First Quarter Venture Capital Results Slip From Prior Highs, According to Healthcare Corporate Finance News

FOR IMMEDIATE RELEASE Stephen M. Monroe, Partner
Gretchen S. Swanson, Associate Editor
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First Quarter Venture Capital Results Slip From Prior Highs, According To Healthcare Corporate Finance News

Norwalk, CT - April 14, 2008 - During the quarter ended March 31, 2008, health care companies raised more than $1.9 billion in 103 deals with disclosed prices. The Q1:08 dollar total represents about a 31% decrease from the total committed in Q1:07-however, in that quarter, more venture capital was invested in health care companies than any other quarter of the past five years. The number of deals announced declined by 23% in Q1:08, compared with the year-ago quarter.
 

Health Care Venture Capital Investments, First Quarter
Ended March 31, 2008
Sector
Number of Deals
Dollar Amount (in millions)
Medical Devices
32      
$663.20  
Pharmaceuticals
16      
$400.32  
Biotechnology
24      
$360.54  
Biopharmaceuticals
16      
$358.85  
Health Care Services
 7      
 $81.60  
e-Health
 8      
 $52.90  
Total
103      
$1,917.41  

 
Nearly 40% of the deals announced had investment sizes of $20 million or more.  The average deal size for Q1:08 was $18.6 million, and the median, $15.0 million.  The largest deals announced in Q1:08 were all in the health care technology sectors.  Included among the largest capital commitments are some tranched financings and some venture investments tied to other financing instruments. 
 
“Many investors are showing a preference for companies with existing products, advanced product candidates or plans to acquire or in-license assets, while others continue to support early-stage enterprises,” remarked Gretchen S. Swanson, Editor of Healthcare Corporate Finance News.  “Furthermore, right now there are more enticing exit opportunities through M&A than an IPO.”
 
Each of the three largest deals is in the $60 million dollar range, with one announced in each month of the quarter.  In January, American Capital invested $66 million in Avalon Laboratories, a supplier of disposable cardiopulmonary vascular cannulae.  Taligen Therapeutics announced a $65 million, six-tranche round in February to help move its lead candidates into clinical development.  In March, TriVascular2 was formed with $65 million to acquire a subsidiary of Boston Scientific, as well as certain intellectual property of its predecessor company, TriVascular, Inc. 
 
“With liquidity opportunities lacking in the public equity markets, venture capitalists are likely preparing to make additional investments in many of their portfolio companies,” commented Stephen M. Monroe, Managing Editor.  “However, in some cases, it may be necessary to implement restructuring plans and cutbacks to keep private, development-stage companies afloat in the currently unstable financial markets.” 

With 32 venture investments totaling $663 million in funding, the medical device sector was the most active in health care during the first quarter, with the greatest amount of funding (35%) and the most deals announced (31%).  Nearly 21% of the total dollars invested in health care during the first quarter was committed to pharmaceuticals, while about 19% each went to the biotechnology and biopharmaceutical sectors.

The most active venture capital firms of the quarter, based on publicly announced transactions, participated in four or more rounds.  These firms are listed below.

Top Health Care Venture Capital Investors, Q1:08
Firm
Number of Investments
InterWest Partners
6
Kleiner Perkins Caufield & Byers
6
New Enterprise Associates
6
Polaris Venture Partners
6
Domain Associates
5
Versant Ventures
5
Fidelity Biosciences
4
MPM Capital
4
Sofinnova Ventures
4

Strategic investors that participated in deals during the quarter include Medtronic, MedImmune Ventures, Safeguard Scientifics, Kaiser Permanente Ventures, Mitsubishi Corporation, Novartis Venture Fund and Merck Capital Ventures. 

Healthcare Corporate Finance News  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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