January
2007 issue
Hot Times In Health Care Venture Capital - Year-End 2006 Results Reveal More
Deals Done, More Dollars Spent
This is the fourth year in a row that the health care venture capital market
has been growing, in terms of both dollars invested and number of deals;
funding for health care services helped drive the yearly and quarterly
totals.
...
Biopharma IPO Ends Big Year With a Bang - Health Care Stock Posts Impressive
Gains In Aftermarket Performance
Initial public offerings by health care companies increased in number during
2006, compared with the preceding year, and we profile the company that in
December priced the IPO with the most notable after-market performance.
...
Mergers & Acquisitions
Another record year for health care M&A transactions comes to a close with
three billion-dollar deals, plus the sale of a biopharma results in the
first exit for a newer venture capital firm.
...
Venture Capital Market
The two largest deals announced during December involve companies focused on
the oncology market, as do four of the others, and a solid month of
transactions boosted year-end figures.
...
Private Equity Market
We talked with the principals and founders of a new alternative investment
group that was just established by a major investment bank to focus mainly
on health care royalty opportunities.
...
Notes & Briefs
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headlines.
Companies Mentioned in this issue:
January 2007
3i Group p2, p6
3M Company p14
A
Abbott Laboratories p12
Access M.D. p5
Accuitive Medical Ventures p7
Accuro Healthcare Solutions p9
Acorda Therapeutics p3
Adams, Harkness & Hill p12
Adams Respiratory Therapeutics p16
Advanced Magnetics p3
Advanced Pediatric Care p5
Advancis p3
Advancis Pharmaceuticals p14
Affentranger Associates p8
Affymax p1
Affymax Research Institute p4
Akorn p3
Albany Ventures p6
Aldagen p8
Alexza Pharmaceuticals p11
Alloy Ventures p7
Alnylam p3
Alphatec Holdings p1
Alta Partners p2
AmerisourceBergen p5
Amgen p4
AMN Healthcare p16
Angiotech p3
Antisoma p11
AorTx p8, p9
Apax Excelsior p4
Apax Partners p12
Aquarius Medical p15
ArchAngel BioVentures p8, p10
Ardea Biosciences p5
Ardent Health Services p9
Arena p3
Artes Medical p3
Assured Pharmacies p5
Assured Pharmacy p5
Aushon Biosystems p8
Azimuth Opportunity p14
B
Bain Capital Ventures p8
Banc of America p3
Banc of America Securities p14
Bay City Capital p8
Bear Stearns Health Innoventures Management p4
Behavioral Healthcare Options p14
Beijing Med-Pharm p14
BiancaMed p8
Biomet p5
BioMimetic p3
Biomira p14
Biopure p3
BioStar Private Equity p8, p9
Blue Trading, Inc. p11
BMO Capital Markets p14
Boston Scientific p2
Bridge Pharmaceut. p5
Bristol-Myers Squibb p5
Brookdale Senior Lvg. p5
Bruker Biosciences p3
C
Camden Partners p14
Canaan Partners p6, p8
CapMan Group p8
CardiacMD p9
Cardioxyl Pharmaceuticals p8
CareGuide p5
Carlyle Group p7
Celgene p5
Ceragenix Pharmaceuticals p14
Cerexa p5, p6
Cerus p14
Channel Medical Partners p8
China Biopharma p14
Chippewa Valley Angel Investment Network p8
CIBC World Markets p3
Close Ventures p8
Codon Devices p7
Columbia Laboratories p14
Columbia University p16
CombinatoRx p3
CompBenefits p3
Concuity p5
ConjuGon p8
Corgenix Medical p3
Cowen and Company p1
Cowen Group p12
Cowen Healthcare Royalty Partners p12
Craig Hallum Capital p3
Cross Creek Capital Fund p7
Cylex Incorporated p8
Cytogen p3
Cytokinetics p14
D
DAG Ventures p7
Dawson James p3
Depomed p14
Deutsche Bank Securities p14
DFJ ePlanet Ventures p8
Diamyd Medical p14
Direct Flow Medical p10
Diversa p6
Domain Associates p2, p6
Domantis p6
Dynastream Innovations p5
Dynatherm Medical p8, p10
E
Edward P. Bass p7
Edwards Lifesciences p10
EGS Healthcare Capital Partners p6
Elan Pharmaceuticals p12
Ellex Medical Lasers p5
Enclarity p8
Enterprise Partners Venture Capital p7
EntreMed p14
EpiCept p14
Equus Total Return p8
ERA Biotech p8
Essex Woodlands Health Ventures p7
F
Favrille p14
FibroGen p4
Flagship Ventures p7
Forest Laboratories p5, p6
Fortis and Whitaker Securities p11
Fortress Investment p5
Foursome Investments p8
Frazier Healthcare Ventures p6
G
Galapagos p5
Galil Medical p8
Garmin, Ltd. p5
Gene Logic Laboratories p5
Genentech p5
Genmab p6
GenVec p14
Geron Corporation p14
Getinge AB p5
GlaxoSmithKline p1
Graceway Pharmaceuticals p1
Gray Ghost p6
GTx p11
Gund Investment p7
H
Haelan Corporation p5
Harbert Venture Partners p8
HBM Funds p2
HealthCare Ventures p2
HealthSPAC p8
Heart Leaflet Technologies p10
HemoSense p14
Highland Capital Partners p7, p8
Highlander Partners p7
Holiday Retirement p5
Hopewell Ventures p7
Horizon Health p5
Hoya Corp. p5
Huntleigh Technology p5
HydroCision p8
Hythiam p14
I
Iapyx Medical p8
IDEXX Laboratories p5
IDG Ventures Boston p8
Ignition Partners p8
ImaRx Therapeutics p3
ImmuneRegen Biosciences p8
Indevus p5
Inflexion Partners p8
Innovative Imaging p5
Inpharmatica p14
Interleukin Genetics p3
Intersouth Partners p8
InterWest Partners p2, p7
Introgen Therapeutics p14
Invertec p8
Investor Growth Capital p7
J
JAFCO Life Science p4
Johnson & Johnson p6
Johnson & Johnson Development Corporation p2
JPMorgan p3
K
Kaiser Permanente Ventures p2
Kalorama Information p16
Kalypsys p1
Kempen & Co. p11
Khosla Ventures p7
Kingsbridge Capital Limited p14
Kleiner Perkins Caufield & Byers p7
Kobayashi Pharmaceuticals p15
Kolmar Korea p5
Kos Pharmaceuticals p2
Kyphon p5
L
Lazard Capital Markets p11
Lev Pharmaceuticals p3
LifeWatch p3
Lilly Ventures p2
Lipid Sciences p14
M
MacroMed p5
MannKind p3
MC Life Science Ventures p6
McClendon Venture Company p7
Mecta Corp. p16
Medarex p6
MedCath p9
MEDecision p3
Medfocus Fund p9
Medicure p14
Medicus Insurance Holdings p1
Medistem p3
Medivation p14
Medscope p16
MedServe p2
Medtronic p2
Merrill Lynch p3
Metabasis p3
Micrus Endovascular p5
Missouri Care p5
Molecular Insight p3
MonoSolRx p7
Montreux Equity Partners p6
Morgan Stanley p1, p3
Morgan Stanley Strategic Investments p9
MPM BioVentures p4
MPM Capital p7
Mulier Capital p14
Municipal Hosp. Auth. p5
MuriGen Therapeutics p8
MVM Limited p6
N
National Autism Association p16
National Cancer Advisory Board p9
National Cancer Institute p9
National Institute of Mental Health p16
National Institutes of Health p9
NBI Development p8
Needham and Company p11
NeoVista p7
Neurogen Corporation p14
New Enterprise Associates p2, p8, p14
NewHope Bariatrics p2
NexMed p14
NLV Partners p4
Nomura Code Securities p11
North Bridge Venture Partners p8
Novartis p2
Novexel p5
Novo Nordisk p6
O
Obagi Medical p3
Oculus Innovative p3
Oiler Acquisition Corp. p9
Oiler Holding Company p9
OMRIX Biopharmaceuticals p1
On Assignment p5
OncoGenex p3
Oncura p8
Ophthonix p7
Oppenheimer & Company p14
OptionCare p3
Oragenics p3
Orbimed Advisors p6
Orchid Cellmark p3
Orexigen p3
Ortho Biotech Products p4
Ortho-McNeil Pharmaceutical p6
OrthoMimetics p8
Osta Biotechnologies p14
Oxford Bioscience p8
Oxford Capital p8
P
Pacific Growth Equities p14
PacLink Capital p8
Palo Alto Investors p7
Pappas Ventures p6
Paul Capital Partners p12
Pediatric Svs. of Amer. p5
Pelican Life Sciences p1
Peninsula Pharmaceuticals p6
Pentax p5
Peptech p6
Peptech Limited p5
Pequot Ventures p2
Pfizer Strategic Investments p2
Pharos Capital Group p7
PHC p14
Philadelphia Brokerage Corporation p14
Pioneer Behavioral Health p14
Pioneer Surgical Technology p7
Piper Jaffray p3
Praecis Pharmaceuticals p5
Predictive Biosciences p8
ProCure Treatment Centers p2
ProSkelia p5
ProStrakan p11
Protherics p5, p11
Psychiatric Solutions p5
Q
QuadraMed p3
QuantRx Biomedical p14
Questcor Pharmaceuticals p14
QuickCool p8
R
RA Capital p14
Raymond James p12
RBC Capital Markets p1, p3
RedPath Integrated Pathology p8, p9
RegeneRx p14
Renal Advantage Inc. p9
ResMed p8
Response Biomedical p14
Reus Capital Riesgo p8
River Cities Capital Funds p7
Roche p4
Roche Venture Fund p8
Rodman & Renshaw p14
Rosetta Partners p8
Roth Capital p3
S
Sadra Medical p10
SafeMinds p16
Salick Cardiovascular Centers p2
Sanderling BioVentures p8
Sanderling Ventures p10
Sangamo BioSciences p5
Saratoga Ventures p9
Schaller Anderson p5
Schroders Investment p8
Sears Capital Management p6
Security Research Associates p14
Seneca Health Partners p8
SG Cowen p3
Sherbrooke Street Capital p14
Sickday Medical House Calls p16
Sierra Health Services p14
SIRS-Lab p8
Sofinnova Ventures p2
Softscope Medical Technologies p8
Southpoint Capital p14
Sprout Capital p4
St. Francis Medical p5
St. Jude Medical p8, p9
St. Mary Hospital p5
Stanford University p9
Starfish Ventures p8
Stifel, Nicolaus & Company p14
Sun Healthcare p3
Sunesis p3
SunTen Phytotech p8
SV Life Sciences p7
Symphony Allegro p11
Symphony Capital Partners p11
T
Taiwan Global Biofund p8
Take Care Health Systems p2
Takeda Pharmaceuticals p4
Tavistock Life Sciences p8
TEVA Pharmaceuticals p2
The Aurora Funds p8
ThinkEquity Partners p14
Thomas, McNerney & Partners p8
Thomas Weisel Partners p1, p12
Three Arch Partners p8
Tolmar p5
Trex Enterprises p7
Triathlon Medical Ventures p8
Trintech Group p5
Tutogen Medical p3
U
U.S. Department of Health and Human Services p9
U.S. HealthWorks p5
UBS Investment p3
ULURU Inc. p11
United American Healthcare p14
Uroplasty p3
US Oncology Holdings p1, p8
US Renal Care p2
V
Valera Pharmaceuticals p5
Vanda p3
VasCon p5
Versant Ventures p7
Vertical Group p7
Verus Pharmaceuticals p12
Vibra Healthcare p5
Viragen p3
VIRxSYS Corporation p8
VisionShare p8
VISTA Staffing Solutions p5
Volcano Corporation p3
W
Warm Springs Hospital p5
Wasatch Advisors p7
Wisconsin Investment Partners p8
World Heart p3
X
Xceleron Limited p8
Xenomics p14
Xenon Pharmaceuticals p8
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Hot Times In Health Care Venture Capital -
Year-End 2006 Results Reveal More Deals Done, More Dollars Spent
Email Editor
For the fourth year in a
row, for the year ended December 31, 2006, both the number of health care
venture capital deals and the amount of total dollars committed increased.
Total venture capital committed to health care companies during 2006 rose
to more than $8.6 billion, which indicates an increase of nearly 18%,
compared with 2005. The year 2006 produced 463 deals, representing an
increase of nearly 5% over the previous year, and an increase of 20%,
compared with 2003, when we began tracking these transactions.
Of the top five
transactions, all for $100 million or more, three were announced during in
the fourth quarter. The largest was the $200.0 million Series A financing
announced by Graceway Pharmaceuticals in February, followed by
US Oncology Holdings—a company that raised $150.0 million, and is
featured in our monthly venture capital section—then three companies that
garnered $100.0 million each: Kalypsys in November, Medicus
Insurance Holdings in October, and Pelican Life Sciences in
April. The median size of health care venture capital deals announced from
January 1 to December 31, 2006 was $12.5 million, and the average for the
year was $18.6 million.
Pharmaceutical and medical device companies actually beat out the biotechs
and biopharmas with the most capital raised during the year in 2006,
reversing a trend we have been seeing for the past few years. This may not
come as a surprise, in light of the fact that in recent months, several
pharma companies have been structured as start-ups backed by venture
capital to in-license or acquire a technology, product, product candidate
or portfolio. All together, 67 pharmaceutical venture capital deals were
announced, totaling $2.05 billion. Medical device companies raised a total
of $1.8 billion in 123 deals. Biotechnology companies alone raised $1.7
billion in 107 deals, and biopharmaceutical companies raised $1.7 billion
in 87 deals. Obviously, if we were to combine these two sectors,
pharmaceuticals and medical devices would be outstripped by the
biologics-based companies, in both total committed capital and number of
deals.
What may come
as a surprise is that $959.6 million of venture capital was invested in 34
health care services companies during 2006, including Pelican Life
Sciences, US Oncology Holdings, Take Care Health Systems,
MedServe, US Renal Care, NewHope Bariatrics, Salick
Cardiovascular Centers and ProCure Treatment Centers. This is
the first year we remember seeing a significant number of venture capital
investments in the services sectors. Additionally, 32 e-Health companies
raised $246.4 million, and 11 other health care companies, which don’t
neatly fit any single sector, secured $87.7 million.
Corporate
investors continue to play an increasingly important role in supporting
the start-up and development of new companies and technologies, through
spin-offs as well as venture investment funding arms. Both Novartis
(NYSE: NVS) and Johnson & Johnson Development Corporation are among
the top 20 most active health care venture capital investors of 2006.
Other corporate players that made venture capital investments during the
year include Pfizer Strategic Investments, Boston Scientific
(NYSE: BSX), Kaiser Permanente Ventures, Kos Pharmaceuticals,
Lilly Ventures, TEVA Pharmaceuticals (NASDAQ: TEVA) and
Medtronic (NYSE: MDT).
The top ten
venture capital firms, based on participation in number of investments
during the year ended December 31, 2006, are headed up by Sofinnova
Ventures and Novartis, with 12 investments each. Alta Partners,
New Enterprise Associates and HBM Funds each invested 11
times. 3i Group, Domain Associates and InterWest Partners
each participated in 10 rounds. Both Pequot Ventures and
HealthCare Ventures made 9 health care investments during the year.
For the
fourth quarter ended December 31, 2006, health care companies raised about
$2.2 billion, representing close to a 29% increase in dollar volume over
the year-ago quarter. Deal volume was up as well, by about 11%, with 120
deals announced in Q4:06, compared with 108 in Q4:05. For the first time
we can recall, health care services companies were responsible for raising
the greatest amount of venture capital in one sector, with $515.2 million
spread over 16 deals. Medical device companies announced 32 deals, the
most in one sector for the quarter, totaling $439.7 million.
Pharmaceutical companies announced 19 transactions that raised $505.7
million. Biotechnology companies raised $361.3 in 22 deals, and
biopharmaceutical companies raised $272.4 in 16 deals.
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