singh January 29, 2013
- Its investment into Mardil Medical Inc largest to date at US$5mil
- Hopes move will position Malaysia as leader in heart treatment
LAST June, Digital News Asia (DNA) broke the news that Agensi Inovasi Malaysia (AIM) planned to make a number of venture capital investments. The news came as a surprise to most at it was assumed AIM was purely an agency tasked with catalyzing innovation in Malaysia.
However, in that June 2012 interview, its chief executive officer Mark Rozario told DNA that making investments was in its charter all along. DNA then broke the news of AIM’s maiden investment of RM10 million last December into high speed LED start-up Quantum Electro Opto Systems Sdn Bhd (QEOS).
It has now followed that up with a recently announced RM15 million (US$5 million) investment into US cardiac device company Mardil Medical Inc.
AIM has received a stake of between 12% and 13% in return, says Naser Jaafar (pic), its executive vice president. Mardil has previously been invested in by Indian venture capital firm Venture East and various other groups and individuals, resulting in a total of 20 shareholders.
Mardil has developed the VenTouch system for the treatment of Functional Mitral Valve Regurgitation (FMR). If left untreated, FMR overloads the heart and can lead to or accelerate heart failure, a debilitating condition that affects 5.8 million people globally.
According to Naser, existing treatment does not deal with the root cause. However, the VenTouch system effectively treats FMR from the root cause and is delivered in a minimally-invasive procedure that can take as little as 45 minutes versus the hours of surgery needed for the current method.
It is this difference in treatment that has AIM excited, leading Naser to say, “We feel this technology is disruptive and we have made the right investment.”
It is estimated that there are 560,000 existing cases in the United States alone with 172,000 new case per year. According to estimates AIM shares with DNA, assuming an average price of US$15,000 per procedure, the 172,000 new cases of FMR translate into an annual revenue of US$2.6 billion (RM7.8 billion).
Notwithstanding its bullishness over the technology and market potential, AIM would not have made the investment if not for a commitment by Mardil to establish its Asian headquarters in Malaysia and, more significantly, base its Asian Center of Excellence (CoE) in Kuala Lumpur (KL), says Naser.
As one of AIM’s goals is to create wealth in Malaysia, this promise by Mardil was an important deal clincher, he says. With the CoE in KL, heart surgeons throughout Asia will need to come to Malaysia to learn how to use Mardil’s VenTouch system. “It will put Malaysia on the map for heart treatment in Asia,” says Naser.
But, as with all healthcare-related treatments, the journey from lab to market will be an expensive and difficult one. Mardil intends to conduct its clinical trials in Malaysia. Clinical trials are a rigorous process of testing drugs and products for the market to determine if they are safe for human use.
While the process for drugs trials can take as long as 10 years and is very costly, Mardil expects its device clinical trials to be completed by the end of 2014. Trials are also to be conducted in Europe as it aims for its cardiac device to be sold in both the EU and US markets. It thus will need EU and US regulator approval.
“They will have to raise more money,” acknowledges Naser. Whether they are successful or not depends on the early phase trial results. [Updated Info]: Mardil will be working with the National Heart Institute or IJN (Institut Jantung Negara) as its partner to conduct clinical trials in Malaysia. A memorandum of understanding was signed this afternoon at the Prime Minister's Department.
As in any venture, there are risks. But with the possibility that a successful product will help create new wealth in Malaysia through the boost it will give to medical tourism and possibly position the nation as a leader in heart treatment, AIM feels it has made a good bet.