October
2007 issue
Health Care VC Is
Here To Stay--
Partners At Six Leading Firms Talk With Us About The Current Market
Recent conversations with several investors led us to feel optimistic about
the state of the health care venture capital market and where it’s headed.
...
Services Deals Boost Quarterly Results--
According To Third Quarter 2007 Health Care Venture Capital Data
During the third quarter ended September 30, 2007, health care venture
capital deal flow continued at a steady pace, with more dollars than usual
invested in health care services companies.
...
IPO Market
Just one health care company priced an IPO during September, but its stock
has been doing notably well in the aftermarket, and several more filed for
initial public offerings during the month.
...
Mergers & Acquisitions
Pharmaceutical deals dominated the health care M&A market during September,
which also saw a fair amount of activity in the medical device sector.
...
Private Placements
One deal accounted for more than half of the
total dollars raised through private placements during September, but not
many deals were announced.
...
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News Read the past
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Companies Mentioned in this issue:
October 2007
A
Abbott Molecular p7
ACT Venture Capital p11
Adams Street Partners p10
Adnexus Therapeutics p8
AdvanDx p11
Aerocare Holdings p8
Aescap Venture p11
Agilence Health Advisors p6
Aldagen p11
Allen & Co. p10
Allen & Company p9
Allergan p8
Alnylam p11
Alphatec Holdings p4, p8
Alseres Pharmaceuticals p4
Alta Partners p2
Altheus Therapeutics p11
ALZA p9
Amerigroup p8
AMR ProNurse p8
Anesiva p12
Antigen Laboratories p8
APEX Intl. Clinical Research p8
Aphelion Capital p10
Archemix p12
Array BioPharma p7
Arura Pharma p8
Ascension Health p12
Ascension Health Ventures II, LLC p12
AstraZeneca plc p7, p8
Athena Net India Pvt. Ltd. p6
athenahealth p4
Atlantis Components p8
Atlas Venture p11
Atria Genetics p7
Atritech p11
Austin Ventures p10
Avicena Group p13
Azimuth Opportunity Fund p13
B
Barrier Therapeutics p13
Baystar Capital p11
BB Biotech p9
Bellevue Woman’s Hospital p8
Berkeley HeartLab p7
Best Medical p8
BioDelivery Sciences p8
Biogen Idec p10
BioHeart p4
bioMerieux p11
BioMicro Systems p11
Bionovo p4
BioPure p4
Biotest AG p8
BioVentures Investors p11
Birmingham Associates Ltd. p13
BlueLine Partners p13
BMO Capital p4
Boston Life Science Venture p10
BridgePoint Master Fund p11
Brimberg & Company p13
Bristol-Myers Squibb p8
Brookside Capital p15
Bru II Venture Capital Fund p11
Business Development Bank of Canada p1
C
Callisto Pharmaceuticals p4
Canaan Partners p2
Canaccord Adams p4, p13
CapMan p11
Cardiosolutions p11
Care Improvement Plus p9
CareSeek Inc. p16
Caring.com p11
Catholic Health East p12
Catholic Health Initiatives p12
Celera Group p7
Celgene p7
Cellerix p10
Cellular Technical p8
Center for Venture Research at the University of N p16
Cerexa p2
CHL Medical Partners p11
CHV II, LP p12
CIBC p4
Clarus Ventures p9, p11
CNF Investments p11
Concateno Plc p8
Corium International p10
Cowen & Co. p4
Cozart Plc p8
Credit Suisse p4
Cross Atlantic Partners p11
CTI Life Sciences Fund p10
Cyntellect p9, p11
D
DaVita p8
Dawson James Securities p4
Delcath Systems p4, p13
Desjardins Venture Capital p10
DexCom p2
DFJ Dragon Fund China p10
Diffusion Pharmaceuticals p11
Doll Capital Management p11
Domain Associates p2, p9
E
Early Stage Partners p11
Echo Therapeutics p8
Eclipsys p6
Edmond de Rothschild Investment Partners p11
Electro-Optical Sciences p4
ElectroSonics Medical p11
Elixir Pharmaceuticals p4
Elliott Associates p13
Ellis Hospital p8
Emeritus Assisted Lvg. p8
Eminent Venture Capital p10
Emphasys Medical p4
Enobia Pharma p10
Eppendorf AG p8
Esprit Pharma p8
Essex Woodlands Technology Ventures p10
Evotec AG p8
Exelixis p4
F
f-star p11
Flexible Medical Systems p11
Fonds de solidarite FTQ p10
Forest Laboratories p7
Forward Ventures p11
G
GenomeQuest p11
GlaxoSmithKline plc p8
GlobeImmune p10
Globus Medical p9
Goldman, Sachs p4, p6
GS Capital Partners p9
H
HBM BioMed China p10
HBM Partners p1
Health Systems Inc. p15
HealthCap p11
Healthcare Realty Trust p4
HealthCare Ventures p10
Heights Capital p10
Henry Schein p8
Highland Capital Partners p10, p11
HLM Venture Partners p11
HomeChoice Partners p8
Humana p8
Hyperion Therapeutics p10
I
IDG Ventures Boston p11
Imalux p11
Imperial Innovations Group p11
Insulet p2
InterMune p4
Interventional Spine p12
InterWest Partners p3
IRIDEX Corporation p13
Isis Pharmaceuticals p7
Israel Seed Partners p11
ISTA Pharmaceuticals p8
J
JenaValve Technology p11
JP Morgan Securities p13
JPMorgan p4
K
KMG America Corporation p8
L
Laserscope p15
LD Pensions p11
LDR Holdings p10
Lectus Therapeutics p11
Leerink Swann p13, p16
Legg Mason p9
Legg Mason Capital Management p10
LeMaitre Vascular p8
Leprechaun, LLC p9
Life Sciences Partners p10, p11
LifeBond Limited p11
Lilly Ventures p10
Lothian Partners p10
Lovell Minnick Partners p16
M
MAKO Surgical p4
MAP Pharmaceuticals p4, p15
MatlinPatterson Global Advisors p9
Mawell p11
Mayes College of Healthcare Business and Polic p16
MD-X p15
Meda AB p8
MedAssets p6
Medica Venture Partners p10
Medical Staffing Ntwk. p8
Medicis p10
Medicure p13
Medivation p13
Medtronic p11
MedVenture Associates p10
Mellon Family Investment Company p10
Memphis Managed Care p8
Merck p9
Mercy CarePlus p8
Meritech Capital Partners p11
Merrion Pharmaceuticals p4
Microbia p7
Millennium Pharmacy Systems p12
Modigene p4
Molecular Vision p11
Molina Healthcare p8
Morgan Stanley p4
Morgenthaler Ventures p10
Mosaix Ventures p11
MPM Bio IV NVS Strategic Fund p11
MPM Capital p1
N
Nabi p8
NanoCor Therapeutics p11
Nanostart AG p11
NeoStem p4
Neuromed Pharmaceuticals p9
New Brunswick Scientific p8
New Enterprise Associates p1, p10
New Leaf Ventures p11
New Science Ventures p9
Nexstim p11
Nile Therapeutics p8
North Bridge Venture p11
Northstar Neurosciences p2
NovaCardia p4
Novartis AG p7
Novartis Venture Fund p10
Novate Medical p11
Novelos p4
Novo A/S p1
NPS Pharmaceuticals p4
Nycomed Pharma p8
O
Obagi Medical Systems p4
Octillion p4
Oculus Innovative p4
Oklahoma Seed Capital Fund p11
OpGen p11
Ophthotech Corporation p12
Oragenics p4
OrbiMed Advisors p10
Ortho-McNeil, Inc. p7
OTC Asset Management p11
P
Pacific Growth Equities p13
PAREXEL p8
Pearl Therapeutics p11
Pequot Ventures p15
Perseus-Soros Biopharmaceutical Fund p15
Pfizer p16
Pharma-Bio Serv p4
Phreesia p11
Piper Jaffray p4, p6
Planet Technologies p8
Polaris Venture Partners p11
Prana Biotechnology Limited p13
Precision Dynamics p9
Prism Venture p11
Progenics p4
Prolog Ventures p11
Proteon Therapeutics p11
PSS Medical p6
PTC Therapeutics p11
PTV Sciences p10
Punk Ziegel p4
Q
Quantel p8
Quantum Technology Partners p10
R
R.W. Baird p4
Radianse p12
Radius Health p7, p11
RadNet p8
Regulus Therapeutics p11
REM Sleep Diagnostics p8
Renovis p8
Richard King Mellon Foundation p10
Roche Venture Fund p10
Rothschild Private Equity p10
S
SafeStitch p8
Sagent Pharmaceuticals p10
Sequel Pharmaceuticals p11
Sequel Venture Partners p10
Sermo p9
Seroba BioVentures p11
SightLine Healthcare Vintage Fund p11
Silkit Pharma Corporation p8
Skyline Ventures p1, p11
Sleep Holdings, Inc. p8, p13
SMI Products p8
Sofinnova p1
Sofinnova Ventures p10
Software of Excellence p8
Solantic p9
Sontra Medical p8
Spinal Dynamics p3
Split Rock Partners p11
Spring BioScience Corp. p8
STAR Physical Therapy p8
Stifel, Nicolaus & Co. p4
StrataGent Life Sciences p10
superDimension p11
SupplyScape p11
Symphony Capital Partners p7
Symphony GenIsis p7
T
T2C2/Bio 2000 p10
Takeda Pharmaceutical p11
Targanta Therapeutics p4
Telegraph Hill Partners p10
The March Group p16
The Zitelman Group p11
TheFunded.com p3
ThinkEquity Partners p13
Three Arch Partners p3
Tobira Therapeutics p11
TomoTherapy p4
Toucan Capital p10
Trans1 p4
TransMedics p4
Trophos p11
Tullis Dickerson p11
TVM Capital p11
U
U.S. Physical Therapy p8
UBS p4
Ucyclyd Pharma p12
UltraShape p11
University of the Sciences at Philadelphia p16
V
Valley Imaging Centers p8
Valley Ventures p10
Vascular Architects p8
Ventana Medical p8
Ventech p10
Vermillion p4
Versant Ventures p10
Versant Ventures p9
Verus Pharmaceuticals p7
VirtualScopics p11
Vital Therapies p10
Vivo Ventures p10
vSpring p11
W
Water Street Healthcare Partners p9
WaveLight Aesthetic p8
Wellcome Trust p11
Welsh, Carson, Anderson & Stowe p9
Wexford Capital p10
WRF Capital p10
X
XactiMed p15
XLHealth Corporation p9
Y
Ysios Asset Management p10
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Services Deals Boost Quarterly Results--
According To Third Quarter 2007 Health
Care Venture Capital Data
Email Editor
Although the economic shifts
that have been set in motion over the past few weeks may have put
investors of all kinds in a bit more prudent mindset than usual, for the
most part, during the third quarter of 2007 an abundance of capital has
been stimulating activity in the venture capital market. Venture backers
are apparently still finding clever and profitable ways to exit
investments, and seem agile in terms of adjusting to changes in the
market. New technology and intellectual property, patents being put to new
uses, outsourcing services, and reformulations of, or improvements on,
existing products continue to attract the attention of investors hoping to
help companies meet unmet medical needs, particularly in large patient
populations.
For the third quarter 2007, the top investment firms, ranked in order of
participation in the greatest to least number of health care venture
capital rounds, are mostly the same firms we have seen at the top for the
past three or four years. Funds managed by HBM Partners and BDC
(Business Development Bank of Canada) Capital invested in the most
rounds during the quarter, having participated in five deals apiece. Seven
firms participated in four venture financings during the quarter:
Sofinnova, Skyline Ventures, Novo A/S, MPM Capital, Domain Associates
and BB Biotech. Thirteen more firms, including Versant Ventures
and New Science Ventures, participated in three deals apiece, while
many others contributed to two rounds apiece and the balance did just one
health care deal for the quarter. In total, 308 venture capital firms and
other investment entities committed $2.5 billion in financing to 120
health care companies in 121 deals (Cyntellect announced both a $15
million Series D financing and a $3 million follow-on round during the
quarter).
The largest deal of the quarter actually didn’t appear on our radar until
after the month in which it was announced, but the $290 million round that
XLHealth Corporation is included in our calculations for the
quarter. This deal, along with one other very large round, actually
boosted quarterly venture capital results substantially for the health
care services sector, which posted a total of $503 million invested in
just eight deals.
XLHealth provides chronically ill patients and physicians with disease
management services and support, including face-to-face interactions with
patients between office visits, data collection and analysis services, and
customized preventive care planning. Through these activities, XLHealth
intends to supplement physician care for the purpose of helping patients
maintain better health and a higher quality of life, ultimately
maintaining optimal health management. The company is headquartered in
Baltimore, Maryland, and currently owns and operates Care Improvement
Plus, one of the largest chronic condition special needs plans in the
United States. In addition, XLHealth recently acquired Leprechaun, LLC,
a provider of technology and consulting services designed to improve
efficiencies in Medicare Advantage plan member assessment, diagnosis, data
management and claims. Among its most notable investors, XLHealth is
backed by MatlinPatterson Global Advisors and GS Capital
Partners.
The other round that boosted quarterly results for the health care
services sector was the $100 million financing that Solantic, an
operator of walk-in urgent care centers in Florida, secured from Welsh,
Carson, Anderson & Stowe. Solantic’s deal, which enables the company
to practically double its presence in the state within a year, as it works
to establish a national brand as the leading provider of urgent care, was
the third-largest health care venture capital transaction announced in
Q3:07.
The second-largest deal of the quarter, a $110 million Series E financing
led by Clarus Ventures, was announced by Globus Medical, a
company that is developing spinal implant systems for fusion, minimally
invasive surgery and motion preservation, as well as biomaterials. The
fourth-largest deal of the quarter, also in the medical device sector, was
the $75 million round that Precision Dynamics raised from Water
Street Healthcare Partners. Precision Dynamics, a global provider of
patient identification wristband systems used for multiple applications in
hospitals and other health care settings, is using the proceeds to make
acquisitions and other efforts to expand its market position. Actually,
during the third quarter 2007, the medical device sector was the most
active in terms of both deal flow and dollar volume. Medical device
companies raised nearly $623 million in venture capital, or 25% of the
quarterly dollar total for all sectors combined, in 34 deals.
Not unexpectedly, pharmaceutical, biopharmaceutical and biotechnology
companies also captured a major share of health care venture capital
dollars for the quarter, with steady deal flow in each sector. With the
next-greatest total amount of funding in one sector, biopharmaceuticals
accounted for nearly $473 million in 20 deals, and pharmaceuticals
followed closely, with almost $391 million in 21 deals. Biotechnology had
more deals, with 26 announced, but the total amount raised in the sector
was a bit less, with $358 million. Neuromed Pharmaceuticals, a
biopharma company that is developing drugs for chronic pain by improving
on the safety and efficacy of existing drugs, announced the largest deal
in these three sectors, with a $53.3 million Series E financing led by
MPM Capital. Currently Neuromed’s portfolio includes an
extended-release hydromorphone formulation that it acquired in April from
ALZA, a Johnson & Johnson (NYSE: JNJ) company, and an internal
collaboration with Merck (NYSE: MRK).
E-health companies raised a relatively respectable amount of venture
funding during the third quarter of 2007, with a total of $106 million
invested in 12 companies. One company of note in this sector is Sermo,
a provider of a Web-based platform that enables physicians who are members
to aggregate observations from their daily practices and share experiences
with each other. The $26.7 million Series C financing that Sermo announced
in mid-September was the largest e-health deal of the quarter. Legg
Mason and Allen & Company were the primary investors in the
most recent round, which brings to more than $39 million in venture
funding the company has raised in the past year. Currently, Sermo is
serving an online community of more than 30,000 physicians from all 50
states in numerous specialties, through its Web site, www.sermo.com.
For Q3:07, slightly more than two-thirds of the health care venture
capital deal announcements we recorded included a specified a round. Among
these 81 deals, nearly 52% of the transactions were Series C or
later-stage rounds, with the remaining percentage accounted for by Series
A and B rounds. Two of the largest deals for the quarter, announced by
Neuromed Pharmaceuticals and Globus Medical, were Series E financings for
companies with products in relatively late stages of
development—suggesting that these companies might have been considering an
IPO, but found more attractive financing terms in the private market.
Among the earlier-stage financings, New Jersey-based Tobira
Therapeutics, which is focused on therapies for HIV/AIDS, raised $31
million in Series B funding to advance its lead compound through phase II
clinical development and to continue advancing another, the worldwide
rights to which were licensed from Takeda Pharmaceutical (PK: TKPHF).
Speaking of licensing deals, a handful of other venture capital
investments announced during Q3:07 were completed in conjunction with
licensing agreements. For example, in August Ophthotech Corporation
announced a $36 million A-round in conjunction with an exclusive,
worldwide license agreement with Archemix to develop and
commercialize two anti-C5 aptamer compounds for treating the wet and dry
forms of age-related macular degeneration. Three deals were announced in
connection with an acquisition, one to launch a joint venture start-up,
one to fund a spin-in and one for a spin-out that resulted from a separate
acquisition.
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