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Performing Under Pressure

Kleanthis Xanthopoulos, a veteran of San Diego’s biotech community, is heading up a new venture in La Jolla.

The firm, called IRRAS AB, was originally based in Sweden with operations in Germany. The company brought facilities from Europe to San Diego and the Bay Area this year at Xanthopoulos’ request.

Xanthopoulos, 58, is the former president and CEO of Regulus Therapeutics Inc., one of San Diego’s more prominent public biotechs. Xanthopoulos was at Regulus since its inception in 2007 and grew the firm from a small biotech to — at its height in 2014 — a publicly traded company valued at nearly $1 billion (Regulus’ stock has fallen since; it currently has a market cap of $313 million). Xanthopoulos resigned from Regulus in 2015, and became general managing partner at Vandel Group, a European investment firm.

Vandel was an early investor in IRRAS, recently contributing to an $11.3 million round. As part of the investment, Vandel appointed Xanthopoulos to lead the firm as acting CEO.

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$22 Million in Funding

IRRAS, which has raised a total of $22 million since its founding in 2011, is already commercializing its product — a medical device for neurosurgeons. The tool has earned a CE Mark in Europe, the regulatory equivalent of an FDA approval, and is ready to launch overseas.

Xanthopoulos said he expects IRRAS to start earning revenue by the end of this year. He intends to grow a sales and marketing team in San Diego and fill out the C-suite locally with the addition of a commercial strategy executive.

“We’re establishing a center of gravity here in San Diego,” Xanthopoulos said, adding that manufacturing would occur near San Francisco. Manufacturing is more cost effective there, he said, and they can adapt quickly to various generations of the technology as it advances.

IRRAflow Device

IRRAS’ medical device is called IRRAflow, and while it’s simple in its innovation, it may substantially change how stroke patients are treated.

IRRAS focused on a small population of stroke victims to treat with its device — those who experience hemorrhagic stroke. This kind of stroke happens after severe trauma (such as a car accident) or following a brain aneurism. Blood vessels rupture and blood spills into or around the brain, creating swelling and pressure that damages cells and tissue in the brain.

While hemorrhagic stroke accounts for only 10 percent to 15 percent of all strokes, it accounts for 40 percent of all stroke-related deaths. It is dangerous, and the current treatment for hemorrhagic stroke (or intracerebral hemorrhaging) has room for improvement, Xanthopoulos said.

When the patient is rushed to the hospital today, their cranium is opened (sometimes drilled into if the trauma is deep). A catheter (thin tube) is snaked into the brain, and then hung from the bed where it collects blood and fluid in a bag.

“Then they let gravity do its work as the blood that’s pooled in the brain starts to drip, drip, drip out,” Xanthopoulos said.

To determine whether the brain is cleared of the pooled blood, a nurse pops in at various intervals and checks the catheter.

The idea is to remove the blood from the brain to reduce the pressure inside the cranium, but this method comes with many risks. Often, the blood that’s dripping from the trauma site will start to clot. To clear away the blockage, a nurse has to open the catheter and squirt a solution up through the tube to clear away the clot. This increases the probability of infection, and sometimes a second operation is required. The survival rate for hemorrhagic stroke is quite low, with 55 percent of patients deteriorating rapidly within the first 24 to 48 hours.

Minicomputer Pump

IRRAS developed the IRRAflow to reduce the probability of infection while helping doctors make calculated efforts to reduce pressure building at the trauma site.

The device includes a catheter-within-a-catheter — one tube dedicated to incrementally sucking out the pooling blood, the other dedicated to gently spraying a solution to clear away any clotting or debris.

“Crudely speaking, think of it in terms of plumbing,” Xanthopoulos said. “You irrigate and aspirate. It continues to inflow, and continues to drain. Whatever clot there is, you’re dissolving it slowly.”

To make that process perfectly calculated, the catheter is hooked up to a minicomputer pump which the doctor can program on a case-by-case basis. This takes the place of staff having to check in to manually survey the blood dropping from the catheter. The computer communicates to the staff and doctor when the process is complete.

Small, Defined Market

The market for a device such as the IRRAflow is small but clearly defined and simple to market to. Xanthopoulos said IRRAS has determined that 80 percent of hemorrhagic stroke operations occur in only 15 institutions across Germany, for example. Since the device is already approved in Europe, IRRAS has already gotten to work there. Twelve out of the 15 neurosurgery centers have placed preorders for the product.

Each unit cost about $6,000, Xanthopoulos said, but the real revenue comes in the disposables. Like a razor and blade model, the minicomputer system is only the first purchase. The neurosurgical facility must order a disposable catheter set for each patient, which runs roughly $4,000-$4,500.

IRRAS intends to have regulatory approval in the U.S. by mid-2017, with a launch later that year. Between the U.S. and Europe, the entire market for the device is about $1.5 billion, Xanthopoulos said. IRRAS projects that it can capture 10 percent of that total market in the next five to six years.

Xanthopoulos said he expects IRRAS to reach profitability by 2018, and the company has made projections that it will earn $25 million in annual revenue by 2020.

Xanthopoulos said he intends to grow IRRAS’ “San Diego footprint” by filling out the executive team and sales/marketing staff by the end of next year.

“If we follow the path of other medical device firms (that went public with a single product) like NuVasive Inc. and Nevro Corp. — and we execute as well as they did — we see a huge probability of being a very meaningful company in San Diego,” Xanthopoulos said.

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