September
2007 issue
Pumping Up The IPO
Pipeline--
Three Health Care Companies Price IPOs And Sixteen More File
In spite of unpleasant news from
the lending industry and the nosedive the stock market took in mid-August,
shares in health care companies that priced IPOs during the month performed
fairly well, and several more IPOs were filed.
...
Major Funding For Spinal Implants--
Spike In Monthly Venture Capital Funding For Medical Devices
Medical device companies were responsible for the most deals and the
greatest share of venture capital in one sector during August 2007,
including the third health care venture capital deal this year that exceeds
one hundred million dollars.
...
Mergers & Acquisitions
Diagnostic companies, among other medical device targets, are a highlight of
health care merger and acquisition activity this August, with a steady flow
of deals in most other sectors as well.
...
Private Placements
More than one billion dollars in private
placement funding was announced by health care companies during August 2007,
the second time in three years we have seen this much funding committed to
these deals in a single month.
...
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:
September 2007
A
Accenture p2
Accuro Healthcare Solutions p2
Acologix p4
Adnexus Therapeutics p3, p4, p11
Advanced Technology Ventures p10
Advent International p10
Agendia BV p10
Agility Healthcare Solutions p11
AIG SunAmerica p1, p10
AkaRx p8
Alloy Ventures p11
Alltracel Pharmaceutic. p8
Alpex Pharma p11
Alta Partners p10
Alta Partners p11
ALZA Corporation p10, p11
Amedica p4, p5
Amedisys p8
American Dental Ptnrs. p8
Amerinet p2
AMS Homecare p8, p14
Anacor Pharmaceuticals p4
Apollo Health Street p8
Arboretum Ventures p11
Archemix p10
Archemix Corp. p12
ARYx Therapeutics p4
Aspen MedTech p11
Astellas Venture Management p10, p11
Atlas Venture p11
Axcell II p9
Azur Pharma p10, p11
B
Baker Brothers Investments p11, p13, p15
Banc of Amer. p4
Banc of America Securities p1, p3
BankInvest Biomedical Venture p10, p11
Baron Growth Fund p3
Bayer AG p8
BayStar Capital p3
BB Biotech Ventures p11
BDC Venture p11
BDC Venture Capital p10
Behrman Capital p8
Bell Policy Center p16
Berg & Berg Enterprises p11
BG Medicine p4
Bio-Rad Laboratories p15
Biocode Hycel p8, p9
BioCryst Pharmaceuticals p4, p13, p15
BioForm Medical p4
BioFX Laboratories p8, p9
Biolex p4
BioMarck Pharmaceuticals p11
BioProcessors Corporation p11
Blue Trading p14
Boston Life Science Venture Corporation p10
Boston Life Science Venture Corporation p11
Broadlane p2
Brookwood Pharmaceuticals p8
BZ Bank Aktiengesellschaft p11
C
Calidora Skin Clinic p11
Callisto Pharmaceuticals p14
Calypte Biomedical p4
CAMOFI Master LDC p11
Canaan Partners p10
Canyon Creek Devel. p8
Cardinal Partners p11
CardioNet p4, p5
Care Capital p11
CareMedic Systems p2
Carrington Laboratories p14
Catalyst Oncology p8, p9
CCS Medical Holdings p4
Celator Pharmaceuticals p11
Cell Therapeutics p8
Charter Life Sciences p11
Chelsea Therapeutics p4
Chicago Growth Partners p10
CIBC p4
CIBC World Markets p3
Ciphergen Biosystems p15
Citi p4
CK Life Sciences p8
Clarus Ventures p1, p10
Clinical Data, Inc. p8
CMDF p10
Concentric Medical p4
CoolSystems p12
Corcept Therapeutics p14
Cord Blood America p8
Cortex Pharmaceuticals p14
Cowen & Co. p4
Cowen & Company p3, p14
Crdentia p4
Credit Suisse p3, p4
CureSource p8
Curis p4, p14
D
Dade Behring Holdings p9
Danish Diagnostic Devel. p8
Danish Diagnostic Development p9
Davy Corporate Finance p10
Davy Corporate Finance Limited p11
Deloitte & Touche p2
Delphi Ventures p10
DeNovo Ventures p10
Department of Health and Human Services p15
Deutsche Bank Securities p3
DiagnoCure p8, p9
DietTV.com p11
Disc Dynamics p5
Domain Associates p10, p11
Drug Royalty Corp. p8
Dynavax Technologies p4
E
EarlyDETECT p4
Eclipsys Corporation p2
Ecolab p8
Ecolab Inc. p7
Edison Pharmaceuticals p11
EHS Holdings p13
EKR Therapeutics p11
Electro-Optical Sciences p4, p14
Elite Pharmaceuticals p4
Emergis p8
Eminent Venture Capital Fund p5, p10
Emisphere Technologies p14
Encysive Pharmaceuticals p14
EndoGastric Solutions p10
Entelos p8
Epidauros Biotechnologie p8
ESP Equity Partners p11
EUSA Pharma p5
Eyetech p12
F
Firstsource Solutions p8
FlowCardia p10
Fluidnet p11
Fluke Venture Partners p11
Fonds Bio-Innovation p11
Forum Bioscience Holdings p8
Forward Ventures p10
Foundation Medical Partners p10
Frazier Healthcare Ventures p10
G
GammaCan p4
Genesys Capital Partners p10
GeoVax Labs p14
Gilde Healthcare Partners p10
Gilead Sciences p8
GIMV p10
Glide Pharma p11
Global Life Science Ventures p10
Globus Medical p1, p10
Gold Hill Capital p10
Goldman, Sachs p3, p4
Greater Southeast Community Hospital p8
Groupe Cair p8
GrowthWorks Capital p10
GrowthWorks Capital Working Opportunity Fund p5
H
H.I.G. Ventures p10
Hambrecht & Quist Capital Management p10
Hana Biosciences p8, p14
Harbert Venture Partners p11
HBM BioVentures p10, p11, p12
HBM BioVentures (Cayman) p11
HealthSpring p8
HealthTrust p2
Helixis p11
HemoSense p8, p9
I
Icagen p14
Iconix Biosciences p8
Immunodiagnostic Sys. p8
Immunodiagnostic Systems Holdings p9
Index Ventures p11
Informatique Demers Lambert p8
ING p10
Innovive Pharmaceuticals p4
Inotek Pharmaceuticals p11
Insys Therapeutics p4
Integra LifeSciences p8
IntegraMed America p8
Integrated Biopharma p4
InterWest Partners p10
Invemed Catalyst Fund p3
Inverness Medical p8
Inverness Medical Innovations p9
Invus Group p14
Invus Group LLC p13
IPC The Hospitalist Co. p4
Isolagen p14
IsoTis p8
J
James Richardson & Sons p5, p10
Javelin Pharmaceuticals p4
JMP Securities p14
JP Morgan Partners p10
JPMorgan p3, p4
JWM Family Enterprises p11
K
KFx Medical p11
Kindred Healthcare p8
Kleiner Caufield Perkins & Byers p15
Kleiner Perkins Caufield & Byers p13
L
Landmark Nursing & Rehab. p8
Latterell Venture p11
Lazard Capital Markets p3
LDR Spine p5
Leerink Swann & Company p14
Lehman Brothers p4
Leon Med. Ctrs. Health Plans p8
Leptos Biomedical p11
Lexicon Pharmaceuticals p13, p14
Life Sciences Partners p10
Lipa Pharmaceuticals p8
LSP BioVentures p11
Lux Biosciences p12
M
MAKIZ p8
Marshall Edwards p14
Masimo p1, p4
Matritech p8
McKesson Corporation p2
MedAssets p2, p4
MedAssist Holding p8
Medco p7
Medco Health Solutions p8
Medical CV p4
Medicure p14
MedImmune Ventures p11
Memory Pharmaceuticals p4
MentorTech Ventures p11
Merck p10
Merrill Lynch p3, p4
Merriman Curhan Ford p4
Metropolitan Dental Hldgs. p8
MGI Pharma p8
Microtek Medical Holdings p7, p8
MidSouth Capital p4
Milestone Pharmaceuticals p11
Minnesota Thermal Science p16
Mirabilis Medica p11
Molecular Analytical Systems p15
Molecular Partners p11
MonoSolRx p4
Montreux Equity Partners p10
Morgan Stanley p4, p8
MPM Capital p5, p10
MSBi Capital p11
Mundipharma p15
MVM Financial p11
N
Nanogen p14, p15
Nanosphere Technologies p4
Navigant Consulting p2
Nereus Pharmaceuticals p10, p11
NeurAxon p10
Neuro Discovery p10
Neuro Discovery p5
Neurobiological Technol. p4
Neuromed Pharmaceuticals p5, p10
Neurotech p12
NeuroVentures Fund p10
New Science Ventures p10
NovaQuest p11
Novation p2
Novo A/S p10, p12
O
Oakwood Medical Investors p10
Oculus Innovative Sci. p4
Oculus Innovative Sciences p14
Okapi Venture Capital p11
OncoVista p11
Ophthotech p10, p12
Oragenics p14
Oramed Pharmaceuticals p14
OrbiMed Advisors p10, p13, p15
Orbotech p8
Orbotech Ltd. p9
OrthoRehab p12
ORTHOsoft p8
Orthovita p4
Oscient Pharmaceuticals p3
OSI Pharmaceuticals p12
Osteologix p4
Oxford Bioscience Partners p11
Oxford Capital Ptnrs. p11
Oxford Technology 4 VCT p11
P
Pacific Pharma Technologies p8
Pacific Venture Group p10
Panorama Capital p11
Paperboy Ventures p14
Pappas Ventures p10
Par Pharmaceutical p8, p14
Peplin p4
Perot Systems p8
Pevion Biotech p11
Pfizer p8, p12, p14
Pharmelle p11
Piper Jaffray p3, p4
PolyMedica p7
PolyMedica Corporation p8
Positron Corporation p4
Precision Therapeutics p4
Premier, Inc. p2
Presidio Pharmaceuticals p11
Prospect Venture Partners p11
PURE Capital p14
Q
Quaker BioVentures p11
R
RAB Special Situations (Master) Fund p14
Radiation Therapy Svs. p8
Reliant Pharmaceuticals p3, p4
Riverside Partners p16
Roche p15
Roche Venture Fund p10, p11
Rockdale Medical Center p8
Rockport Venture Partners p10
Rockport Venture Partners p11
Rodman & Renshaw p14
Royal Bank of Canada p10
Royal Senior Care p8
S
Schering-Plough p4
SecureWorks p16
Seven Hills Partners p14, p15
Shionogi & Co. p15
Siemens AG p9
Signalife p13, p14
Signature Hospital Corp. p8
Signet Healthcare Partners p11
Smartrac NV p8
Smith Healthcare p8
Solantic p5
Specialty Hosp. of Amer. p8
Specialty Surgical Instrum. p8
Split Rock Partners p11
Stada Arzneimittel p8
Stada Arzneimittel AG p8
Stephens Investment Management p13
Sucampo Pharmaceutic. p4
Sucampo Pharmaceuticals p1
Surgery Partners Hldgs. p8
SurModics p8, p9
SV Life Sciences p10, p12
Symmetry Medical p8
Synpart AG p8
SyntheMed p14
Synthes Spine p5
T
Taiwan Global Biofund p10
Texas Pacific Group Ventures p13
The Aurora Funds p11
The Gables Surgical Center p8
The Greens Communities p8
The Palmer Club p8
The SSI Group p2
The Veranda p8
The Wyndmoor p8
ThinkEquity Partners p14
Thomas McNerney p11
Three Arch Partners p11
Tobira Therapeutics p10
TOPIGEN Pharmaceuticals p11
TOTALtrak Global p8
Two Lighthouse Inns p8
U
UBS p4
UCB Pharma p11
UnitedHealthcare p16
University of Connecticut p16
Upstream Biosciences p8
V
Van Herk Biotech p10
Vein Clinics of America p8
Ventures West Capital p10
Vermillion p14, p15
VIA Pharmaceuticals p4
Vyteris p14
W
Waterford Gdns. p8
Waters Medical Systems p8
Wexford Capital p11
Wilkinson Corp. p8
William Blair & Company p3
WuXi PharmaTech p1, p4
Y
YA Global Investments Fund p13
YA Global Investments Fund p14
Yorkville Advisors p13
Z
ZARS Pharma p4
Zavata p8
Zecotek p14
Zimmer Holdings p8 |
Major Funding For Spinal Implants--
Spike In Monthly Venture Capital Funding For
Medical Devices
Email Editor
August 2007 ended with 34
venture capital deals announced by health care companies, totaling nearly
$714 million. Compared with the preceding month, deal flow and dollar
volume continued at about the same pace, with just a few deals less than
July and almost as much funding. However, the monthly totals for August
2007 represent about a 24% decrease in both the number of deals and
dollars committed, compared with August 2006. This August, medical device
companies produced the most deals and the greatest total dollars in one
sector for the month, with 10 deals totaling $233 million, followed by
pharmaceutical companies, with 9 deals totaling $203 million.
Biotechnology and biopharma-ceutical companies also figured prominently in
the monthly totals, with 7 deals totaling $142.4 million and 5 deals
totaling $124 million, respectively.
For the fourth time this
year, a health care company announced a venture capital round that equals
or exceeds $100 million. In the largest venture capital round of August,
Globus Medical raised $110 million in Series E financing from
Clarus Ventures, AIG SunAmerica and other investors, with
Banc of America Securities as the sole placement agent. Globus Medical
is developing spinal implant systems for fusion, minimally invasive
surgery and motion preservation, as well as biomaterials. Also in the
hundred-million-dollar club for the year, EUSA Pharma announced a
$175 million round and CardioNet announced a $110 million round,
both in March, and Solantic announced a $100 million financing in
July.
Globus Medical is using the
proceeds from this most recent round to fund growth and clinical trials
associated with multiple technologies. Globus, founded in 2003, is now
reporting annualized revenues of more than $50 million. David Paul, who
formerly was with Synthes Spine, another leading orthopedic
company, is the chief executive officer of Globus. Globus Medical’s vision
is to collaborate with spine surgeons to develop products that will result
in pain-free, active lives for their patients. Mr. Paul has implemented
and refined a product development process that utilizes small teams, each
focused on taking specific product candidates from concept to launch. The
approach has enabled Globus to rapidly gain FDA approvals.
Based on the size of the
investment and the fact that this is a late-stage round, one can’t help
but wonder if Globus has been, or is still, considering an IPO. It seems
obvious that the private investment provided Globus with sufficiently more
attractive financing terms than an IPO would have at this time. Given the
size of the venture round, and that in its latest press release, the
company begins by stating it is the largest privately-held spinal implant
manufacturer in the world, it seems unlikely Globus is planning an IPO
right away—but we wouldn’t be surprised if the company does make some
acquisitions, since the Series E proceeds are, in part, earmarked for
expansion of the company’s pipeline. In addition, with its development
strategy already based on the use of small, specialized teams, Globus is
well-positioned to assimilate businesses with complementary technology
into its existing structure.
Perhaps a company such as
Amedica, which announced just a few months ago that it had raised
$13.2 million in Series D financing, would be a possible fit. Just a few
days after that, Amedica filed for an IPO, but then withdrew it in August.
Amedica is an emerging orthopedic implant company focused on using its
ceramics technologies to develop and commercialize innovative spine and
joint implants for the orthopedic device market, including products for
the spine, hip and knee. The product candidates Amedica is developing are
based on silicon nitride ceramic technologies that the company anticipates
will result in ceramic implant materials that are superior to what is
currently on the market, in terms of greater strength, resistance to
fracture and better compatibility with surgical and diagnostic imaging
techniques. Amedica’s goal is to establish a new standard of care in
orthopedics, but its technology is still in the pre-market stage, and does
not yet have any regulatory clearances or approvals. The CEO and one of
the co-founders of Amedica are currently its two largest shareholders.
Some other venture-backed companies could offer an acquirer different
strengths, such as LDR Spine, a provider of fusion and non-fusion
spine products with a presence in North America, Europe and China, or
Disc Dynamics, which has developed a catheter-based, minimally
invasive nucleus replacement disc arthoplasty system for treating lower
back pain associated with degenerative disc disease.
Globus has already developed
and launched a full line of fusion products, as well as a pipeline of
other product candidates. In the first half of 2007, Globus Medical
expanded its sales and distribution footprint and introduced six new
systems that represent significant technological advancements in fusion,
minimally invasive surgery and biomaterials. Additionally, in the area of
motion preservation, the company announced two "world’s first" surgeries
using its transforaminal and posterior disc replacement systems. The
venture financing also enables Globus to continue to rapidly expand its
sales and distribution force and extend its product portfolio.
Globus, founded in 2003, is
now a leading spinal implant provider worldwide. The company got a bit of
unpleasant business out of the way recently; just two days before Globus
announced the venture financing, the company announced it had settled all
six cases that had been pending between Synthes Inc. and Globus Medical
Inc. Without any admission of liability or wrongdoing, Globus agreed to
make a payment of $13.5 million to Synthes, and agreed that neither Globus
nor its agents will solicit or hire Synthes employees for one year (until
August 10, 2008); mutual general releases were also exchanged. At the end
of August, Globus announced that its revenues for the second quarter ended
June 30, 2007 were $30.2 million, representing an increase of 52% over the
$19.9 million it reported for the year-ago quarter, and its annualized
revenues amount to more than $120 million.
The second-largest round of
the month—also a Series E financing—was announced by Neuromed
Pharmaceuticals, which raised $53.3 million from MPM Capital,
James Richardson & Sons, Neuro Discovery, GrowthWorks
Capital Working Opportunity Fund, Eminent Venture Capital Fund
and other investors. Neuromed Pharmaceuticals is developing drugs for
chronic pain by improving upon the safety and efficacy of existing drugs,
including an extended-release hydromorphone formulation that it recently
acquired from ALZA Corporation, as well as another internal
program, and a collaboration effort with Merck (NYSE: MRK).
Launched in 1998 as a spin-off from the University of British Columbia,
Neuromed had already raised more than $74 million in venture funding, and
has offices in the United States as well as Canada.
With Davy Corporate
Finance Limited as the placement agent, Azur Pharma secured the
third-largest health care venture capital financing announced in August,
with $48 million raised from undisclosed investors. Azur will use the
proceeds to complete the acquisition of FazaClo, an antipsychotic for
schizophrenia and other conditions, and to provide sufficient cash
resources for acquiring further products and pipeline assets. Founded with
$50 million in 2005, Azur already acquired Gastrocrom, a product for
mastocytosis, from UCB Pharma, as well as the business of
Pharmelle, a urology and women’s health company. Headquartered in
Dublin, Ireland, Azur Pharma is focused on specialty pharmaceutical
markets in the United States and currently markets 11 products, including
FazaClo.
Nereus Pharmaceuticals
announced the fourth-largest health care venture capital deal during
August, with a Series D-2 financing that raised $45 million. BankInvest
Biomedical Venture, Roche Venture Fund, Astellas Venture
Management, Boston Life Science Venture Corporation, HBM
BioVentures and Alta Partners are among the investors in the
round. Nereus Pharmaceuticals is using marine microbial sources for the
discovery and development of cancer therapeutics, and will use the
proceeds from this round to fund ongoing clinical trials. Currently Nereus
has two candidates in phase I clinical trials, including one for the
treatment of just solid tumors, and the other for the treatment of solid
tumors, lymphomas and multiple myeloma. Its discovery portfolio also
includes additional drug candidates for oncology, as well as for
infectious diseases and inflammation. Since the first round it announced
in April 2000, Nereus Pharmaceuticals has raised approximately $120
million in venture funding.
Ophthotech
raised $36 million in a Series A venture financing announced during
August, which was the fifth-largest round of the month, from SV Life
Sciences, HBM BioVentures and Novo A/S. The company’s
board and management team include individuals who previously held
high-ranking posts at Eyetech, which was acquired by OSI
Pharmaceuticals (NASDAQ: OSIP). Ophthotech’s president, Dr. Samir
Patel, was a co-founder of Eyetech and also developed and commercialized
Macugen, which in 2004 became the first anti-VEGF inhibitor to be
FDA-approved for the treatment of wet age-related macular degeneration and
is now marketed by (OSI) Eyetech and Pfizer (NYSE: PFE).
Ophthotech expects that the initial funding is sufficient to execute its
strategy for developing and commercializing therapies for back-of-the-eye
diseases, bringing them to market in an accelerated manner.
The lead investor, Dr. Lutz
Giebel of SV Life Sciences, stated, "We are thrilled to invest in this
all-star, ex-senior Eyetech management team that has a proven,
stellar track record in accelerated drug development and commercialization
of therapeutics for the back of the eye." Dr. Giebel, who is on the boards
of Ophthotech, Lux Biosciences and Neurotech, among others,
recently estimated that the ophthalmology market is one that represents
billions of potential dollars per indication. Both dry and wet age-related
macular degeneration, as well as diabetic retinopathy, diabetic macular
edema and glaucoma are all areas that represent some unmet need.
With well-known venture
backers and a proven leadership team, Ophthotech is one company in the eye
care space that will be closely watched. In tandem with the procurement of
the $36 million financing, Ophthotech sealed two in-licensing deals with
Archemix Corp. for the worldwide rights to all ophthalmic uses for
certain of Archemix’s primary aptamers. In addition, an agreement was
forged between Ophthotech and (OSI) Eyetech, under the terms of which OSI
is transferring to Ophthotech all rights in another aptamer program,
including a preclinical compound. OSI had suspended further research on
the compound in connection with its decision to divest its eye disease
business.
In last month’s issue, we
featured companies that are working with temperature modulation and
control for health care applications. In August we learned that one
company in this space, CoolSystems, had expanded its Series G
financing, raising $6 million from existing investors on the same terms as
the $8.6 million initially raised in this round, which we reported in
January 2006. The January funding supported CoolSystems’ growth, as
explained by Tom Oliver, the company’s chief executive officer. "Our
expansion since 2006 included the addition of a new department that
focuses on regulatory and quality assurance and clinical trials. We’ve
increased our staff from 46 in 2006 to more than 70 today," he said. The
company’s Game Ready products continue to sell well in both the human and
animal markets. CoolSystems managed once again to practically double its
revenue for the year, achieving revenues of about $11 million in 2006,
compared with about $6 million in 2005. "In addition," Mr. Oliver stated,
"we’ve signed a couple of big distribution deals in the past year,
including one with OrthoRehab, and another with a public orthopedic
company." The identity of that public company has yet to be disclosed.
CoolSystems intends to
continue building its core business, based on cooling and compression
devices for use in the sports, rehabilitation and orthopedic markets. Its
newest product is an articulated knee wrap designed for use after knee
surgery as part of continuous passive motion (CPM) therapy. CoolSystems’
knee wrap delivers circumferential cooling and intermittent compression
while the patient’s leg is positioned in a CPM machine. In addition, the
company is currently looking at other technologies with potential
post-operative applications. "Right now we are expanding into the
post-operative orthopedic market," continued Mr. Oliver, "The insider
round supports our thrust in this direction." Investors in CoolSystems
include MedVenture Associates, Roda Group, the Brian and
Jennifer Maxwell Trust and angels.
|
|
FREE TRIAL
TO
HEALTHCARE CORPORATE FINANCE NEWS!
If you like this article, there’s lots more
waiting for you in the Healthcare Corporate Finance News.
Sign up for two free months right now! There’s no
obligation, no writing “cancel” on a bill. Happy reading!
|
|
