March 2008 issue
Slow Month Produces Some Unique Deals--
We Talk With CEOs Of Two Companies That Closed Venture Rounds
February was a slow month for
deals, but the CEOs of two health care companies that raised venture rounds
in February took some time to talk with us.
...
Financing Available For Quality Companies:
New Venture Funds Raised, Ready and Willing To Invest In The Best
We talk with two venture
capital investors whose firms have recently closed large funds focused on
health care.
...
Public Equity Market
In addition to IPOs priced, filed and withdrawn in February, we take a look
at IPOs that have been withdrawn in the past two years.
...
Mergers & Acquisitions
The amount of capital committed to fund health
care M&A deals increased slightly in February, compared with the prior
month.
...
Private Placement Market
Deal flow has not picked up since last month, but a bit more funding was
invested through PIPEs in February.
...
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News Read the past
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Companies Mentioned in this issue:
March 2008
Symbols
3i Group Plc p6
5AM Ventures p10
A
Accumetrics p10
Acorda Therapeutics p4, p6
Adnavance Technologies p11
Advanced Technology Ventures p2
Aerovance p9
Aethlon Medical p4
Affimed Therapeutics p11
AgeChem Venture Fund p10
Agemark p8
Alexion Pharmaceuticals p6
Alpinvest Partners p12
Alta Partners p3
Alverix p11
Amberbrook p10
AMN Healthcare Services p8
Angel Capital Association p12
Antigenics p4
Apex Bioventures p3, p4
ARCH Venture Partners p10
Archemix p4
Arnerich Massena & Associates p10
Arriva Pharmaceuticals p11
Arthrosurface p11
AthenaHealth p4
Avalon Ventures p12
Avantis Medical p12
AxiCorp GmbH p6
B
Bay City Capital p14
Bayer AG p6
BB Biotech Ventures; Merck KGaA p11
BBT Fund p10
Beijing Med-Pharm p4
BioCon p6
Biodel p4
Bioheart p3
BioIQ p11
Biolex Therapeutics p4
BioVascular, Inc. p11
BioVentures Investors p11
Black Mountain Ventures p11
BMO Capital Markets p5
Boston Millennia Partners p11
Brandywine Senior Living p8
Burrill & Company p11
C
Cadence Pharmaceuticals p14, p15
Canaan Partners p11
Canaan VIII p11
CapitalSource p8
CardioNet p3, p4
CDIB BioScience p10
Celgene Corporation p6
CellGate p6
Cerexa p12
Certified Diabetic Supply p15
Chemokine Therapeutics p15
China Sky One Medical p15
CHL Medical Partners p10
Chronicity p11
Chrysalis Ventures p1
Cianna Medical p11
Citi p4
Clarus Lifesciences II, L.P. p1
Clarus Ventures p1
CollaGenex Pharmaceuticals p6
CoMentis p9
Concentric Medical p4
Connecture p11
Cowen and Company p3
Criticare Systems p6
Cross Creek Capital p10
Cypress Biosciences p6
CytRx p4
D
Dakim p11
Dara BioSciences p3, p4
Dawson James Securities p5
De Novo Ventures p10
Diabetic Plus p15
Direct Patient Solutions p1
Domain Associates p10, p14
DOR BioPharma p4
Dynogen Pharmaceuticals p3, p4
E
Edison Ventures p11
EKR Therapeutics p6
Emdeon Business Services p6
Encysive Pharmaceuticals p6
Epic Ventures p10
Esaote Group p11
Essex Woodlands p10
eutsche Bank p4
F
Family Home Health Care p8
Fininvest p10
FinTech p10
Fisher Healthcare p1
Fog City Fund p11
Forest Laboratories p6
Frazier Healthcare Ventures p14
Frost & Sullivan p4
FUJIFILM Holdings p6
Fusion Capital p4
G
Galderma p6
Galen Partners p11
GE HealthCare p6
General Atlantic p6
Genoptix Medical Lab p4
Genta Incorporated p15
Gentiva Health Services p8
GlaxoSmithKline p6
GlaxoSmithKline plc p6
Global Healthcare Exchange p2
Global Hunter Securities p15
Globus Medical p9
Great Pacific Capital p11
Grove Street Advisors p12
GrowthWorks Capital p11
GTC Biotherapeutics p14
H
Harris & Harris Group p2
Harvard Management p12
Healthcare Discoveries p8
HealthMedia p9
Healthsport p4
Helix BioMedix p15
Hellman & Friedman p6
High Country Venture p3
HLTH Corp. p6
Home Health Care Affiliates p8
Humana p8, p9
I
Iasis Healthcare p8
ICON plc p8
IDG Ventures Boston p2
ImmunoCellular Thera. p6
Institutional Venture Partners p10
InterWest Partners p10
INVESCO p10
Invitrogen p10
J
Janney Montgomery Scott p5
Johnson & Johnson p1
JPMorgan p3, p4
K
Kaiser p11
Kaiser Permanente Ventures p10
Kane Biotech p15
KB Partners p10
Kingsbridge Capital Limited p14
L
Lehman Brothers p4
Light Sciences Oncology p4
Lotus Pharmaceuticals p15
M
MAKO Surgical p3
Mary Conrad Center p8
McKesson Corporation p2
MedVenture Associates p2
Merck Capital Ventures p11
Merck KGaA p11
Meridian Health p8
Merrill Lynch p4
Merriman Curhan Ford & Co. p5
Mesa Verde Partners p11
Midtown Partners p15
Millennium Pharmaceuticals p9
Molecular Discoveries p6
Momentum Medical Group p8
Montagu Newhall p10
Montreux Equity Partners p11
Morgan Stanley p3, p4
Morgenthaler Venture p11
MPM BioVentures p11
N
NanoImaging Services p11
Natl. Medical Health Card p8
Neoforma p2
Nerites p11
New Leaf Venture Partners p10
New Venture Partners p11
Nordic Biotech p11
Novacardia p12
Novo Nordisk Biotech Fund p11
O
Ocera Therapeutics p10
Optimata p11
Opto Circuits (India) p6
Orexigen Therapeutics p12
Ouachita Comm. Hospital p8
Owens & Minor p2
OXiGENE p14
P
Pappas Ventures p10
Parish Capital Advisors p12
Paul Capital p12
Pediatrix Medical Group p8
Peninsula Pharmaceuticals p12
Pfizer p6
PhaseRx p10
Platinum Select, L.P p8
POINT Biomedical p10
Point Therapeutics p3, p4
Polaris Venture Partners p11
PolyRemedy p1
Portico Systems p11
Possis Medical p6
Pro-Pharmaceuticals p15
Progen Pharmaceuticals p6
Promedior p11
Proprius Pharmaceuticals p6
PTV Sciences p10
Q
Q Therapeutics p10
R
Ranier Technology p10
RBFSC, Inc. p15
Regeneration Technol. p6
RiverVest p10
Rodman & Renshaw p14
Rolling Oaks Radiology p8
RXi Pharmaceuticals p3, p4
S
Safeguard Scientifics p11
Saints Capital p10
Salt Lake Life Science Angels p10
San Diego Tech Coast Angels p11
Sanderling Ventures p3
sanofi-aventis p6
Saratoga Ventures, p10
Sciona p11
Senior Hsg. Properties Tr. p4
Sequel Pharmaceuticals p12
Shepard House p8
Sofinnova Ventures p10
SXC Health Solutions p8
Synergy Life Science Partners p12
T
Takeda Pharmaceutical p6
Taligen Therapeutics p1
Tango p3
TechniScan Medical Systems p11
Thomas, McNerney & Partners p10
TLC Health Care Services p8
Tobira Therapeutics p12
Toucan Capital p10
Toyama Chemical Company p6
TransForm Pharmaceuticals p9
Transoma Medical p4
Traversa p11
Tutogen Medical p6
TyRx Pharma p10
U
UBS Investment p4
University of Colorado at Denver p13
University of Utah Research Foundation p10
V
Vedanta Capital p10
Vein Assoc. of Amer. p4
Venrock Associates p9
Venture Investors p11
Versant Ventures p10, p14
Viscorp p4
Vital Health Technologies p8
vSpring Capital p10
W
Wachovia Securities p3
WebMD Health Corp. p6
Whatman plc p6
William Blair Capital Partners p10
Windamere Venture Partners p11
Working Opportunity Fund p11
Z
Zogenix p9 |
Slow
Month Produces Some Unique Deals--
We Talk With CEOs Of Two Companies That Closed Venture Rounds
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February 2008 was the
slowest month the health care venture capital market has seen in over two
years, in terms of both deal and dollar volume. Only 26 investments were
announced, totaling $390.3 million, based on confirmed deals with
disclosed prices. We had to look back more than two years for other months
with so little activity. In June 2005, there were 26 deals announced,
totaling $422 million, and in July 2005, there were 27 totaling $455.2
million. Fortunately (since the numbers are no fun to discuss this month),
we had the opportunity to talk with the CEOs of two of the companies that
announced venture rounds during February. Taligen Therapeutics
announced the largest deal of the month and PolyRemedy announced
the fifth-largest.
Starting with the smaller of the two, Daniel Eckert shared information
about himself and about PolyRemedy, which announced a $25 million round in
February. Mr. Eckert, who joined PolyRemedy in Fall 2007, began his career
with Johnson & Johnson, Inc. (NYSE: JNJ), selling wound care
products. He also previously held senior level positions at Direct
Patient Solutions, Fisher Healthcare, McKesson Corporation (NYSE: MCK),
Owens & Minor, Inc. (NYSE: OMI), and Neoforma, Inc., which
was acquired by Global Healthcare Exchange in 2005. “My experience
in the health care supply industry has given me a very good understanding
of the wound care space and its challenges. Plus, I’ve had a lot of
exposure to the supply chain processes that actually get products into the
market,” he explained.
Advanced Technology Ventures, IDG Ventures Boston, MedVenture
Associates and Harris & Harris Group provided the recent
funding to PolyRemedy. Mr. Eckert remarked, “We are very pleased with the
investors we have, who are contributing not only financial backing but
also strategic input. They are a unique fit for us because of their
understanding of health care and devices, as well as their expertise in
the delivery of innovative technology.” PolyRemedy, which was founded by
its chief technology officer, Oleg Siniaguine, Ph.D., has been developing
its technology since 2005, combining software, robotics and nanotechnology
to create a delivery system that consistently fabricates precisely
customized wound dressings, on demand and at the point of care. The
initial funding for PolyRemedy was provided by angel investors, who are
still invested in the company. MedVenture Associates was its A-round
investor.
“PolyRemedy replaces the traditional, manual, labor intensive, error-prone
method of creating wound dressings with a simpler, automated system that
consistently, uniformly fabricates customized, unit-dose dressings,” Mr.
Eckert explained. Instead of locating and then cutting down to size
various wound dressings, tape, or other supplies and applying salves,
ointments or solutions by hand, clinicians can use PolyRemedy’s equipment
to produce a tailored dressing that is ready for use. “We like to call it
no assembly required,” he said.
PolyRemedy’s founders saw a necessity for a delivery system that would
make it easier for clinicians to adhere to well established moist healing
protocols. The machine, which takes up about four square feet of
space—close to the size of a newer, smaller ATM—cuts and creates each
wound dressing from layered, nanofiber rolls, adds specified fluids and
packages it in a sterile sleeve that is dispensed to the clinician.
The nanofibers that PolyRemedy utilizes include materials that are
hydrophilic, which attract water or moisture, and hydrophobic, which repel
moisture. “The wounds we are dealing with are chronic, such as diabetic
ulcers and pressure sores, and are often associated with an underlying
chronic health condition,” explained Mr. Eckert. The machine also includes
a system that logs data and provides an interface that is expected to
enable the capture and monitoring of patient data for analysis and to
demonstrate outcomes. Accordingly, clinical protocols can be refined,
costs can be controlled and evidence-based improvements in wound heal
rates over time can be demonstrated.
Among other initiatives, the company is currently working to track and
identify the exact time and cost savings associated with the use of its
system. “This year, we are doing beta testing at an undisclosed number of
facilities, and we expect a full launch of the product in 2009. After
commercialization, we will start to consider other financing options for
the company.”
PolyRemedy has clearly defined its target market. “Our initial focus is on
the specialized wound care center market, including both independent and
hospital-based centers,” Mr. Eckert told us. From what we understand,
PolyRemedy’s system is not difficult to use, and so far, market acceptance
has been promising. Mr. Eckert stated, “We concentrate on minimal
disruption of current clinical workflow. Even so, we find there is a
process with early adopters taking the lead and then the rest of the staff
following.”
“We really want to revolutionize this space,” said Mr. Eckert, who
considers the technology disruptive because, “There is no supply chain.
The product is fabricated at the point of care.” An additional benefit he
pointed out is that, “PolyRemedy improves the capacity for controlling the
sterility of dressings, with fewer hands touching the materials at fewer
locations.” Adding to its appeal, it is likely that PolyRemedy’s dressings
will be subject to low regulatory review and approval and in many cases
reimbursable under existing codes. So, even though it’s too soon for
PolyRemedy to predict revenues, the perception is that there is
considerable potential for gain. Mr. Eckert also asserted, “Our investors
see that we are addressing a large, relatively underserved market in the
U.S. We have an opportunity to address a specialized market, to improve
care and a business process, as well as capture data.” He concluded, “We
intend to be a leader in this market.”
We learned about Colorado-based Taligen Therapeutics, which announced the
largest deal in February, from Dr. Woodruff Emlen, who founded the company
with Dr. V. Michael Holers in 2004. Taligen is a development-stage biotech
focused on developing and utilizing technologies that modulate and
regulate activation of the complement system. Taligen secured $65 million
in Series B funding, led by Alta Partners and Clarus Ventures,
new investors in the company. “We’re really excited about the deal,” Dr.
Emlen stated, “We have wonderful investors, who really add a lot more than
just the capital.” Founded in 2004, Taligen raised $3.75 million in Series
A financing from Sanderling Ventures and Tango in late 2005.
Sanderling, Tango and the state of Colorado’s High Country Venture
fund, which is managed with Tango, also participated in the second round.
The size of Taligen’s Series B financing, which is structured in
milestone-based tranches, is larger than many investments in early stage
companies, indicating some strong interest and long-term expectations from
investors. The company has already received a significant portion of the
funding and is now focused on continuing to grow the company and to
advance its lead product candidates into clinical development. “It makes
sense for us to have the financing arrangements in place, so we can
concentrate on operations instead of thinking about when we’ll have to
raise the next round.”
Taligen is working to produce monoclonal antibodies and recombinant fusion
proteins that specifically target the alternative complement pathway, with
its therapeutic focus on serious inflammatory diseases, including asthma,
macular degeneration and immune kidney disease. The technology and
intellectual property that the company is using are predominantly from the
University of Colorado at Denver and Health Sciences Center and
partnering institutions. Dr. Emlen noted that, “Scientists have been
studying the complement system since the 1950s, but in the past five years
or so, several discoveries have been made that strongly link diseases with
abnormalities of the complement system. Because of these discoveries, now
investors are more interested.”
Dr. Emlen explained, “The complement system is a group of about 30
proteins that are present in circulation and tissues, that are part of the
immune system. The job of the complement system is to recognize an insult
to the body and to reply by triggering or activating a process which leads
to the release of inflammatory compounds. The complement system is one of
the major drivers of the inflammatory process.” Taligen is currently in
the process of identifying the one or two compounds in its pipeline that
are best suited to move into the clinic for development, in the areas of
asthma and age-related macular degeneration. “Strategically, we will
probably work with a partner for the development of one compound and
develop the other in-house,” Dr. Emlen revealed. There are a few other
companies out there targeting the complement pathway, but, he told us,
“Taligen’s approach is really quite different, because of the precise
point in the complement pathway that we target.”
The proceeds from the Series B financing are expected to provide
sufficient funding for Taligen to get one of its lead programs into phase
II clinical trials. Although Taligen already has animal proof of concept
for several compounds, it will still be at least one year before any phase
I clinical trials are initiated. Dr. Emlen speculated that by the most
aggressive estimate, a Taligen product could potentially reach the market
in as soon as five years. “Currently, the company is making a concerted
effort to build out and get the manpower in place to meet our milestones.
We have five people already and that will double within the year.”
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