San Francisco Business Times: AirXpanders to start breast reconstruction device trial, raise $7M-$10M

San Francisco Business Times by Ron Leuty, Reporter

Date: Tuesday, August 30, 2011, 12:48pm PDT – Last Modified: Wednesday, August 31, 2011, 10:33am PDT

AirXpanders Inc. will start a clinical study of its breast tissue expansion device in mastectomy patients — and seek additional financing — after the Food and Drug Administration on Monday granted a key exemption.

The Palo Alto company said it will seek $7 million-$10 million to help pay for clinical and commercial work for AeroForm, its device for women undergoing breast reconstruction. That work includes regulatory clearance in the United States and Europe, increased manufacturing and limited commercialization in Europe and Australia.

“We are fortunate to have such committed investors and expect full insider participation,” AirXpanders President and CEO Scott Dodson said in a press release. “It’s always good, however, to improve the capacity around the table, which is what we will seek to do with this round.”

The company has raised $12.1 million through investors GBS Venture Partners, Prolog Ventures    and Heron Capital    . Most recently, it took in $5 million in April 2010 through a Series C round led by GBS and added $3 million through a working capital line from Oxford Finance Corp.    in February.

AeroForm uses compressed carbon dioxide that is gradually released by a wireless remote control by patients through a small internal valve into an implanted expander. It would eliminate the need for saline injections by doctors, according to AirXpanders. The company also said that AeroForm could take as little as 15 days to reconstruct a woman’s breast while saline injections take as long as 22 weeks.

“We see an opportunity to help mastectomy patients restore their shape after the devastating effects of breast cancer and put some degree of control over recovery in their hands,” Dodson said.

Most medical devices that are implanted are considered a “significant” risk by the FDA, according to AirXpanders, and need an exemption before regulators allow a clinical trial to begin.

The AeroForm study, designed to compare AeroForm and saline injections, will be conducted at 10 sites across the United States, including Atlanta, Boston, New York, St. Louis and San Diego. It is expected to enroll its first patient in September toward a goal of 92 patients implanted with AeroForm and 46 patients implanted with saline expanders.

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