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September 2006 issue
New Imaging Applications Show Promise: Venture-Backed Companies Target
Diabetes, Fibroids, Other Indications 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:
3i Group p8 |
New Imaging Applications Show Promise: Venture-Backed Companies Target Diabetes, Fibroids, Other IndicationsDuring the month of August 2006, five companies refining or redefining the use of imaging technologies reported venture capital rounds. Mirabilis Medica raised $4 million in its first round of outside funding, led by Charter Life Sciences and vSpring Capital. Michael Lau, M.D., the CEO of Mirabilis, stressed to us that his company is focused on developing applications for their technology that will convert traditionally surgical, hospital-based procedures to non-invasive, office-based procedures. Mirabilis is initially focused on uterine fibroids, the most common, non-cancerous tumors in women of childbearing age, but expects its technology to have applications for other indications in the future. The United States currently spends $3.5 billion annually on fibroids, for which the most common treatment is hysterectomy, or removal of the uterus, followed by myomectomy, or removal of the tumors. Both options entail invasive surgery, prolonged recovery time and high cost, and few other good options exist so many patients go untreated. Mike Connolly, a Principal at vSpring Capital, told us that Mirabilis is part of a trend he has seen in the market, for at least 20 years, toward more novel imaging applications to facilitate less invasive medicine. He expects that the market for the treatment of fibroids could be expanded because physicians would be more comfortable recommending a product like Mirabilis is working on than the current options. Mirabilis wants to make it possible for doctors to see in real time an image of fibroids as they are being ablated, without any incisions, through a transvaginal, ultrasound image-guided, high intensity focused ultrasound (HIFU) device. At this time, no other device on the market offers intra-cavity HIFU treatment for fibroids, giving Mirabilis an advantage in this market, assuming the product and procedure are approved and accepted by the market. The system is being designed so that physicians can perform the procedure in the office in about 30 minutes, allowing the patient to resume normal activities in a few days. Mr. Connolly pointed out that Mirabilis has a strong patent portfolio, including the exclusive license for its unique technology, and will hopefully be the first to bring to market this type of real-time system. Founded in 2004, Mirabilis hopes to launch its system in the United States within a few years. The company is exploring a variety of business models to produce revenue. The proceeds of the Series A financing are being used to fund further development and initial human trials, so we would expect to see the company to raising its next round before the product is ready for launch. Dr. Lau says that the machine is pretty easy for gynecologists to learn to use, since most already do transvaginal scanning. Besides, doctors would generally prefer to retain their patients instead of see them go elsewhere, such as to a radiologist, as some current treatments require. In the past several years, insurance companies have become very interested in procedures done in lower-cost environments outside the hospital, he says, and reimbursement has changed recently. Now, he says, it is in the interest of the doctors and the insurance companies to switch to a new, less costly, less time-consuming method of treatment, because insurance companies are paying less for endometrial ablation. Benefits to patients of the Mirabilis procedure include non-invasiveness, a faster, lower-cost treatment, quicker recovery time, and reproductive abilities are more likely to be retained. Hopefully, some savings will be passed on to patients as well. Among other imaging companies that secured venture funding this month, Israel-based InSightec Ltd., offers an FDA-approved system for the magnetic resonance imaging (MRI) visualization and ultrasound ablation of symptomatic uterine fibroids. InSightec secured $15 million in funding from existing investors, Elbit Medical Imaging, GE Capital and MediTech Advisors, and will use the proceeds to expand its research and development and sales and marketing activities, as well as for general corporate purposes. The fibroid ablation system, InSightec’s first product, integrates focused ultrasound thermal ablation with GE Healthcare’s MRI capabilities. One source said InSightec’s system requires alternation between the MRI and ultrasound, so the procedure is not in real time, and costs more than a hysterectomy. VeraLight, Inc. secured $17.5 million in Series B financing from investors led by Psilos Group and including CMEA Ventures, vSpring Ventures, Wasatch Venture Fund, Dow Chemical Company and others. From the investor’s point of view, Mr. Connolly of vSpring noted that VeraLight has a strong patent estate and will address a market that is already large—roughly $135 billion, or 10% of the United States health care budget, goes to diabetes and its complications—and still growing. For patients, VeraLight’s device will offer the ability to detect up to 30% more diabetics and pre-diabetics than the most common method currently in use, and is non-invasive. Last year, Mr. Connolly noted, was the first year Medicare would actually pay for diabetes screening. Both of the companies vSpring invested in during August are applying imaging to accomplish new tasks and perform procedures less invasively. In the case of Mirabilis, he said the technology involves two areas that are still actually evolving for the FDA, which is looking at new ways to treat fibroids and as well as how it should evaluate HIFU. David Van Avermaete, the Chief Executive Officer of VeraLight, indicated that there is room for expansion in this market when he told us that about 41 million people are estimated to be pre-diabetic, and that in the past few years new drugs have been under development that would stop the disease while in a pre-diabetic state. VeraLight’s device will not require any blood to be drawn and will be ideal for use at pharmacy clinics, ambulatory care centers and by corporate screening companies, as well as by companies such as Kaiser Permanente, Geisinger and Quest Diagnostics (NYSE: DGX). The greatest challenge he spoke of in the market VeraLight is addressing will be educating health care providers on how and why the technology works. VeraLight’s product uses fluorescence spectroscopy to non-invasively measure advanced glycation endproducts in the skin, a biomarker of diabetes. This year the company is building a clinical prototype, and by the middle of next year hopes to initiate an FDA trial, then in early 2008 plans to launch the product. Also in the imaging arena, Bioptigen, Inc., a company developing optical coherence technology applications for imaging systems, raised $1.3 million in Series A funding. A spin-out of the Biomedical Engineering Department at Duke University, Bioptigen will use the proceeds for business development and expansion. Investors included the Piedmont Angel Network and the Inception Micro-Angel Fund. Last but not least, Taglich Brothers acted as the placement agent for a $7.3 million Series A financing announced by Dilon Technologies, LLC, a manufacturer and supplier of high-resolution molecular imaging systems. Dilon will use the proceeds to expand national sales operations and international ventures centered on its non-invasive diagnostic tool used in conjunction with mammography for the detection of breast cancer. |
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