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December 2005 issue
Stuffed Bird Still Hungry: Sneaking A Peek
At Year-End 2005 Venture Capital Results Sign up for a trial subscription and get the current issue! Read more about Healthcare Corporate Finance News Read the past headlines.
Companies Mentioned in this issue:
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Stuffed Bird Still Hungry: Sneaking A Peek At Year-End 2005 Venture Capital ResultsThis past month was one of the four thirty-day periods this year for which we recorded 40 or more deals; the others were during February, March and April. From November 1 to November 30, 2005, venture capitalists poured more than $548 million into 40 health care companies. Additionally, there were a handful of other deals totaling $37 million that, although we left messages for parties involved, have not yet been confirmed. Plus, two biotechs, a health care finance company, a device maker and two health care information providers announced venture investments without disclosing an amount. In some cases, no doubt, companies are trying to fly as far below the public radar as possible; in other cases, the rounds may still be open. Such was the case with Affinergy, Inc., a spinout of Duke University that has so far raised $2 million in a round targeted at $3 million, according to a spokesperson for the company. Affinergy, which is focused on developing coatings and medical devices for the orthopedic and cardiovascular markets, recently signed a collaboration agreement with Boston Scientific (NYSE: BSX) to investigate new coatings for cardiovascular stents. But even without the unconfirmed deals, and in spite of any unreported stealth deals, it remains clear that both deal volume and total dollars invested in health care venture capital are on the rise. With the deals announced during November, both total spending and number of deals have already surpassed the year-end totals for last year and the year before. For the 11 months ended November 30, 2005, more than $6.7 billion in venture capital financing has already been raised by health care companies, in a total of 409 transactions. Health care venture capital spending for just the month of November increased significantly in 2005, in comparison to each of the previous two years. Compared with November 2004, this past month’s deals posted a 24% increase in dollar volume and 48% increase in deal volume; and compared with November 2003, a 69% increase in dollar volume and 135% increase in deal volume. However, December 2004 ($647 million; 29 deals) represented a decrease in total funding compared with December 2003 ($748 million; 25 deals), so it will be interesting to see which way the scales tip when venture capitalists have finished stuffing stockings at the end of the year. At least two companies that secured venture funding this past month are focused on doing business in Asia. According to a spokesperson for San Diego, California-based Vital Therapies, Inc., the proceeds of its latest financing will support clinical trials in China of the company’s extracorporeal liver assist device system. The system is a human liver cell-based therapy that provides metabolic support to liver failure patients. Vital Therapies closed its Series B with $8.2 million, which brings to approximately $11.5 million the amount of venture financing it has raised to date. The latest investment was led by MedVenture Associates, with participation from Valley Ventures and others. Also based in California, in Mill Valley, BioPro Pharmaceuticals raised $5 million in its A round, the proceeds of which will be used for expansion. BioPro is already operating in Taiwan, Korea, Thailand, Malaysia and Singapore, and according to a spokesperson for the company, plans to enter other major Asian markets. Founded in 1999, BioPro has been operating since 2003, and hopes to become profitable in the next year or so. The company licenses FDA-approved drugs, primarily from mid-sized United States-based companies, for distribution in underserved markets in Asia. BioPro has licensed two products so far, Gliadel, for brain cancer, from MGI Pharma (NASDAQ: MOGN), and Vantas, for prostate cancer, from Valera Pharmaceuticals. Two funds managed by Sanders Morris Harris, Life Sciences Opportunity Fund II, L.P. and Life Sciences Opportunity Fund (Institutional) II, L.P., contributed to the round. The largest health care venture capital deal this past month was the $46 million Series B announced by Portola Pharmaceuticals, Inc. Portola is focused on applying its expertise in platelet biology, thrombosis and platelet-mediated inflammation to develop safer and more efficacious acute and chronic drugs for indications where current therapies are unavailable or inadequate. The round was led by Advanced Technology Ventures and included Abingworth Management. The proceeds will be used to advance the South San Francisco-based biotech’s lead program, an oral Factor Xa inhibitor, into phase II clinical trials in 2006, and bring its ADP receptor antagonist program, aimed at the $7 billion anti-platelet market, into the clinic. Portola also has in its portfolio a third compound, which inhibits platelet adhesion to artery walls, in preclinical development for a broad range of vascular disorders, including atherosclerosis. Nanosys, Inc., a company that barely scraped its way into our charts, is developing applications of its nanotechnology for the pharmaceutical and other industries. Venture investors that participated in this financing of Nanosys include some active health care investors, Wasatch Advisors, Polaris Venture Partners, Prospect Venture Partners and Medtronic Inc., plus the venture capital arm of the CIA, In-Q-Tel. Separately Adnavance Technologies raised $3.3 million to advance its work developing enabling technology applications that use the conductivity properties of both normal and novel, metallic, forms of DNA. The company’s metallic DNA is expected to have applications in the biosensor and molecular diagnostics markets, as well as for the energy industry. When we spoke with the Chief Executive Officer, Dr. Henry Geraedts, he noted that Adnavance has already received funding support from Canada’s National Research Council’s Industrial Research Assistance Program (NRC-IRAP) and from The Natural Sciences and Engineering Research Council of Canada (NSERC) for its research and development programs. |
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