Northstar's Second Chance

Article preview reprinted from IN VIVO - November 2008

For Northstar Neuroscience, which is exploring new approaches for neurostimulation devices, the decision to take the money and run when the device IPO window was open in 2006 has meant the difference between survival or closing up shop.

Northstar's Second Chance

Article preview reprinted from IN VIVO - November 2008

There are two schools of thought when it comes to financing a start-up company. One viewpoint is, when it comes time to raise money and you get the opportunity to raise even more than you think the company needs, take the money and run because you don't know whether you'll be that fortunate the next time around. The other line of thinking is to raise only what you think you'll need to hit your next milestone, thereby minimizing dilution.

For Northstar Neuroscience Inc., which is exploring new approaches for neurostimulation devices, the decision to take the money and run when the device IPO window was open in 2006 not only has proved to be the right course of action for the company, but it probably has meant the difference between Northstar surviving or closing up shop. The FDA's recent approval of the company's second study of its Renova cortical stimulation device for the treatment of major depressive disorder (MDD) is another sign that reports of Northstar's demise may, in fact, prove to have been premature. And the company's new life can largely be attributed to Northstar having chosen to fly in the face of conventional wisdom that held it was too early for the company to go public in 2006, when public investors were embracing promising device companies on the basis of little else than that promise.

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Companies mentioned in this article:

Boston Scientific Corp.
Hewlett-Packard Co.
Johnson & Johnson Ethicon Inc.
Medtronic Inc.
National Institutes of Health Neuronetics Inc.
Northstar Neuroscience Inc.
St. Jude Medical Inc.

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