Blog of Intellectual Capital

 

SALE OF Cibiem, Inc.

 

Gerbsman Partners (http://gerbsmanpartners.com)has been retained by Cibiem, Inc. (http://cibiem.com ) to solicit interest for the acquisition of all, or substantially all, the assets of Cibiem, Inc.  (please see attached detail Cibiem Sales Letter, NDA, Fixed Asset list and Intellectual Property summary)

Cibiem is a privately held medical device company located in Los Altos, CA founded in November, 2011.  Cibiem was created to enable a novel, protectable, superior approach to reducing sympathetic tone via ablation of the carotid body, a previously untargeted anatomic target in the neck. The significant majority of Cibiem’s clinical data has been generated in the resistant hypertension space, but the physiologic hypothesis is equally strong, if not stronger for reduced ejection fraction heart failure (HFrEF) patients. The acquisition of Cibiem enables immediate participation or expansion in both the resistant hypertension market – currently dominated by Medtronic via their Ardian acquisition, and the HFrEF space.

Cibiem has raised two rounds of private financing to date totaling $28 million from two venture capital investors, Third Rock Ventures and SV Health Investors and has $8.5M of bridge notes outstanding that were anticipated to convert on the next round of financing.  A new venture investor participated in the last bridge financing (BioStar Ventures). The company has also received financing in the form of a $6 million loan from Oxford Finance LLC.

Cibiem is a clinical stage company which has devoted significant time and resources to developing a comprehensive understanding and thoughtful approach on how best to target the carotid body as a therapeutic target for numerous diseases.  Value created over the past several years fall into several distinct categories:

1.  Proprietary understanding of the carotid body anatomy, physiology, etc. Extensive cadaver studies, as well as small animal work was done to answer key questions regarding the feasibility of a catheter based approach to target the carotid body.
2.  Product development work advancing two different technical approaches to ablate the carotid body.  Our generation 1 catheter was an RF based system delivered within the carotid arteries; the generation 2 catheter is an ultrasound based system delivered within the jugular vein via the femoral vein.  We have done work regarding image augmentation to support ultrasound guidance for the procedure as well as extensive work regarding a breathing based test to pre-identify patients most likely to benefit from a carotid body based procedure.
3.  We have run a number of clinical studies outside the US, the most notable of which are:
4.  10 patient surgical heart failure study run in Wroclaw, Poland;
5.  15 patient surgical hypertension study run in both Wroclaw, Poland and Bristol, UK;
6.   6 patient RF-catheter based resistant hypertension study run in Prague, CZ, Wrolaw, Poland and Warsaw, Poland and,
7.  39 patient ultrasound cather based resistant hypertension run in 7 sites in Europe and Australia.
8.  Patents – Cibiem has ten issued US patents, fourteen pending US applications, 3 issued national (OUS) patents and eighteen pending national (OUS) applications.

Cibiem has advanced the vision for a minimally invasive therapy to dramatically reduce sympathetic tone via ablation of the carotid body since inception of the company. Despite compelling data from our most recent transvenous ultrasound hypertension study, investor reticence following the challenges and delays encountered in the renal denervation space made closing a new round of financing challenging. While there was interest from institutional and strategic investors to refocus the company on the potential benfit of the therapy in interventional heart failure, the Board of Directors did not see a direct path for additional needed equity investment but instead made a decision to maximize and monetize the value of Cibiem’s Intellectual Property and proven commercial success with the approval of the senior lender, Oxford Finance.

 

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to Cibiem’s Assets has been supplied by Cibiem.  It has not been independently investigated or verified by Gerbsman Partners or its agents.Potential purchasers should not rely on any information contained in this memorandum or provided by Cibiem, or Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Cibiem, Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of Cibiem’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the Cibiem Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Cibiem or Gerbsman Partners.  Without limiting the generality of the foregoing, Cibiem and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Cibiem Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent.  This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit A.

Historical Company Information

Cibiem is a clinical stage company that has developed and conducted clinical trial work with a proprietary ultrasound ablation catheter that targets the carotid body, a group of chemoreceptor cells in the neck involved with detecting hypoxia.  The carotid body is one of a network of redundant peripheral sensors providing input to the brain regarding blood gas saturation (oxygen, carbon dioxide) and provides this signaling through the sympathetic nervous system. While the carotid body is reasonably well known in the medical literature, Cibiem is, to the best of our knowledge, the first company to develop a medical device specifically to target the carotid body.

Prior to Cibiem’s work, the primary evidence demonstrating the potential therapeutic benefit of the carotid body was a series of surgeries that were done starting in Japan in the 40’s targeting patients with COPD and asthma.  This therapy was popular with patients as it provided a marked and sustained relief of dyspnea (breathlessness) for these patients. While the surgeries were generally well tolerated and though numerous journal publications (available as part of diligence package) demonstrated no negative effects from the removal of the carotid body’s hypoxic awareness sensing, there were serious complications associated with performing this surgery in the vicinity of the neck. With time, and the development of better pharmacological options for these patients, the procedure was abandoned.  In total, over 15,000 of these procedures were documented, and among them were a subset of hypertensive patients treated in Japan who the investigator noticed had a significant blood pressure lowering benefit from the procedure. These historical benefits, along with the founder’s previous experience with sympathetic modulation therapies targeting the renal nerve led them to develop a therapy in which the carotid body could be accurately targeted with a safe, reliable, minimally invasive cather based procedure.

Cibiem has established broad intellectual property around the carotid body, a previously unexploited anatomical target for reduction in sympathetic tone.  When the company was founded, there was relatively little data published regarding details such as the exact location, size, or accessibility of the carotid body via non-surgical approaches.  As part of the company’s early proof of concept work, extensive cadaver studies, as well as small animal work was done to answer key questions regarding the value of a catheter based approach to target the carotid body.  An initial series of 10 cadavers, followed by a second series of 20 cadavers were conducted to understand the anatomical location and proximity of the carotid body relative to other sensitive neural or vascular structures to establish the viability and safety of a catheter based approach to ablate the carotid body.  We believe this series of cadaver studies is the largest, most detailed look at the specific anatomy of the carotid body and established a number of the foundational aspects of our interventional approach, both in terms of how we specifically target the carotid body as well as scenarios in which it may be advised to NOT ablate the carotid body in a given patient due to the potential of inadvertent damage to a nerve or blood vessel in the nearby vicinity.

In addition, early pre-clinical animal studies clearly established the therapeutic benefit of targeting the carotid body by showing significant blood pressure reductions in spontaneously hypertensive rats (SHR) and reductions in periodic breathing, reduced incidence of arrhythmias and an improvement in mortality in a paced induction of heart failure model in rabbits.

Product Development

Cibiem’s product development efforts have followed four general areas.

1.  Bipolar RF Catheter System: In 2012 and 2013, the company pursued the development of a novel, bi-polar RF catheter that was delivered via the femoral artery to the common carotid up to the carotid bifurcation. This proprietary approach was taken after early feasibility studies as well as computer modeling demonstrated that an off the shelf monopolar RF catheter could not create a lesion that would encompass the carotid body without damaging adjacent structures. This bi-polar ablation catheter was specifically designed to be positioned across the carotid bifurcation, with one electrode in the internal carotid, and one in the external carotid.  When RF energy was delivered, energy was focused between these electrodes, and allowed all the tissue between the internal and external artery to be ablated while minimizing the spread of the lesion to adjacent areas where sensitive nerves and blood vessels pass.  While this approach was excellent from the technical aspect of delivering a lesion of known dimensions in the desired area, it was problematic in terms of needing to be delivered via a catheter in the carotid artery.  The majority of patients with significant hypertension also have significant athlerosclerotic disease which would make them susceptible to a stroke if a catheter introduced in this area were to dislodge any plaques in this vicinity.  In parallel with the initial clinical effort to test this bi-polar device, the team began developing a second interventional device that could be delivered via a non-arterial approach
2.  Transvenous Ultrasound Catheter System: This exploratory non-arterial work lead to the current transvenous ultrasound embodiment which has been used most extensively and has accumulated the most clinical experience including our recently completed 39 patient resistant hypertension study. This second generation device was designed to be delivered to the jugular vein adjacent to the carotid bifurcation via a percutaneous puncture in the femoral vein in the groin, like most interventional cardiology procedures.  The virtue of being delivered into the venous system vs. the arterial system, the safety profile of this device is inherently significantly better than the first generation bipolar RF device, as the potential of dislodging emboli and causing a stroke is virtually eliminated.  In addition to the use of ultrasound energy to ablate the carotid body, this device also used an off-the-shelf intravascular ultrasound imaging catheter manufactured by Boston Scientific to identify the correct location to position the catheter to ablate the carotid body.  While the carotid body itself is not visible using ultrasound, previous anatomical studies have established with good statistical significance the carotid body’s location relative to the carotid bifurcation, which is easily identifiable using ultrasound.  The current embodiment of the Cibiem transvenous catheter works exclusively with the Boston Scientific 9Mhz UltraICE Plus catheter, but the company was working on iterations of the product to allow its use with other IVUS imaging technologies as well as plans to build a standalone intergrated device that would encompass both imaging and ablation transducers into a single device.
3. Image Augmentation: While developing the transvenous ultrasound ablation system, the team heard some concerns from clinicians regarding the fact that the ultrasound images we were relying on them to interpret in order to perform the carotid body ablation procedure were not images they normally used in other procedures, and that this lack of familiarity might create a barrier for some clinicians.  In an effort to address this concern, the team began a small side project to develop some image augmentation algorithms that would take the images created from the IVUS console and post-process them in a real time manner to overlay guidelines to highlight important anatomy, clearly demonstrate the direction in which the ablation transducer was pointing and after ablation, highlight where lesions were created.  These augmented images would then be output to one of the large screens typically used in interventional suites alongside the fluoroscopy screens.  This system was prototyped and generally proven to be feasible in animal studies, but was not advanced to human use.
4. Companion Diagnostic: The last area of product development has been around developing a streamlined, clinically relevant chemosensitivity test to help identify patients most likely to benefit from a carotid body therapy.  While increased sympathetic tone is a hallmark of chronic diseases like hypertension and heart failure, therapies designed to target and reduce this tone do not universally lead to improvement in these patients.  In renal denervation, which represents the majority of patients treated with these types of therapies, approximately 65-70% of patients demonstrate a reduction in blood pressure, making them so-called ‘responders’.

 

Clinicians / thought leaders in the space have questioned the appropriateness of a permanent procedure to ablate healthy tissue with the potential for unforeseen consequences further down the road if only 2 out of 3 patients benefit from this procedure.  As such, there have been numerous calls within the industry to develop companion test procedures to help identify which patients would be most likely to benefit from these therapies.  In the renal denervation world, these tests are in the experimental phase only and appear to add significant additional complexity to the procedure.  At Cibiem, our goal was to further develop an established physiologic test known to be associated with carotid body activity into a straight forward clinical test that would identify patients with abnormal carotid body activation and hence most likely to benefit from our therapy.  The work that has resulted has shown positive trends in its ability to distinguish between likely responders and non-responders, but the size of the most recently completed study was too small to establish definitive proof of the effectiveness of this test.  The intent for the planned 100 patient randomized trial was to test all 100 patients with this test to validate the test an further refine the cutoff chemosensitivity levels that would be used to establish inclusion in future trials.

Competitive Context

The most well recognized alternative to our therapy is renal denervation, which seeks to similarly reduce sympathetic tone via ablation of the renal nerves which run parallel to the renal artery supplying blood to the kidney.  Renal denervation is a relatively new therapy which has been undergoing development and clinical investigation over the past ten years and which has experienced many ups and downs during that time.  Early in its development, renal denervation was seen as a potentially very large growth opportunity for interventional cardiology companies to expand their franchise by targeting the very large hypertension market. Early feasibility data showed very large blood pressure reductions (30mmHg Office Blood Pressure –OBP) and Ardian, the company which was the first to bring this technology to market was acquired early in its development timeline by Medtronic for $800M + milestone payments that would have exceeded $1B.  This ‘boom’ time for the technology resulted in many copycat companies executing ‘fast-follower’ strategies which at its peak resulted in 60+ companies pursuing some kind of renal denervation implementation.

 

Cibiem Unique Opportunity

 

Despite these challenges, Cibiem believes the carotid body represents a unique opportunity for the creation of a broad platform therapy that can address several large, chronic diseases with the potential to provide significant market expansion opportunity for large strategic players.  Some of the reasons for this belief are as follows:

1.  Numerous published studies demonstrate the carotid body’s role as a powerful input to the sympathetic nervous system.  Pre-clinical work in animals demonstrate significant improvement in both hypertension and heart failure symptoms after    removal of the carodi body stimulus.  Research from 2001 demonstrated that heart failure patients with elevated carotid body activity had dramatically lower survival at 3 years vs. patients with normal carotid body activity.
2.  The Cibiem transvenous ultrasound ablation system enables a very short, efficient procedure requiring approximately 30 minutes from introduction to removal and the delivery of only 2- 3 ablations totaling 8-12 seconds each.  This is in contrast to the typical renal denervation procedure which can take 70-90 minutes and in its most recent embodiments requires in excess of 40 ablations, each of which can be quite painful.
3.  The Cibiem procedure is conducted primarily with ultrasound guidance, minimizing the need for fluoroscopy or contrast.  Patients with hypertension or heart failure often have compromised renal function which limits their ability to tolerate significant 3.  amounts of contrast injections.
4.  Identification of several established reimbursement codes that may be applicable for in-patient ablation/destruction of one or both carotid bodies.
5.  Manufacturing conducted by an established 3rd-party that supplies large med-tech strategics that could ramp up the latest generation product quickly to enable additional clinical trials.
6.  The device that has been developed to date can be used, with minimal changes to treat HFrEF patients.
7.  Thirteen (13) issued patents, thirty two pending applications.
8.  The potential to more accurately target patients most likely to respond to the therapy with a companion diagnostic test that utilizes a simple breathing test to identify patients with elevated carotid body activity.  Such a test would allow a reduction in the number of patients required in a future pivotal study by maximizing the demonstrated efficacy and would address concerns about exposing patients unlikely to benefit to a permanent procedure.
9.  The potential to expand to additional markets in which sympathetic overdrive is recognized an underlying driver to the condition.  Examples include chronic kidney disease, diabetes, insulin sensitivity, obesity, etc.

 

Cibiem Company Profile

Cibiem was founded by Howard Levin and Mark Gelfand, the same innovative founder team that created the renal denrvation concept that was commercialized by Ardian and acquired by Medtronic.  Their goal in creating Cibiem was to develop an alternative, superior approach to the reduction in sympathetic tone to address large, chronic diseases like hypertension in heart failure in a way that would be distinct and protectable vs. renal denervation. The Cibiem Transvenous Ultrasound System (CTUS) is the first, and only interventional approach that enables interventionalist to safety and efficiously target the carotid body to down regulate sympathetic tone for the treatment of these diseases.

The CTUS system has been used in 39 clinical cases since its introduction in early 2016 with no device related serious adverse events.  The interim results of the procedures have been presented at several global hypertension or cardiology conferences and we anticipate the primary safety and efficacy results will be published by the principal investigator later this year.  Highlights of the benefits of this therapy include:

 

1.  10mmHg reduction in Systolic Ambulatory Blood Pressure Monitoring in non Isolated Systolic Hypertension (ISH) patients.
2.  Our study included some ISH patients, who are recognized to not respond as well to sympathetic modulation treatments and with those patients included, we had a 8mmHG reduction in systolic ABPM.
3.  Safety with the transvenous system was excellent with no device related serious adverse events, and minor procedure related adverse events that were not intrinsic to the carotid body ablation itself.
4.  The procedure itself, which was novel and the first of its kind, was straight forward to teach to new operators and with minimal experience all clinicians were able to succesffuly complete procedures in 30-45 minutes.
5.  Patients tolerated the procedure very well.  Unlike renal denrvation which requires in excess of 40 ablations of 30 seconds each and results in significant patient discomfort during each, the CTUS procedure typically required 2- 3 ultrasound ablations total, with each taking 8-12 seconds each.  While patients did sometimes complain of some discomfort during this ablation, the short duration and minimal number made this a much more tolerable experience.

Cibiem has created an extensive patent portfolio consisting of 13 issued patents, and thirty two applications pending.  (see attached IP Patent Portfolio)

 

Cibiem’s Assets

From Cibiem’s inception, the goal has been to operate the company as efficienty as possible by outsourcing those activities that were readily available in an outsourcing model, and to maintain in-house product R&D and clinical trial execution. The company’s assets are contained in the following:

1.  Patents, Patent Applications and Trademarks
2.  Significant intellectual capital, know-how and expertise in the anatomy and physiology of the carotid body.
3.  Significant know-how and expertise in the measurement of carotid body activity via chemosensitivity and interpreting that data to identify patients most likely to benefit from carotid body ablation.
4.  Experience from over 70 carotid body targeted procedures (surgical excision, RF ablation, transvenous ablation) with 39 patients treated with the most recent tranvenous product embodiment.
5.  Clinical data from four clinical studies, three manuscripts and three abstracts.
6.  Fixed assets of approximately $500,000 which includes materials and components necessary to build additional ablation systems and continue clinical studies in additional indications like heart failure.

The assets of Cibiem will be sold in whole or in part (collectively, the “Cibiem Assets”). The sale of these assets is being conducted with the cooperation of Cibiem.  Cibiem and its consultants will be available to assist purchasers with due diligence and a prompt, efficient transition to new ownership.

The CTUS product was manufactured by Corpus Medical in Campbell, CA. Corpus Medical was acquired recently by Confluent Medical which is an established, qualified manufacturer in the medical device industry that supplies product to major med-tech strategics. We have not completed a device build with Confluent, but it is our understanding that they would be willing to bid on future work for Cibiem.  We have also done some preliminary work to qualify Duke Empirical in Santa Cruz, CA as a second contract manufacturer.

 

Cibiem, Inc. Key Personnel

Ken Martin — President and CEO/Board Member:  Ken Martin has led the company’s product development, product planning, operations, and relationships since 2013.  Martin has over 20 years of experience in multidisciplinary technology development and product engineering of medical devices. Prior to joining Cibiem, Ken was President and CEO of Sadra medical where he worked with the founding team to significantly redesign the product leading ultimately to the company’s acquisition by Boston Scientific.  Prior to joining Sadra, Ken was vice president of engineering at Hansen Medical, a robotic catheter control system company, and at Immersion Corporation, a pioneer in haptic feedback systems used for simulation and hands-on medical training. Prior to that, he was with IDEO, a product design and innovation consulting firm.

Ken holds a B.A.Sc. in mechanical engineering from the University of Toronto, an MS in manufacturing systems engineering from Stanford University and an MBA from Santa Clara University. He is listed as inventor or co-inventor on over 50 issued patents and published patent applications. He has received a number of awards and fellowships, the most recent of which was the Biodesign Innovation Fellowship from Stanford University in 2004-2005.

 

Cibiem, Inc. Board of Directors

Neil Exter: Venture Investor, Third Rock Ventures

Paul LaViolette: Venture Investor, SV Health Investors

Hank Kucheman: Independent Investor

Fred Khosravi: Independent Director

Michael Buck: Independent Director

Howard Levin: Founder

Louis Cannon: Observer, Venure Investor, BioStar Ventures

 

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”).  Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Cibiem Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Cibiem, Inc., Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and neither Cibiem nor Gerbsman Partners (or their respective, staff, agents, or attorneys) makes any representations as to the accuracy or completeness of the same. 

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the Cibiem Assets.  Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than Friday, September 21, 2018 at 3:00 p.m. Pacific Time (the “Bid Deadline”) at Gerbsman Partners office, located at 211 Laurel Grove Avenue, Kentfield, CA 94904.  Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.  The attached Cibiem fixed asset list may not be complete and Bidders interested in the Cibiem’s Assets must submit a separate bid for such assets.  Be specific as to the assets desired.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  All bids must be accompanied by a refundable deposit check in the amount of $200,000 (wire transfer information will be supplied at a later date).  The winning bidder will be notified within 3 business days after the Bid Deadline.  Non-successful bidders will have their deposit returned to them.

Cibiem reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.  Interested parties should understand that it is expected that the highest bid will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

Cibiem will require the successful bidder to close within 7 business days.  Any or all of the assets of Cibiem will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Cibiem Assets shall be the sole responsibility of the successful bidder and shall be paid to Cibiem at the closing of each transaction.

For additional information, please see below and/or contact:

 

Steven R. Gerbsman

steve@gerbsmanpartners.com

 

Kenneth Hardesty

ken@gerbsmanpartners.com