CHF Solutions, Inc., Closes $26.2 Million in Series D Funding.

Business Editors & Health/Medical Writers

Proceeds to Be Used to Launch Unique Ultrafiltration System;

Congestive Heart Failure Patients Stand to Benefit

CHF Solutions, Inc., a private medical device manufacturer, has closed a $26.2 million Series D equity financing, led by MPM Capital of San Francisco. Five other firms also participated in the offering. The company plans to use the proceeds to launch its System 100 Fluid Removal System, a mechanical pump ultrafiltration system that removes excess fluid from fluid-overloaded patients. Fluid overload afflicts congestive heart failure patients. Financing proceeds will enable the company to develop a sales and marketing infrastructure for direct distribution in the United States, build inventory, launch the product in international markets and conduct U.S. clinical trials. In early June, CHF Solutions received marketing clearance for the System 100 from the U.S. Food and Drug Administration.

Fluid overload can cause severe fatigue, shortness of breath and subsequent hospitalizations. The market potential for treating fluid overload is very large. For congestive heart failure alone, an estimated five million Americans suffer from the condition, incurring 3.1 million hospital admissions at a cost of more than $23 billion annually.

"We look for strong opportunities and market potential when we consider companies for equity financing," said Kurt Wheeler, general partner, MPM Capital. "In the case of CHF Solutions, we feel that we've found a company that can help millions of patients suffering from fluid overload. The market potential for treating fluid overload is substantial."

"We are delighted to have the financing in place to launch our product and especially pleased to have the support of a strong group of investment firms," said John L. Erb, CHF Solutions chief executive officer. "The System 100 addresses a profound need for an expedient and cost-effective therapy for fluid-overloaded patients, including many who suffer from congestive heart failure. Our technology can remove excess fluid quickly and at a controlled rate, in contrast to intravenous drug therapies that involve significant risks and extended hospitalizations. A limited market launch at selected medical centers is underway, and we are planning a national rollout late in the third quarter of this year."

Other investors in the $26.2 million round of Series D financing include Investor Growth Capital, New York; MPM BioEquities, San Francisco; Brightstone Capital, Minneapolis; Mason Wells Biomedical, Milwaukee; and Zesiger Capital Group LLC, New York.

How the Product Works

The CHF Solutions technology offers a rapid, precise and safe approach to treating fluid overload. The System 100 removes two to four liters of fluid in a four- to eight-hour period. In contrast, standard intravenous diuretic drugs are used cautiously due to their increased risk and may take as long as four days in the hospital to achieve similar results. In addition, the System 100 has been shown to have no impact on blood chemistry, blood pressure or heart rate of clinical significance.

"The System 100 product has the potential to dramatically improve the way we treat patients suffering from fluid overload," said Dr. William Abraham, chief, Division of Cardiovascular Medicine, University of Kentucky College of Medicine, Lexington, KY. "It can substantially reduce a patient's time in the hospital, and it's an excellent alternative to intravenous drug therapies that can incur significant health risks."

The System 100 allows a cardiologist or nurse to extract a targeted volume of fluid from the blood at a precisely controlled rate using a technique called ultrafiltration that separates the excess fluid from the blood. The System 100 utilizes a proprietary single-use blood circuit/filter and an easy-to-use, reusable console to perform ultrafiltration. It connects to the blood stream through catheters inserted into peripheral veins, typically in the arms. The ability to predictably remove excess fluid reduces the risk of removing too much fluid too quickly, which can result in low blood pressure and vital organ damage.

Fluid Overload and Congestive Heart Failure

Fluid overload can be caused by many things including renal failure, post-surgical fluid overload, metabolic disease and congestive heart failure. Patients with congestive heart failure represent the largest group of fluid-overloaded patients. Congestive heart failure (CHF) is the progressive inability of the heart to pump enough blood to support the vital organs; deterioration of the heart muscle leads to decreased pumping capacity, elevated stress on the heart and increased fluid retention.

In the United States alone, more than five million people suffer from congestive heart failure. With the aging population, congestive heart failure diagnoses are growing eight percent annually in this country. The American Heart Association (AHA) calls congestive heart failure "the disease of the millennium."

The System 100 can reduce days in the hospital. Medicare reimbursement only covers about half of the typical $10,000 cost of hospitalization for fluid overload associated with congestive heart failure, so there is significant interest in the cost effectiveness of the System 100. The cost of the System 100 therapy is under $1,000 and will be reimbursed under current DRG codes.

About CHF Solutions

CHF Solutions, Inc., based in Brooklyn Park, Minn., designs and manufactures mechanical pump/filter systems to remove excess fluid in fluid-overloaded patients and improve their quality of life. The company's mission is to provide cardiologists with innovative tools to better manage fluid-overloaded patients and to significantly reduce health care costs. For additional information, visit www.chfsolutions.com.