March
2006 issue
Consistency In Venture Capital? Flow of
Funding Shows No Signs Of Slowing, With More Large Deals
The flow of venture capital to the health care
markets continues in full force, and one of the largest deals announced last
month was by a company that is currently focused on treatments that address
gastrointestinal disorders. read more
...
New Device Frees Up Diabetics, Providing
Insulin Infusion Pump Therapy Without The Tubes That Tether
In a late-stage round, one company secured funding to grow its business and
meet the demand for its first product, designed for the management of
insulin-dependent diabetes.
...
Public Equity Market
Two rather impressive initial public offerings were completed by health care
companies last month, among a total of six that were priced, but they were
certainly not biotechs.
...
Mergers and Acquisitions
More than a few billion dollars were committed to fund the health care
mergers and acquisitions announced during February, but there were no
billion-dollar deals in the month.
...
Private Equity Market
Publicly traded health care companies have liberal access to institutional
funding right now, and in February the largest deal was announced by a
company focused on gastrointestinal disorders.
...
Notes & Briefs
...
Key Contacts
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headlines.
Companies Mentioned in this issue:
March 2006
3i Group p4
A
A Place For Mom p8
A.G. Edwards p3
A.P. Apteka p5
Abbott Laboratories p9
Abingworth p8
Access Pharmaceuticals p11
Accumetrics p8
Acologix p8
ACON p5
Acorda p3
Adheris p5
Adolor p3
Aduromed p8
Advanced Life Sciences Holdings p10
Advanced Technology Ventures p7
Aesthera p8
AEW p5
AEW Capital Management p6
Aircast Incorporated p6
Akzo Nobel p3
Alexza Pharm p3
Alliance Pharma p5
Alliance UniChem p5
Allscripts p3
Alphatec p3
Alta Partners p9
American CareSource p11
American Health Holding p12
American Medical p5
American Medical Instruments Holdings p4
American Retirement p5
American Teleradiology DayHawks p4
American Teleradiology Nighthawks p4
Amphion Innovations p8
Amphora p5
Andara Life Science p5
Angiotech Pharmaceuticals p4
Animas p9
Antares Pharma p11
Applied Visual Concepts p12
APT Pharmaceuticals p6
Aradigm p9
Arcadia Resources p5
Arena Pharma p3
ARYx Therapeutics p7
Ascent Biomedical Ventures p7
Athenagen p8
Avalon Pharmaceuticals p11
AxERx p5
B
Baker Brothers p11
Banc of America p3
Banyan Corp. p5
Battery Ventures p8
BB Biotech Ventures p7
Bear, Stearns p3
betapharm Group p4
BioMedinvest p8
Biomimetic p3
Biomira p11
Bioniche Pharma p5
BioSphere Medical p11
Biotechnology Value Fund p11
Bioxel Pharma p11
Birchmere Ventures p6
Bridgetech Holdings p3
Bristol-Myers Squibb p9
Brookdale Senior Living p6
Brookdale Senior Lvg. p5
Burrill & Company p7
Business Development Bank of Canada p8
C
CAC, LLC p8
Cadence Pharmaceuticals p9
California Technology Partners p7
Caliper Life Sciences p5
Callisto Pharmaceuticals p11
Cambrex p5
Canaan Partners p7
Canaccord Capital p10
Caprius p11
Cardica p3
CardioTech p3
Caregiver Homes p12
Carter Securities p11
Catalyst Biosciences p7
CDIB BioScience Venture p7
Ceiling Scenes p12
Cel-Sci Corporation p11
Centrus p5
Cepheid p3
Cerus p3, p5
Charter Life Sciences p8
Chelsea Therapeut. p3
Chelsea Therapeutics p11
Chicago Growth Partners p7
CHL Medical Partners p7
Chromos Molecular p11
CIBC p3
Citigroup p3
ClickFind p5
Coda Genomics p8
COPD Partners p6
Corautus Genetics p3
Corus Pharm p3
Credit Suisse p3
Curlin Medical p5
Cutanogen p5
Cyberkinetics p5
Cyberonics p12
Cystic Fibrosis Foundation p8
D
DATATRAK p5
Dawson James Securities p11
De Novo Ventures p8
Deutsche Bk. p3
dj Orthopedics p6
Domain Associates p7
Dr. Reddy’s Laboratories p4
DSI Holding Company p6
Dundee Securities p10
DuPont p2
E
eDiets.com p12
Eisai p5
Ekips Technologies p8
Elder Service Plan of the North Shore p12
EMBL Ventures p8
EndoGastric Solutions p7
EntreMed p10
EpiCept p11
Escalon Medical p5
EyeSense p8
F
Federated Kaufmann Fund p1
Ferndale Pharmaceuticals p5
Ferris, Baker Watts p3
First Albany p3
Fonds de solidarite des travailleurs du Quebec p11
Foundation Medical Partners p7
Foundation Medical Partners p7
Frazier Healthcare Ventures p7
Fresenius Medical Care p6
Friedli Corporate Finance p8
Fuji Photo Film p5
G
Generex p3
Genitope p3
Genospectra p8
GlaxoSmithKline p5
Global Pharmatech p3
Goldman, Sachs p4
GPC Biotech p10, p11
Graceway Pharmaceuticals p1, p7
GTCR Golder Rauner p1, p7
H
H&Q Healthcare Investors p11
H&Q Life Sciences p11
HealthCare Ventures p7
Healthcor Management p11
HealthSpring p4
Heartscape Technologies p8
Horizon Health p5
I
Icoria p6
Immtech p3
Inflabloc Pharmaceuticals p8
InnoCentive p8
Inovio Biomedical p3
Insulet p1
INTERCEPT p5
INVAMED Pharma p5
Inventages Venture Capital p8
Inverness Medical p5
Iomai p3
IonSpec p5
Israel Healthcare Ventures p8
J
Jacksonville Hlthcare. p5
JAFCO Life Science Investment p7
Jefferies p3
Jennison Associates p2
JMP Secs. p3
Johnson & Johnson p9
JPMorgan p3
K
King Pharmaceuticals p1
Kingsbridge Capital p10, p11
Kingswood Pines Hosp. p5
Kleiner Perkins Caufield & Byers p8, p11
L
L Capital Partners p8
La Jolla Pharm p3
Lazard p3
Lazard Capital Markets p10
Lectus Therapeutics p8
Lehman Bros. p3
Lehman Brothers p3
Life Science Angels p8
Life Sciences Partners p8
Ligand Pharm p3
M
MacroChem p11
Maverick Capital p2
Medical Ventures Corp. p11
Medsurge Medical p11
Medtronic MiniMed p9
Medwave p11
Merlin BioMed p7
Metabolex p9
Microbia p1
Misys Healthcare p5
Montreux Equity Partners p7
Moog p5
Morgan Stanley p3, p4
Morgenthaler Ven- tures p7
Morgenthaler Venture Partners p7
MPM Capital p7
MRP Group p5
Myogen p5
N
National Renal Institutes p6
Neogen p5
New Enterprise Associates p7, p8
New Life Scientific p5
NightHawk Radiology p4
Nomura Phase4 Ventures p7
Norwich Ventures p8
Novacea p3
NovaMed p5
Novartis Venture Fund p7
Novavax p11
Novel Bioventures p7
NuVasive p3
O
Oakwood Medical Investors p7
Oklahoma Life Sciences Fund p8
Optigenex p3
Oracle Hlthcr. Acq. p3
OrbiMed Advisors p1
Organon p3
OrSense p8
OrthoLogic p5
P
Pacific Growth p3
PainCare Holdings p5
Paramount BioCapital p11
Paul Royalty Fund II p10
Payerpath p5
Pequot Capital Management p8
Pequot Ventures p9
Peregrine Pharm p3
Perseus Proteomics p5
Pharming Group p10
Physicians Medical p5
Piper Jaffray p3
PLIVA Pharmaceuticals p5
Polaris Ventures p2
Precision Engineering p2
Premier Health Services p5
Preston Plaza Surgery p5
Prism Ventures p8
Progenics p3
ProQuest Investments p7
ProRhythm p8
Prospect Ventures p11
Protalex p3
PTC Therapeutics p6
Public Citizen p12
Q
QuadraMed p3
QuantRx Biomedical p11
QuatRx Pharm p3
Quester p8
R
R.W. Baird p3
Radius Ventures p8
RBC Cap. p3
RCT BioVentures p7
Remedy Therapeutics p5
Renal Solutions p6
RiverVest Venture Partners p8
Riviera Senior Living p5
Rockwell Medical p11
Rodman & Renshaw p10
Roth Capital Partners p11
RoundTable Healthcare Partners p4
S
Santarus p10, p11
SCO Capital Partners p11
SCO Securities p8, p11
Scottish Widows Investment Partnership p7
Senate Finance Committee p12
Seniorlink p12
SeQual Technologies p8
SG Cowen p10
Sigma Capital p2
Sigma-Aldrich p8
Smiths Medical p9
Sofinnova Partners p8
Sofinnova Ventures p7
Somanetics p3
Somanta Pharmaceuticals p8
Special Situations p11
Spectrum Dental p5
Spencer Trask Ventures p8
Spine Wave p7
Sprott Securities p11
Sprout Capital p7
Stereotaxis p3
Steven D. Bell & Co. p5
Summit Partners p4
Sunnylife Global p11
Sunrise Medical p6
Sunwest p5
Supernus Pharm p8
SV Life Sciences p9
Syncro Medical Innovations p8
T
Tailwind Capital p6
Tang Capital p11
Tapestry Pharmaceuticals p11
Targacept p3
Technologie Biolactis p8
Technology Partners p7
Therasense p9
Thoma Cressey Equity Partners p7
U
U.S. Food and Drug Administration p12
UBS Investment Bank p3
Uso Racional p5
V
Valera Pharm p3
Varian p5
vasopharm BIOTECH p8
VeinRx p8
Venrock Associates p2
Ventiv Health p5
Versant Ventures p1
ViRexx Medical p11
Virtual Expert Clinics p8
Vista Surgical Hospital p5
Vital Signs p3
vSpring Capital p8
W
WellCare p3
WellGen p8
World Health Alternatives p5
WR Hambrecht p3
Wulfing Holding p5
X
Xenogen p5
Y
Yasoo Health p8
YM BioSciences p10
YM Biosciences p11
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New Device Frees Up Diabetics, Providing
Insulin Infusion Pump Therapy Without The Tubes That Tether
Email this Editor
One company that secured
funding last month is poised to simultaneously capitalize on growth that
has been occurring in more than one subsector of health care. Insulet
Corporation raised $50 million in its Series E financing, which was
led by OrbiMed Advisors and included Versant Ventures and
other previous investors, as well as The Federated Kaufmann Fund.
Insulet, a diabetes management company, will use the proceeds to increase
its ability to produce its first product as it builds its business.
According to Dr. Ross Jaffe, a co-founder of Versant Ventures, “Part of
the appeal for investors is that Insulet has a product that is in demand,
proven to work, approved by the FDA and has demonstrated reliability among
adult patients.” Also, people with diabetes represent a very large patient
population. Duane DeSisto, the President and CEO of Insulet, says the
company is “in a great spot,” having raised sufficient capital to be in a
position to build out as a stand-alone entrepreneurial company.
Insulet’s first product, the OmniPod Insulin Management System, could be
discussed as a drug delivery device. Venture capital funding for companies
focused on drug delivery reached $183 million in 2005, representing an
increase of 14%, compared with 2004. And in 2004 drug delivery companies
secured 52% more than in the previous year. So when the founders of
Insulet sat down more than five years ago, drug delivery would have been a
good subsector of health care to focus on.
But Insulet is first and foremost a diabetes management company, and
lately, as Mr. DeSisto noted, “the equity markets have been kind to
diabetes companies.” Companies targeting diabetes in one way or another
have raised more than $78 million already this year. For 2005 the amount
of capital invested in private companies focused on diabetes increased by
49%, compared with 2004—and that amount increased by 146% in 2004,
compared with 2003. So by targeting a therapeutic specialty, the founders
have positioned themselves in a market that is attracting increasing
amounts of venture capital. However, that was not the motive for Insulet
to be conceived as a company.
In a case of need fueling innovation, when the son of one of Insulet’s
principal investors was diagnosed with Type I diabetes, he quickly learned
that this patient population could really use some help and decided to do
something about it. Insulet was initially formed in 2000 for the purpose
of developing a better way to effectively deliver insulin to people with
Type I (insulin dependent) diabetes. John Brooks, a founding partner of
Prism Ventures, co-founded Insulet with retired partner Duane Mason.
Prism Ventures provided seed funding for the company. After coming up with
the idea for the OmniPod System, the founders not only hired engineers,
but spent time with people with diabetes, accumulating almost two years of
research before actually designing the product, which was conceived from
scratch.
Diabetes is one of the largest domestic markets for health care in terms
of patient population, with an estimated 1.5 million people who have Type
I diabetes and up to 15 million who have Type II diabetes in the United
States. With its first product, Insulet is positioned as a new player in
the infusion pump business, instead of generating a me-too device that
mimics products from the others in this space—namely, Medtronic MiniMed
(NYSE: MDT); Animas Corporation, which was recently acquired by
Johnson & Johnson Corporation (NYSE: JNJ); and Smiths Medical MD,
Inc. of St. Paul, Minnesota.
Insulin therapy is the required treatment for people with Type I diabetes.
Currently the two options for insulin delivery are injection and infusion.
Type II diabetics often progress in treatment from diet to drugs, with
insulin as a last resort. Studies done in recent years suggest that an
infusion of insulin allows for better glucose control and better insulin
control than an injection.
The OmniPod, a device slightly larger than a matchbook, is controlled by a
wireless handheld remote that looks rather like a PDA but is called a PDM,
for personal diabetes manager. The OmniPod can be worn for up to three
days, including in the shower and swimming. Unlike traditional infusion
pumps, which have been the standard pump therapy for the past decade and a
half, Insulet’s device has no tubing so patients no longer need to stay
tethered to a machine at all times to receive insulin.
The primary market for the system is Type I diabetics, who have to check
their glucose levels up to eight times per day. Type II diabetics, who
check their levels less frequently, are a secondary market. The PDM
contains an Abbott Therasense glucose meter that diabetics of either type
can use to check glucose levels. Dr. Jaffe was an early investor in
Aradigm Corporation (NASDAQ: ARDM) and also Therasense, which
was sold to Abbott Laboratories (NYSE: ABT). He describes the
OmniPod System as next-generation, saying that although “Insulet has not
changed the fundamentals of insulin delivery, they have tried to make it
better.” Standard insulin infusion delivery systems cost $5,000 to $7,000
upfront, plus supplies and glucose monitoring equipment.
The standard MSRP for the OmniPod System is around $800 for the starter
kit, plus $30 per pod. Insulet expects to help grow the market for insulin
infusion pump therapy by extending the reach of pump therapy to people
with diabetes, Type I or Type II, who had previously opted for injection
therapy.
Mr. DeSisto says that a good number of patients have already experienced
satisfaction with Insulet’s system, which has been well received by a
significant number of providers, with the number of covered lives in the
millions. Insulet has been shipping the OmniPod System since October 2005,
and the company has already grown to include more than 120 people. This
year Insulet will be focusing on automating its manufacturing process in
order to increase capacity. The company will have to meet the demand of at
least 122 OmniPods per year, per patient. It is expected that Insulet will
be manufacturing in full force by the end of 2006 or the beginning of
2007.
Anecdotally, Mr. DeSisto says, among patients using the OmniPod System
there have been observations that A1c levels decline in correlation with
lesser amounts of insulin, suggesting that such simple monitoring of
glucose levels allows patients to control the disease just as tightly with
a smaller amount of insulin. A1c levels are the primary indicator in Type
I diabetes patients of the level of glucose control. Clinical trials will
be done to determine if this anecdotal experience yields any statistical
results. But the next study Insulet is focused on is for user evaluation
among patients in the pediatric Type I diabetes population, which will
start in about two weeks.
To date, Bedford, Massachusetts-based Insulet has raised a total of
approximately $120 million in venture capital. The company raised $36
million in its Series D financing, which was led by Alta Partners
and announced in March 2004, to support the expansion of its program in
the use and benefits of insulin infusion therapy. Previously, Insulet
secured a $22 million Series C financing, led by Pequot Ventures,
and an $11 million Series B, co-led by Versant Ventures and SV Life
Sciences.
Versant Ventures also participated in the third-largest venture capital
financing announced in the health care sectors during February. Cadence
Pharmaceuticals secured $53.8 million in financing to fund its
acquisition of the exclusive license, development and commercialization
rights in the United States and Canada to an intravenous formulation of
acetaminophen from Bristol-Myers Squibb (NYSE: BMY). Also in
Versant’s portfolio is Metabolex, Inc., a Hayward, California-based
company that discovers and develops drugs for diabetes.
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