August
2007 issue
Institutional Funding Flows To Health Care-
Private Placements Offer Attractive Financing Option And Are On The Rise
Private placements in health care
companies are attracting an increasing amount of capital, and a few
bankers in the business offered their viewpoints on current dynamics in this
market and preferred opportunities for these investments.
...
Temperature Modulation Enhances Care--
A Look At Some Of The Coolest, And Hottest, New Therapeutic Technologies
Some health care companies are dedicated to improving care by using
temperature, to either apply
warming, cooling, extreme heat or extreme cold for specific therapeutic
purposes.
...
Public Equity
Not much happened in terms of IPO activity, other than a handful of
withdrawals and one pricing, but a few of these deals had interesting
twists.
...
Mergers & Acquisitions
Medical device deals dominated the health care M&A market, while the
pharmaceutical and long-term care sectors also made a strong showing.
...
Private Placements
For the month of July, public health care
companies announced a relatively average number of deals and
a fairly decent amount of total funding through private placement
transactions.
...
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Healthcare Corporate Finance
News Read the past
headlines.
Companies Mentioned in this issue:
August 2007
A
Ablation Frontiers p11
ACCBT Corporation p14
Accelerated Care Plus p11
Acologix p5
Acrobot p11
Actavis p9
Actavis Group hf. p8
Acumen Fund p12
Advocat p8
Aescap Ventures p11
Affinity Ventures p11
Agensys p10
Alchemia p11
Alcon p8
Alexza Pharmaceuticals p5
Alliance of Merger and Acquisition Advisors p2
Alpine Biomed p15
Alta Healthcare System p8
Alta Partners p10
Amedica p5
American Imaging Mgmt. p8
American Medical Association p15
Antares Pharma p14
Applied Neurosolutions p5
Apposite Capital p11
Aquapharm Biodiscovery p11
Archemix p5
Arnerich Massena p11
Arpida Ltd. p8
Arrow International p9
Assent Consulting p8
Asset Management Company p10
Assisted Lvg. Concepts p8
Atria Senior Living p8
Atrium Biotechnologies p8
ATS Medical p5
Azur Pharma Limited p8
B
Banc of America p5
Bayer Diagnostics p7
BB Biotech p10
Bear Stearns Health Innoventures p10
Beckman Coulter p7
Beecken Petty O’Keefe & Company p15
Behavioral Centers of America p11
Benchmark Medical p15
BioAlliance Pharma p13
Biogen p8
BioSante Pharmaceuticals p5
BioVex Group p11
BMO Capital Markets p14
BrainStorm Cell Therapeutics p14
Brandywine Senior Lvg. p8
Bryan, Garnier & Company p13
C
Camden Partners p6
Canyon Creek Devel. p8
Caprion Proteomics p8
Cardica p5
Cardinal Health p15
Cardium Therapeutics p1
CDP Capital p10
Cell Therapeutics p8
Cellumen p11
Ception Therapeutics p7
Chicago Growth Partners p10
Chrysalis Ventures p11
CIBC p5
Citigroup p5
Coastal Carolina Med. Ctr. p8
CODA Genomics p11
Computrition, Inc. p16
ComVest Group p11
ConnectivHealth p11
CoolSystems p6
Cougar Biotechnology p5
Coventry Health Care p8
Cowen & Co. p5
CPMG p10
Credit Agricole Private Equity p11
Credit Suisse p5
Crescent Capital p11
Cross Atlantic Partners p6
Cross Country Hlthcr. p8
CS First Boston p6
CSA Medical p6
CTI Life Sciences Fund p10
Cumberland Pharma p5
Cyntellect p11
Cytogen p5, p14
D
Dade Behring Holdings p7
DecisionView p11
Deerfield Management p13
Deutsche Bank p5
Deutsche Bk. p5
Diagnostic Products Corporation p7
Diamics p11
Diatos p11
DJO, Inc. p9
DOCS International p8
Draper Fisher Jurvetson p9
Drug Royalty Corp. p8
Dubuque Retirement Cmmty. p8
Duquesne Capital Management p10
Dyax p5
Dynatronics Corp. p8
Dynavax Technologies p13
E
Edheads p16
Encore Medical Corp. p9
Essex Woodlands Health Ventures p14
ev3, Inc. p8
Eyeonics p5
F
FazaClo p8
Flagship Global Health p14
FoxHollow Technologies p8
FrontPoint Partners p14
Fusion Antibodies p11
G
Galapagos NV p14
GBS Ventures p11
GE/NBC Universal’s Peacock Equity Fund p11
Genoptix Medical p5
Genstar Capital p8
GenVault p7
GeoVax Labs p14
GIMV p11
Gish Biomedical p8
GlaxoSmithKline p14
GlycoVaxyn p11
Golden Pond Healthcare p5
Goldman Sachs p4, p9
Great Point Partners p8
GrowthWorks Capital’s Working Opportunity Fund p11
H
H&Q Life Science Investments p10
Hambrecht & Quist Capital Management p10
Hamilton Pharmaceuticals p8
Haywood Securities p14
HBM BioVentures p10
Health Capital Consultants p2
Healthline p11
HepaLife Technologies p5
Hill-Rom Company p15
HLM Venture Partners p10
Hollister p12
Horizon Therapeutics p10
Human BioSystems p5
I
ICON plc p8
ImaRx p5
ImaRx Therapeutics p4
Immune Targeting Systems p11
Imperial Innovations p11
Index Ventures p11
InnerCool Therapies p1
Innovis Investments p10
Inspire Pharmaceuticals p14
Integrated Surgical Systems p8
Inverness Medical Innovations p11
ISTA Pharmaceuticals p5
J
JAFCO p10
JCAHO p15
JDS Pharmaceuticals p8
Jefferies p5
JEGC OCC Corp. p13
JHP Pharmaceuticals p8
JMP Securities p13
Johnson & Johnson p15
Johnson & Johnson Development Corporation p10
JPMorgan p12
K
KaloBios p11
KBL Healthcare Acq. III p5
Kimberly Clark p6
Kyphon p9
L
Lake Worth ASC p8
Lazard p5
Legacy at Lehigh p8
Lehman Bros. p5
Lehman Brothers p14
Lexicon Pharmaceuticals p5
Lifeblood Medical p7
Light Sciences Oncology p10
Linden LLC p11
Lombard Odier Hentsch & Cie p10
London Technology Fund p11
Lpath p5
LYNX Medical Systems p4
M
Magnetar Capital Master Fund p13
Manor Care p7
Masimo p5
Masimo Corporation p5
Maxim Group p5
MDY Healthcare p6
Meda AB p8
Medcool p7
Medex p15
Medivance p6
MedPointe p8
Medtronic p8, p9
Merck & Co. p4
Merrill Lynch Capital Healthcare p2
Merritt, Hawkins & Associates p16
Micromet p5
Midwest Physician Svcs. p8
Misys CPR p8
MIV Therapeutics p14
Monitor Ventures p11
Morgan Stanley p5, p14
Morgenthaler Ventures p10
MPM Capital p11
Mucos Emulsions GmbH p8
MVM Life Science Partners p11
N
NeoMend p11
Neuren Pharma p8
NeuroDerm p11
New England Journal of Medicine p6
New Markets Growth Fund p6
New River Management p11
New Science Ventures p11
Newsweek p1
NexGenix Pharmaceuticals p11
Nextech Venture p10
Nighthawk Radiology p8
NovaCardia p4
Novartis p8
Novartis Venture Fund p11
Novator p9
Novator eignarhaldsf. p8
Novatrix Biomedical p8
Noven Pharmaceutic. p8
Novo A/S p10
Novo Ventures p11
Novocell p10
Nuon Therapeutics p11
O
OccuLogix p13
One Equity Partners p12
Oppenheimer & Company p14
Option Care p8
Oragenics p5
OrbiMed Advisors p10
Orthovita p14
OVP Venture Partners p11
P
PA Early Stage Partners p11
Pacific Horizon Ventures p10
Panacea Fund p13
Pappas Ventures p10
Paramount BioSciences p11
Partisan Management p6
Petra Capital Partners p11
Physiotherapy Associates p15
Picis p4
Pinnacle Ventures p10
Piper Jaffray p5
PRA International p8
Precision Dynamics Corporation p12
Prospect Medical p8
Protiva Biotherapeutics p11
PURE Capital LLC p14
Putnam Associates p16
Q
QuadraMed Corp. p8
Quark Biotech p4
Quest Group International p5
QuickCool p6
QuickHealth p9
R
Raymond James & Associates p2
ReAble Therapeutics p9
Reata Pharmaceuticals p10
Redpoint Bio p5
Response Biomedical p14
RiverVest Venture p11
Roche p7
Rodman & Renshaw p14
S
Safeguard Scientifics p11
Sanderling Ventures p10
Sangamo BioSciences p13
Satiety p10
Scottsdale Healthcare p16
Serentis p11
Siemens AG p7, p8
Skilled Healthcare Gp. p8
Skylight Healthcare Systems p16
Skyline Partners p6
Skyline Ventures p10
Sofinnova p11
Sofinnova Partners p11
Solantic p9
Sonic Healthcare p8
Sontra Medical p14
Southridge Technology Group p14
Stryker Corp. p15
Sucampo p5
Sucampo Pharmaceuticals p5
Sunrise Medical Laborator p8
Sunrise Senior Living p7
Surgery Partners Hldg. p8
Swarraton Partners p11
Systems Medicine p8
T
Take Care Health p15
Talecris Biotherapeutics p5
TargeGen p10
Targeted Genetics p5
Tate & Lyle Ventures p11
Teleflex Incorporated p9
Tenet Healthcare p8
The Blackstone Group p9
The Carlyle Group p7
The Cleveland Clinic p16
The Medicines Co. p8
TheraGenetics p11
Three Arch Partners p10
Tikvah Therapeutics p11
TissueLink Medical p11
TLC Vision Corporation p13
TLT Medical Ltd. p8
TotalMed Systems p4
Trans1 p5
TransMedics p7
Triathlon Medical Ventures p11
Truffle Ventures p11
Tudor Capital p11
U
UBS p5
UBS Investment Bank p5
V
VantagePoint Venture Partners p10
Vein Associates of America p14
Venrock p10
Via Pharmaceuticals p14
Viridian Growth Fund p11
Vista Health Plans p8
Vivo Ventures p11
W
W.R. Grace & Co. p12
Wachovia p5
Walgreen Co. p8, p15
Warburg Pincus p14
Water Street Healthcare Partners p12
WaveLight AG p8
WellPoint p8
Welsh, Carson, Anderson & Stowe p9
Westly Group p9
Westminster Securities p14
WHO p15
WuXi PharmaTech p5
Z
ZARS, Inc. p7
Ziqitza Healthcare Limited p12 |
Temperature Modulation Enhances Care--
A Look At Some Of The Coolest, And Hottest, New Therapeutic Technologies
Email Editor
One therapeutic approach
that a limited number of health care companies are currently focused on is
the use of temperature as a means of delivering or enhancing medical care
and improving outcomes for certain patients. Temperature management has
traditionally been a major concern in some areas of medicine, such as
organ harvesting, transportation and transplantation, but that is not the
only area companies are looking at these days. Now the clinical trend
includes the development and utilization of tools for the preservation of
ischemic tissue and reduction of fever through cooling, the use of extreme
cold for ablation, as well as other tools that employ heat or warmth to
facilitate therapeutic activity—with applications that may target specific
areas of the body or the entire patient. Temperature modulation therapies
seem to be on the verge of becoming mainstream, with even Newsweek
featuring InnerCool Therapies, an operating unit of Cardium
Therapeutics (OTCBB: CDTP), in a cover story that examined how certain
doctors are using mild hypothermia to treat sudden cardiac arrest
patients. And among the companies appearing in our venture charts this
month, two are involved in this space, including one that has a product on
the market for ablation using extreme cold, and another focused on
temperature modulation. Looking back at the past few years, several others
working on related technologies have also received funding. Among the July
deals, Baltimore, Maryland-based CSA Medical raised $8.3 million in
its Series A financing, which was led by an undisclosed private investor
and included participation from New Markets Growth Fund and other
individual investors. “This round was led by existing investors—mainly
management and angels,” Steve Schaefer, the company’s chief financial
officer, told us recently. The company was founded about twelve years ago,
but raised the new capital, he said, “to expand commercialization of the
CryoSpray Ablation technology platform,” which can be used by doctors to
destroy unwanted tissue by means of extreme cold. Part of the appeal of
CSA Medical as an investment is, as Mr. Schaefer said, “We have a
one-of-a-kind product with a broad clearance from the FDA, and very broad
potential for multiple indications. This is the only low-pressure, cryo-spray
ablation technology available right now.” He described CSA Medical’s
system as less complicated for the patient and the physician, and less
costly and less damaging to healthy tissue, compared with other tissue
ablation procedures.
More than eight years of development and clinical trials preceded the
first FDA approval of a CSA Medical product, the CryoSpray Ablation System
(CSA System), which allows physicians to store, regulate and transport
liquid nitrogen to targeted lesions. The first generation system initially
received FDA clearance in 2004, and the second generation, in 2006. The
CSA System has been shown in clinical studies to ablate or remove
precancerous and cancerous cells in the esophagus, with subsequent
regrowth of normal esophageal epithelium. Although CSA Medical may also
exploit its technology to create applications for use by the thoracic and
ear/nose/throat physician communities, among others, “Initially we are
targeting the upper gastrointestinal tract,” Mr. Schaefer said.
The CSA System is currently being marketed as a tool for destroying
unwanted tissue in patients with Barrett’s esophagus, a condition that
traditionally has been addressed with extreme heat, which can sometimes
have less-than-desirable effects on the healthy tissue surrounding what is
targeted for ablation. CSA Medical and its investors seem very confident
in the CryoSpray product platform, in terms of both clinical and economic
value. For one thing, Mr. Schaefer noted, “We don’t anticipate needing any
more funding.” As he explained the medical benefits of the CryoSpray
technology, we learned that, “it triggers a programmed cell death, then
the healthy cells regenerate,” and the unhealthy cells just perish. CSA
Medical also received marketing clearance in late May 2007 for a new
accessory—a directional spray catheter—to the CSA System, which originally
was marketed with a straight-tip spray catheter that was proven clinically
effective and will continue to be available. The new directional catheter
will enable clinicians to better and more easily target lesions for
ablation, as well as increasing the coverage area with less chance of side
effects.
Another company, Louisville, Colorado-based Medivance, founded in
1998, is developing therapeutic temperature management products to treat
critically ill patients, such as those suffering from stroke, cardiac
arrest, brain injury, high fevers, trauma and heat stroke. Medivance
announced in July that it raised $23 million in Series D funding, and will
use the proceeds to support ongoing sales growth. The company already has
general 501(k) clearance to market its products (the result of a premarket
submission to the FDA demonstrating the device is at least as safe and
effective as a legally marketed device that is not subject to premarket
approval). Cross Atlantic Partners, Camden Partners, Skyline Partners,
Partisan Management and MDY Healthcare provided Medivance with
this most recent round of financing, joining previous investors including
Kimberly Clark (NYSE: KMB) and CS First Boston. Medivance
provides clinicians with safe, easy and precise methods for regulating
body temperature, currently used to reduce high fevers and to induce mild
hypothermia, because a growing body of clinical data indicates that
lowering body temperature effectively limits neurologic damage in a wide
range of critically ill patients. For example, studies reported in the
New England Journal of Medicine and other top-tier medical journals
suggest that therapeutic hypothermia may reduce damage from cardiac
arrest, stroke, brain injury and other critical conditions. In addition,
Medivance reports that the use of precise cooling methods to reduce high
fevers appears to improve outcomes and shorten ICU stays.
Last year, a few other companies developing temperature management
products received venture funding. In December 2006, Sweden-based
QuickCool raised $1.8 million to continue long-term development and
launch clinical trials of its patented technology, which enables quick and
easy cooling of the brain with the aid of a portable pump connected to
balloon catheters. QuickCool’s portable device is designed for use in the
ambulance, emergency room and intensive care units, to reduce mortality
and neurological sequele in patients suffering from dangerous episodes of
oxygen deprivation to the brain following stroke, cardiac arrest, brain
trauma and neonatal asphyxia. Another company, CoolSystems, which
provides sports injury treatment systems that deliver both compression and
cooling and have additional applications in orthopedics, neurology and
other areas of health care, announced its $8.6 million Series G financing
in early 2006.
Although most of the companies in this space tend to be medical device
makers, the potential ramifications of temperature fluctuation and control
are not lost on the drug makers. For example, Ception Therapeutics,
a Pennsylvania-based company that closed a $77 million Series C financing
in May, is concentrating on predicting the thermodynamic forces that
govern structure-activity relationships, in an effort to significantly
reduce the time required to optimize selectivity and affinity of drug
candidates. Also recently, ZARS, Inc., a company backed by about
$25 million in venture funding, announced the commencement of two phase
III trials to evaluate the efficacy of its matrix transdermal ketoprofen
patch with an integrated controlled heat assisted drug delivery unit. ZARS
is measuring its product, ThermaProfen, against a ketoprofen patch without
heat, and a patch that delivers just heat, without the drug.
TransMedics, another company in this space, closed a $25.5 million
Series D financing in April 2007, which brought its venture financing to
date to approximately $90 million since 2004. TransMedics has already
developed a system designed to maintain the human heart in a warm,
functioning state outside the body during transportation prior to a
transplant. Currently the company is working to extend its technology to
the living preservation of other organs. In June 2006, Lifeblood
Medical announced the closing of its A and B rounds with $2.2 million
in funding. Lifeblood Medical is a biotech focused on enhancing organ
preservation and cell culturing at room temperature, as well as through
cryopreservation. Other companies are focusing on temperature management
for applications such as biosample analysis and storage, with the intent
of creating viable solutions for storing and working with samples at room
temperature. GenVault, headquartered in California, has a
proprietary platform for the extraction, preservation, recovery and
distribution of DNA at room temperature. GenVault announced it had raised
nearly $20 million in just the past few months, and is using the funding
to accelerate the commercialization of its technologies for the storage
and transportation of biosamples at room temperature.
The basic idea of using heat or cold to produce or prohibit a certain
result may be fairly simple, and it’s not exactly a new idea, but the
applications currently under development involve some complicated science.
Since the temperature of our bodies and our environment is crucial to
survival, it seems likely that as technology evolves, temperature
management solutions will continue to come to market. Therapeutic
protocols involving heating, warming, cooling or freezing seem to be
becoming more widespread, and the FDA is likely evaluating a number of new
devices for specific new applications. In July, the FDA approved
Medcool’s RapidCool System to be used for temperature reduction in
patients where clinically indicated and for monitoring patient
temperature. Controlled heat, cold and temperature management may not have
attracted as much venture funding as other areas of medical technology—all
the deals we discussed in this article add up to just about $246 million,
which covers most of the publicly announced deals in this space since
2003. But, we would hazard to guess, these companies could achieve a good
deal of success and profitability with approved and commercialized
products. Sometimes, the simplest ideas are the best.
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