Mid-Year Data Shows 2007 VC Investments Exceeding Prior Year, According to Healthcare Corporate Finance News

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Gretchen S. Swanson, Associate Editor
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Mid-Year Data Shows 2007 VC Investments Exceeding Prior Year, According To Healthcare Corporate Finance News

Norwalk, CT - July 10, 2007 - Following an exceptionally strong first quarter, the health care venture capital market stayed on course for a robust year during the second quarter of 2007. According to Healthcare Corporate Finance News, venture capital firms invested $2.3 billion in health care companies during the second quarter ended June 30, 2007, bringing the total for the first half of the year to more than $5.1 billion. The number of deals announced increased by about 8% for both the quarter and the half-year, compared with the year-ago periods. For the first six months of 2007, the total amount of venture capital dollars invested in health care companies increased by almost 22%, compared with the first half of 2006. Looking at just the second quarter of 2007, the total dollars invested increased by about 15%, compared with the year-ago quarter.

Health Care Venture Capital Investment Totals By Sector
Sector
Second Quarter Ended June 30, 2007
 
Six Months Ended        June 30, 2007
Number of Deals
Dollar Total,           In Millions
 
Number of Deals
Dollar Total,           In Millions
Medical Devices
35
$733.36
 
78
$1,459.41
Biopharmaceuticals
27
$686.40
 
50
$1,413.78
Biotechnology
25
$368.81
 
52
$761.66
Pharmaceuticals
19
$352.15
 
38
$1,012.50
Health Care Services & Other
6
$119.50
 
18
$354.61
e-Health
5
$35.90
 
15
$98.23
Total
117
$2,296.12
 
251
$5,100.19

Although deal and dollar volume did drop a bit in the second quarter of 2007, compared with the first quarter, by 13% and 18%, respectively, half-year results indicate that this year is still likely to end with more dollars invested and more deals announced than the prior year. “The IPO window is at least partly open right now, but attractive valuation multiples in the M&A market are also drawing venture capital firms and strategic investors to the health care sectors,” remarked Stephen M. Monroe, Managing Editor, “and there is plenty of capital available right now for promising investments.”

For both the second quarter and the first six months of 2007, a bit more than 8% of the deals announced were for $50 million or more. The largest deals of the first half of the year were the $175 million Series A financing announced by EUSA Pharma, a specialty pharma focused on developing and marketing products to hospitals, the $110 million round announced by CardioNet, a provider of wireless mobile cardiac outpatient monitoring solutions, and the $85 million round announced by Sientra, a medical device company focused on plastic surgery and aesthetic medicine.

“Strategic investors, particularly the venture capital arms of major health care and other companies, have been appearing more frequently among investors in recent months,” noted Gretchen S. Swanson, Associate Editor. In just the second quarter, these included Johnson & Johnson Development Corporation, Biogen Idec, Olympus Medical Systems, Schering-Plough, Pfizer Strategic Investments Group and several others. “Venture capital deals tied to an acquisition, licensing deal or strategic agreement are also becoming more common.” The most active venture capital investors of the second quarter and the first six months of 2007, ranked by participation in number of deals, are listed below.

Most Active Health Care Venture Capital Firms
The Second Quarter, Ended June 30, 2007
Number of Investments
The Half-Year, From January 1 to June 30, 2007
Number of Investments
Alta Partners
8
Alta Partners
16
Novartis Venture Fund
8
Novartis Funds
13
Domain Associates
7
Sofinnova Ventures
13
Frazier Healthcare Ventures
6
Domain Associates
12
InterWest Partners
6
Frazier Healthcare Ventures
11
Polaris Venture Partners
6
InterWest Partners
9
Intersouth Partners
5
Polaris Venture Partners
9
Investor Growth Capital
5
Three Arch Partners
9
MPM Capital
5
Canaan Partners
8
Venrock Partners
5
New Enterprise Associates
8
 
 
Pequot Capital
8


Healthcare Corporate Finance News (www.hcfnews.com) reports weekly on financial events in the fast-paced venture capital, private and public equity, and merger and acquisition markets for health care companies, and provides subscribers with access to a searchable online database of health care venture capital deals. This monthly newsletter and weekly email update is published by Irving Levin Associates, Inc., a leading financial publisher and source of market intelligence since 1948. For more information, please call 1-800-248-1668.

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