June
2007 issue
Nine Health Care IPOs Priced
Wall Street Greets Most New Stocks With Warm Reception
We can’t recall the last time we saw nine health care companies price IPOs
in the same month, and more potential winners are likely in the pipeline.
Plus, the one withdrawal of the month looks like it could be an acquisition
candidate.
...
Investors Take Cardiology To Heart
Cardiac Devices, Drugs Attract Increased Venture Funding
Since we began tracking health care venture capital investments, an
increased amount of funding has flowed to cardiac devices and cardiology
applications; we explored the increase with some investors involved in this
space.
...
Mergers & Acquisitions
The health care M&A market is flush with capital, teeming with transactions,
in the sights of several private equity firms, and bearing fruit for some
venture investors and entrepreneurs.
...
Venture Capital
Although there wasn’t quite as much activity as last month, numbers are
still up for May 2007 compared with the prior year, and strategic investors
cropped up in a few deals this month.
...
Private Equity
Among publicly traded health care companies,
during May biopharmaceutical and biotechnology companies raised most of the
private equity capital, with pharmaceutical and medical device companies
also announcing a few deals.
...
Notes & Briefs
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News Read the past
headlines.
Companies Mentioned in this issue:
June 2007
5AM Ventures p 11
A
ABS Ventures p 10
ABV Holding Co. p 11
Acura Pharmaceuticals p 14
Advanced BioHealing p 11
Advanced Cell Tech. p 8
Advanced Magnetics p 4
Advanced Technology Ventures p 10
Advanced Technology Ventures p 10, p 11
Advancis Pharmaceut. p 4
Aegerion Pharmaceut. p 4
Aeolus Pharmaceuticals p 14
Aescap Venture Management p 11
Aetna p 8
Aetna Ventures p 11
Affinity Capital p 2
Albany Molecular Res. p 8
Alliance Hospital p 8
Alliance Imaging p 4
AllianceBernstein p 9
Alta Biopharma p 5
Alta Partners p 10,
p 11, p 15
Alternative Treatment International p 16
Altitude Life Science Ventures p 10, p 15
Ambrilia Biopharma
p 14
Amedica p 4, p 11
American Society of Plastic Surgeons p 16
Amicus Therapeutics p 4
AMN Healthcare Svs. p 8
AmSurg Corporation p 8
Andover Medical p 14
Annual Scientific Assembly of the American Thoraci
p 15
Antares Pharma p 14
Aperio Technologies p 11
APNEX Medical p 11
Arcturus Capital p 11
Arete Therapeutics
p 15
Array Biopharma p 4
Ascension Health Ventures p 11
Asmacure p 11
Asthmatx p 15
ATC Healthcare Svs. p 8
Atlantis Components
p 11
AtriCure p 14
Avalon Pharmaceuticals p 13
AVEO Pharmaceuticals p 15
Avestha Gengraine Technologies p 11
Avid Radiopharmaceuticals p 11
Axxora Life Sciences p 8
B
Banc of America p 5
BaroFold p 11
Barr Pharmaceuticals p 7
Bauch & Lomb p 8
Bausch & Lomb p 9
BBT Fund p 10, p 15
Be-Tabs Pharmaceuticals p 8
Bear, Stearns p 4
Beecken Petty O’Keefe & Company p 7
Berry Medical Employment p 8
Bessemer Venture Partners p 10, p 11
Bio-Imaging Research p 8
Bio-Rad Laboratories p 8
Bioabsorbable Therapeutics p 3,
p 11
Biodel p 5
Bioenvision p 8
Biogen Idec p 15
Biolex Therapeutics
p 10
BioMedical Ventures
p 10
Biomerk p 8
BioProgress p 8
Biosante Pharmaceuticals p 14
Biosite p 8, p 9
BioStar Funds p 3
BioStorage Technologies p 11
Biotechnology Value Fund p 13
Blackmont Capital
p 13
Boston Life Sciences p 14
Boston Millennia Partners p 5
Boston Scientific p 1
Boulder Ventures
p 11
Bovie Medical p 8
Bristol-Myers Squibb p 8
Brooks Eckerd Pharmacy p 7
Brookside Capital p 9
Burrill & Company
p 11, p 15
C
Cambridge Heart p 4
Cantor Fitzgerald p 4
Canyon Creek Devel. p 8
Cardinal Health p 7, p 8
CardioMEMS p 4, p 5
CardioVascular BioTherap. p 14
Cardiovascular Innovations p 8
Cardium Therapeutics p 4
Catella Healthcare
p 10
CCS Medical Holdings p 4
Ception Therapeutics p 11
Champions Biotechnol. p 8
Charles Street Securities p 11
Chattem p 8
CIBC p 4, p 5
CIDC p 10
Citi p 4
Clayton, Dublier & Rice p 9
Community Hlth. Sys. p 8
Connecticut Innovations p 11
CoreValve p 3
Cowen p 4
Creation Capital p 11
Credit Suisse p 1, p 4
Crest p 16
Cumberland Pharma. p 4
CVRx p 3
Cypress Bioscience
p 4
Cytyc p 7, p 8
D
D.A. Davidson p 4
Delphi Ventures p 10
Deutsche Bank p 4
Devax p 3
Devonshire PGA National p 8
DFJ Frontier p 11
DiaMed Holding p 8
Digirad p 8
Domain Associates
p 11
Dow Venture Capital p 10
E
Earlybird Venture Capital p 11
Easton Capital p 10
Encorium Group p 14
Endocare p 14
EndoCeutics p 4
Ensign Group p 4
EnteroMedics p 4
Enzo Biochem p 8
Essex Woodlands
p 11
ETF Venture Funds
p 7
Eurand N.V. p 4
EUSA Pharma p 3
EvoGenix p 8
F
Federated Kaufmann Fund p 13
Finistere Ventures
p 3, p 11
FirmInvest AG p 14
First Albany Capital
p 4
Flagship Ventures
p 10
Fonds Bio-Innovation p 11
Forest Laboratories
p 16
Foundation Capital
p 11
Foundation Medical
p 5
Foundation Medical Partners p 10
Frazier Healthcare
p 10, p 11
Frazier Healthcare Partners p 15
Frazier Healthcare Technology p 10
Frazier Healthcare Ventures p 10
Frazier Healthcare Ventures p 14, p 15
Fusion Capital. p 4
G
Galen Partners p 11
Genomic Health p 4
Genzyme Corporation p 8
Goldman, Sachs p 9
GPC Biotech p 12
Green Light Capital
p 11
H
H&B Capital p 10
Halozyme Therapeutics p 12
HBM BioVentures (Cayman) p 11
HealthSport p 8
Helicos Biosciences
p 4, p 5
Hemispherx Biopharma p 4
Hercules Healthcare Technology Growth Capital p 10
Highland Capital p 10
Highland Capital Management p 14
Hologic p 7, p 8
Hunt BioVentures
p 13
I
Iasis Healthcare p 8
IBG p 10
IBTM p 10
ImaRx p 4
Immunomedics p 13
InfoLogix p 8
InnerPulse p 3
Innovatech Quebec
p 11
Innoven Partenaires p 14
InnoZen p 8
Inovio Biomedical
p 14
Insmed p 14
Insulet p 4
Insulet Pharmaceuticals p 1
InteliStaf Holdings
p 8
Intersouth Partners
p 10
Interventional Spine p 11
InterWest Partners
p 10
InterWest Partners
p 10, p 11
Intrexon p 11
Inverness Medical
p 8, p 9
Investor Growth Capital p 10, p 11
IOMED p 8
ITX International Equity p 3, p 11
J
J-Plasma p 8
Javelin Pharmaceutic. p 4
Jazz Pharmaceuticals p 1, p 4
Jefferies & Co. p 4
JM Financial p 15
John Curtin School of Medical Research at The Aust p 12
Johnson & Johnson Development Corporation p 10
Johnson & Johnson Development Corporation p 15
Johnson Matthey PLC p 14
JPMorgan p 4
K
Kleiner Perkins Caufield & Byers p 11
L
Latterell Venture Partners p 11
Lazard Capital Markets p 12, p 13
Lehman p 4
Lehman Brothers p 1
LehmanBrown International Accountants p 9
LeMaitre Vascular p 8
Life Without Pain p 8
Lusora Healthcare Systems p 14
Lux Capital p 11
M
Madison Dearborn
p 8, p 9
Manhattan Pharmaceu. p 4
Marcadia Biotech p 11
Maxim Group p 4
Maxor Natl. Pharmacy p 8
McGraw-Hill Construction p 16
Medcath p 4
Medfocus Funds p 3
Medical Staffing Ntwk. p 8
Medtronic p 2
MemberHealth p 8
Merck KGaA p 7, p 8
Merlin BioMed Group p 10
Merlin Nexus p 13
Merrill Lynch p 4
Mitsubishi UFJ Financial Group p 10
Mitsui & Co. Venture Partners p 10
Modigene p 14
MonoSol Rx p 4
Morgan Stanley p 1, p 4, p 11
Morria Biopharmaceuticals
p 11
MPM BioVentures IV
p 11
MPM Capital p 11
Mylan Laboratories
p 7, p 8
Mytogen p 8
N
Natexis Bleichroeder p 1
Nationwide Health p 4
Naviscan PET Systems p 11
Neurogesx p 5
NeuroVista p 10
New Enterprise Associates p 11
New River Management V p 11
New River Management V, LP
p 12
New York Life Investment Management India Fund p 11
NitroMed p 4
Novadaq Technologies p 13
Novartis p 7
Novartis Venture Fund p 11
NOXXON Pharmaceuticals p 10
O
Olympus Medical Systems p 15
Omnicell p 4
ONSET Ventures p 11
Oppenheimer & Co.
p 12
Oppenheimer & Company p 4
Orange Medical p 9
OrbiMed Capital p 5
Osco Drug p 7
Oxford Bioscience Partners p 10
P
Pacific Growth Eq. p 4
PainCare Holdings
p 4
PAION AG p 16
Pantarhei Bioscience p 14
Passport Management p 13
Pegasus Biologies
p 11
Peptech Limited p 8
Pequot Capital p 5
Perceptive Life Sciences Master Fund p 14
Pharmion p 4
Pharmion Corporation p 14
Pharmion GmbH p 14
Piper Jaffray p 4, p 14
PLC Medical System
p 13
Polaris Venture Partners p 10, p 11
Porter Health p 8
Portola Pharmaceuticals p 9
Power Medical Interven. p 4
Premise p 11
Prism Ventures p 5
ProCertus Biopharm
p 11
Progen Pharmaceuticals
p 12, p 13
Prolacta Biosciences
p 11
ProMed Healthcare
p 8
Prospect Ventures
p 10
Prospect Medical p 8
Prospect Venture Partners p 10
ProtAffin Biotechnologie p 11
Q
Quaker BioVentures
p 10
Quantum Group p 14
Quantum Technology p 11
QuatRx p 10
QuatRx Pharmaceuticals p 15
Quest Group p 8
QuestMark Partners
p 11
R
Radiation therapy center p 8
Radiation Thrpy. Svs. p 8
Radius Ventures p 11
Ranbaxy Laboratories p 8
RBC Dominion Securities p 13
ReAble Therapeutics p 8
Reliance Life Sciences p 11
Research and Markets p 9
Rigel Pharmaceuticals p 4
Rite Aid Corporation p 7
River Rock Lodge p 8
Rodman & Renshaw
p 12, p 14
Rothschild Investment Partners p 10
Royalty Pharma p 8
Rx Pro Health p 8
S
Sadra Medical p 3
Safeguard Scientifics p 11
Sanderling Ventures p 11
Sandoz p 7
Sav-on Drugs p 7
Savannah Commons p 8
Savvian Advisors p 14
Schaller Anderson p 8
Schering-Plough p 8, p 15
Secure Pharmacy Plus p 8
Selah SeniorCare p 8
Sidec Technologies
p 11
SightLine Partners
p 10
Signet Healthcare Partners p 11
Sirtris Pharmaceuticals p 5
Skilled Healthcare Group p 4, p 5
Sofinnova Partners
p 10
Solace Pharmaceuticals p 11
Special Situations Life Sciences Fund p 13
SpectraScience p 14
Spectrum Pharmaceuticals p 12
Spring Mills Venture Partners p 11
Sprout Group p 10
Standard Mgmt. Corp. p 8
STARLIMS Technol.
p 4
Stifel Nicolaus p 4
Stockwell Capital p 10
StrataGent Life Sciences p 11
Sun Pharmaceutical
p 8
Sunesis Pharmaceutic. p 4
Sutter Hill Ventures
p 10
SV Life Sciences p 1
Synergy Ventures p 3
T
T. Rowe Price p 9
Take Care Health Systems p 7
Talima Therapeutics p 11
Targanta Therapeutics p 4
Taro Pharmaceutical p 8
Teachers’ Private Capital p 10
Tempo Pharmaceuticals p 11, p 15
Teton Capital p 3
Teva Pharmaceuticals p 7
Therative p 11
ThinkEquity Partners p 12
Third Point p 11
Thomas Weisel p 4
Thomas Weisel Healthcare Partners
p 10
Thomas Weisel Partners p 4, p 12,
p 15
Three Arch Partners
p 10, p 11, p 15
TL Ventures p 10
TomoTherapy p 4,
p 5
TorreyPines Therapeu. p 4
Transoma Medical
p 2
Turenne Capital p 14
Turner Construction Company p 16
TVM Capital p 10
U
U.S. Renal Care p 3
UBS p 4
UCB, S.A. p 13
Ultrascan p 8
Universal American
p 8
University of California at Davis
p 15
University of Pittsburgh School of Medicine p 16
US Venture Partners p 11
V
Valera Holdings p 10
Varian p 8
Vectura Group p 16
Venrock p 11, p 15
Venrock Partners
p 10
Ventas p 4
Venture Investors
p 11
Versant Partners p 13
Versant Ventures p 5
VIASYS Healthcare
p 8, p 9
Viragen p 4
VirtualScopics p 4
Vivo Ventures p 9
Vivo Ventures VI p 9
VWR International
p 8, p 9
W
Walgreen Co. p 7
Warburg Pincus p 8, p 9
Wexford Capital p 11
X
Xillix Technologies
p 13
Xtent p 3
Y
Younger America p 8
Z
Z-Cube p 11 |
Investors Take Cardiology To Heart
Cardiac Devices, Drugs Attract Increased Venture Funding
Email Editor
The market space that
encompasses cardiac devices, as well as drugs and biological therapeutics
with applications in cardiology, is a major component of the overall
health care industry. According to our calculations, by the end of 2007,
companies developing products for the cardiology community could account
for a record number of venture capital deals announced and dollars
invested. There is at least a good chance that this space will generate
more total funding and more transactions during 2007 than in 2006, since
already, from January through May 2007, more dollars have been invested in
these companies than in all of 2003 or 2004, and nearly as much as in all
of 2005.
One investor we talked with, David Milne, a managing partner at SV Life
Sciences, a firm that provides financing to human life sciences
businesses in all stages of development, remarked, "I’ve been in the
cardio market since 1991, and beginning with advancements such as balloon
angioplasty, growth has been explosive." Mr. Milne, who has previously
been involved with product management, development and commercialization
in interventional cardiology, was at Boston Scientific (NYSE: BSX)
during a time when BSX was making several major acquisitions. Since we
began tracking health care venture capital investments in 2003, medical
device companies have garnered 42% of the total funding in this space and
accounted for 53% of the deals. Biotech and biopharma companies pulled in
28% of the funding and 29% of the deals, pharma companies attracted 26% of
the funding with 15% of the deals, and a few miscellaneous companies
accounted for the rest. We also talked with B. Kristine Johnson, who was
with Medtronic (NYSE: MDT) for 17 years before joining the venture
capital community, and is now a managing partner for Affinity Capital,
a Minneapolis, Minnesota-based venture capital firm that invests in
private, United States-based health care companies in the medical device,
biotechnology, health care service and health care information technology
sectors.
"One area investors
are really interested in right now is new stent technology," Ms. Johnson
told us. Although drug-eluting stents had a major impact on the medical
device industry, and, no doubt, provide clinical benefits to many
patients, some clinical evidence indicates that drug-eluting stents may
play a role in increasing the risk of thrombosis long after implantation.
"The long-term performance of drug-eluting stents was not what was
expected, so now there is a growing interest in bioabsorbable stents and
stents that incorporate new drugs and new materials," she remarked. "There
was a period of time when drug-eluting stents were viewed as a panacea to
the point of dampening investor interest in other approaches to
interventional cardiology procedures."
Affinity Capital has a major focus on medical devices, due
in large part to its geographic location, but also invests in
biotechnology, health care services and health care information technology
sectors. "The Twin Cities are a good, central spot for interaction with
the medical technology industry," Ms. Johnson commented. Indeed, eight of
the health care venture capital rounds we recorded in the cardiac space
were announced by Minnesota-based companies, including Transoma Medical,
an Affinity Capital portfolio company that has raised more than $25
million to date, including a $13 million Series C financing reported in
our April issue. However, the majority of the deals in this space, as in
most other therapeutic areas, were concentrated in California, and to a
lesser extent in the Northeast.
SV Life Sciences, with a team of nearly 30 professionals, currently
advises or manages four venture capital funds and a closed-end traded
mutual fund with capital commitments of approximately $1.6 billion. In Mr.
Milne’s opinion, "Some blockbuster products, such as implantable
defibrillators and drug-eluting stents, completely changed the size and
scope of this market," referring to the market for cardiac devices, which
may now be valued at up to $40 billion. Anecdotally, medical device
investments are hot right now, with the perception that more people and
money are going into these companies. It has been suggested that this may
be having a dual effect on the market, in that the bar may be lowering
with more sub-par companies receiving funding, but the expectation is
being raised for companies working in areas that are refining certain
recently commercialized technologies, including stents, which are now
being further developed for cardiac as well as vascular applications.
"Devices and implants, such as drug-device combination products, are
getting more complicated," Mr. Milne observed, "and the risk is becoming
greater in many ways." One reason is that the FDA does not yet have set
definitions for the classification of some combination technologies,
making the regulatory pathway unclear. However, as Affinity’s Ms. Johnson
explained, "In spite of the lengthy development and regulatory process, if
anything, investors are putting more money into companies in this space,
especially those with later-stage technology. A large number of companies
are pursuing active implantables, including devices targeting hypertension
and implantable defibrillators, as well as diagnostic products." In
general, it can take five to seven or more years for a new medical
technology to move from initial product development to commercialization.
"There is some concern about the length of time in getting to market, and
getting reimbursement is more of a concern, in some cases, than the
regulatory approval and clinical trial process," she said.
In spite of its challenges, "The overall medical device market is also
getting significantly larger and it remains an attractive area for
investment," Mr. Milne observed. "So much has been learned in the past 10
years, and this science is now being leveraged into specialty areas such
as atrial fibrillation, rhythm management, structural heart disease such
as aortic valve replacement and congestive heart failure and vascular
disease. Each clinical area has spurred a number of competitive companies
going after solutions to the same problems with different approaches," he
stated.
Ms. Johnson seemed to basically agree
with Mr. Milne’s assessment of the market, and noted, "There is a lot of
activity, lots of opportunity in the market right now." She also
commented, "The market for cardiac devices is one where we see a great
amount of growth. We believe our investments in this space have the
potential to become attractive stand-alone companies or M&A targets." Ms.
Johnson said that, "Atrial fibrillation is also an area of growing
interest, since this market is currently and expected to continue
expanding. Diseases will continue to drive the market for cardiac devices,
especially as the population ages and lifestyle issues continue to drive
need in this space." She added, "Part of what is driving the increase in
activity in this space is the fact that some very large rounds are going
to companies with later-stage technology."
Other holdings in Affinity Capital’s
portfolio that are involved in the cardiac space include CoreValve,
which most recently raised $33 million in its C round and InnerPulse,
which most recently secured a $50 million C round. Also among Affinity’s
investments, Devax, which raised $32 million in Series D financing
in its most recent venture round, has recently filed for an initial public
offering. In February 2007, another of Affinity’s portfolio companies,
Xtent (NASDAQ: XTNT), had an IPO take of $75 million on a $364 million
post-money valuation. SV Life Sciences has holdings in EUSA Pharma,
U.S. Renal Care, as well as a number of other health care
companies, including Sadra Medical, which is developing a medical
device for the percutaneous replacement of aortic valves.
Among the conditions that companies in this space are
working to address, hypertension, one of most common diseases in the
world, is estimated to affect 65 million people in the United States
alone, and worldwide, around 1 billion. Factors such as an aging
population, the increasing incidence of obesity, more sedentary behavior
and dietary factors are contributing to the prevalence of hypertension in
this country. Aortic aneurysms are also of serious concern, affecting
approximately 2.7 million people in the United States alone, according to
recent estimates, and are among the leading causes of death in the nation.
Heart failure afflicts more than 5 million people in the country annually,
and is the leading cause of hospitalizations—with more than 1 million
hospitalizations and 200,000 deaths per year.
During May 2007 alone, three companies targeting the
cardiology market disclosed that they had closed venture capital
rounds—two medical device companies and one biopharma—with a combined
total of $109 million in financing. CVRx, a company covered more
extensively in our venture capital section, is working on an implantable
device designed to control hypertension, and raised $65 million from a
syndicate of investors to support ongoing development and trials.
Bioabsorbable Therapeutics, a medical device company
that received $9 million in Series B financing from Finistere Ventures,
ITX International Equity, Synergy Ventures, BioStar Funds,
Teton Capital and Medfocus Funds, is developing a
biodegradable polymer technology. The company expects its technology will
be the basis for a product with innately anti-inflammatory
characteristics, resulting in a fully biodegradable coronary stent that
would eliminate permanent metal implants in patients. The Menlo Park,
California company has designed a stent that acts like a scaffold for
tissue growth during the initial six months following surgery, but once
the artery has healed, it is absorbed by the body, leaving no permanent
implant. Bioabsorbable Therapeutics’ drug delivery polymer offers
therapeutic benefits in and of itself, including that as it degrades, it
releases salicylic acid (the active ingredient in aspirin) to be taken up
by the artery wall to reduce inflammation and restenosis. The company’s
stent technology allows for multi-layered mixing with other drugs for
controlled release and combination drug delivery through the polymer.
Within six months, the implant is fully absorbed, leaving only the native
artery, and presumably, reducing or eliminating the risk of late adverse
events that may occur long after metal stent implantation.
The biopharmaceutical company, Arete Therapeutics,
is not focused solely on the cardiac market, but has initially assembled a
portfolio of first-in-class preclinical compounds targeting a new approach
for the treatment of hypertension and inflammation. Arete, intent on
developing small molecule therapeutics for treating cardiovascular,
inflammatory and metabolic diseases, announced in May it had raised $35
million in venture funding from Frazier Healthcare Ventures,
Alta Partners, Three Arch Partners, Burrill & Company
and Altitude Life Science Ventures, completing its Series A round
and bringing the company’s total funding to approximately $51 million.
Arete’s technology is based on a portfolio of issued and pending patents
resulting from over two decades of research done by Dr. Bruce Hammock at
the University of California at Davis.
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