By Thomas Lee
CORRECTION: Due to a reporter’s error, this article originally and incorrectly stated that Acorn Cardiovascular Inc. had shut its doors. That is not the case.
Acorn Cardiovascular Inc., which has struggled for years to convince the Food and Drug Administration to approve its heart device, seems to be on the rocks.
Early Thursday, sources told MedCity News the company simply ran out of time and money. It seemed as if Acorn had shut down altogether — my sources said as much.
But in a later e-mail, Acorn president Steve Anderson said the company has slashed costs, shutting down its website and moving out of its headquarters in New Brighton, Minn.
Acorn has raised more than $100 million in venture capital. If the company failed, it would be one of biggest (and most expensive) casualties to date among local medical device startups struggling to raise money amid a poor economy and an increasingly skeptical FDA.
Since 1997, Acorn has been developing a mesh device to support the heart, which can swell to three times its normal size as heart failure progresses. Major venture firms such as Cardinal Partners, Fidelity Biosciences, Credit Suisse, New Enterprise Associates and SightLine Partners poured tens of millions of dollars into the startup.
Acorn, however, has yet to win over the Food & Drug Administration. In some ways, the company became both a lightning rod for critics — who say the FDA is too soft on medical devices — and a rallying cry for industry supporters, who accuse the agency of stifling innovation.
In 2008, the Star Tribune in Minneapolis suggested that Daniel Schultz, the former head of the FDA’s Center for Devices & Radiological Health, helped Acorn even after his own agency’s advisory panel recommended to deny the company’s pre-market approval application.
A subsequent FDA dispute resolution panel also declined to approve the device. But with Schultz’s help, Acorn eventually reached an agreement with the FDA for another clinical study, the newspaper reported.
Public Citizen, a watchdog group founded by Ralph Nader, criticized the FDA for approving the new study.
Acorn denied Schultz acted improperly.
“Dan was required to work with the two panels to define a clinical study which met the data requests of the panels,” Anderson told MedCity News at the time.
“This study would then have to be conducted and, if successful, Acorn would have had to go through a full PMA review process with the FDA with no guarantees whatsoever on success,” Anderson said. “The idea that this process meant that Dan was supporting Acorn is completely false and shows a lack of understanding of the process.”
In any case, Schultz left the agency amid criticism that he was too cozy with industry. Today, he’s advising medical device companies for Greenleaf Health LLC, a regulatory consulting firm in Washington, D.C.
His replacement, Dr. Jeffrey Shuren, now runs the FDA’s medical device unit, which is widely expected to toughen approval standards for both its 510(k) and PMA applications.