Editor’s note: Many of the most promising high-tech, biotech and pharmaceutical firms will be presenting at the annual venture capital conference sponsored by the Council for Entrepreneurial Development. The event will be on April 27-28 in Chapel Hill. As it has in the past, Local Tech Wire will profile presenting companies that wished to participate in a Q&A. Second in the series is Alveolus.Stent technology has been made famous by its uses in treating vascular problems, such as clogged arteries. Charlotte startup Alveolus sees many more uses for the technology.

Are investors buying in to the concept?

“We raised $6,000,000 in down economy,” Chris Dancu, vice president of marketing and development, tells Local Tech Wire, “with the economy improving we see further upside ahead.”

Alveolus, which did not disclose its investors, is producing stent technology for use against cancer and other obstructive diseases. Its “products are developed by physicians for physicians,” the company says with an emphasis on developing “a next-generation stent for use in the lungs.” Alveolus already has received five patents and has applied for more than 40.

The market for stent devices is a lucrative one — more than $1 billion, according to Dancu. Alveolus also has in development a removable, self-expanding stent that would not require X-rays.

Dr. Gerard Silvestri, a well know expert on lung cancer who has written widely on the subject, co-founded the company along with businessman Eric Mangiardi in 2001.

The Q&A with Aveolus:

Given the difficult investment climate, have you explored or used other means of getting funds than venture capital? If so, please explain why you remain interested in venture capital.

Yes, we are raised over $ 6,000,000 individual. But we are also interested in partnering with venture firms that provide us additional leadership and insight to get us to the next level.

Are investors telling you that the climate for making deals is
improving? Please explain.

We raised $6,000,000 in down economy, with the economy improving we see further upside ahead.

If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”

In 2001, the company was founded with the vision that technology and development can be leveraged in a $1.5 billion market by keen insight from leading physicians in a variety of surgical and interventional specialties. Through its contracted advisory board of leading physicians in the areas of interventional pulmonology and interventional gastroenterology (GI), Alveolus has designed next generation stent technology and delivery device applications in the emerging field of non-vascular stenting. Alveolus has received FDA and CE approval, and is set to market and sell their next generation tracheobronchial stents in the US & Europe.

In addition, the company expects regulatory approval on the worlds first removable self expanding stent that can be placed with direct visualization (no fluoroscopy or x-ray required) thus potentially eliminating many of the current complications with existing stent technology.

What is the “pain point” (or points) you address for your customers?

Alveolus Stent Technology System addresses all the shortcomings of existing technology: stent migration, tumor-in-growth, and unraveling and tissue granulation. We are filling three important gaps. First, lack of dedicated technology that meets both physicians and patient needs (mentioned above) Second, significant training required for clinicians to deploy existing technology. Third, minimal focus on the non-vascular field by large medical device companies.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

Yes, we have five approved patients and over 40 pending. We received a freedom to operate opinion on the stent technology and delivery device.

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

Boston Scientific (85 percent of the market), Nova-Tech, Cook. The Alveolus stent technology is the first product created specifically for anatomic needs of the Pulmonary and Gastrointestinal space, it can be placed with direct visualization, is removable, can be used for malignant and benign disease, and is bacterial static.

We would capture a large portion of their existing market as physicians would not place the current stents because of ethical and legal reasons with placing a device that is not removable if there is a removable product available. In addition because we can correctly pick the right size stent, place it without the use of imaging technology, and remove it if necessary the training required and concerns about non-removability will be eliminated for doctors interested in stenting but not currently participating because of concerns with existing technology.

Does your company already generate revenue? If so, how much? Are you cash flow positive?

No, minimal revenue at his point, forecasting to be cash flow positive in 2005.

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

Alveolus will be a technology innovator in the approximately $1.0 billion worldwide market for gastrointestinal and pulmonary stenting. Alveolus is also expected to compete in the $500 million emphysema market. The company is positioned to fill the R&D void in this emerging field created by the lack of attention from leading medical device companies and is positioned to become the world leader in developing stents and ancillary products for both cancerous and non-cancerous indications. Growth in the stent market will be spurred by increased physician acceptance, due to more widespread training, removability, and improved visualization technology which will ease stent deployment.

Additionally, hospital costs will be reduced through the use of stents when compared to the use of more expensive alternatives such as prolonged intubations. Through dedicated research and development, training, and the initial market entry points of interventional pulmonology and gastroenterology, Alveolus will establish and maintain a competitive advantage and leverage its success in other areas of non-vascular interventional stenting. Alveolus expects market penetration of 5 percent to 7 percent in pulmonary and gastrointestinal respectively in 2004.

What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?

Alveolus is seeking an additional $6-8 million in capital to facilitate the planned market launch of “STS”, provide working capital for the company, and allow further development of products for advanced Interventional Pulmonary and GI procedures, including the pulmonary optical delivery device, esophageal stent, esophageal optical delivery device, luminal measurement device and biliary stent. Alveolus management believes that this capital will allow the company to get to a cash flow positive position and reach profitability in 2005.

What do you want from an investor other than money?

Consultative services and guidance

Why will investors be impressed with your management team?

Alveolus is led by an experienced management team with extensive backgrounds in medical technology, business planning and implementation, mergers and acquisitions, and non-vascular interventional medicine.

Alveolus currently has eight full time employees and the management team is backed by a support team of outsourced agencies and contracted professionals with experience in building and managing companies.

Additionally, Alveolus has partnered with outside professionals who assist the Alveolus management team with regulatory, clinical, and financial issues. Alveolus intends to market and distribute the products internationally through outsourced distributors and
domestically through sales force of between 25-50 to be employed by Alveolus

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

We are exploring all avenues

Company fact box: www.localtechwire.com/article.cfm?u=7707

Coming next: Biopheresis Technologies