Article preview reprinted from Start-Up - March, 2009
With public market capitalizations sagging and venture capitalists hesitant to commit new capital, large publicly traded medical device companies were expected to feast on capital-starved device start-ups during this recession.
Corporations Chiming In On Device Financings
Article preview reprinted from Start-Up - March, 2009
However, this clearly hasn't happened. If not for the $1.25 billion spent by Medtronic Inc. for Ablation Frontiers Inc., CoreValve Inc. and Ventor Technologies Ltd., the strategic acquisition market would be just as bleak as the market for initial public offerings of stock.
But the business development offices at Johnson & Johnson, St. Jude Medical Inc. and others have been busy. The fruit of their labor is strategic investments, not acquisitions. A review of medical device deals recorded in FDC-Windhover's Strategic Transactions database shows an increase in corporate participation in venture capital raised by companies at all stages. (See Exhibits 1 and 2.) Over the past 15 months, corporate investors have played a larger role in financing medical device start-ups, participating in one quarter of the total financings completed as this magazine was going to press. The contributions clearly don't come close to matching the output by traditional venture investors, but these investors have been active.
It's worth noting that corporate investors aren't limiting themselves to later-stage rounds. According to the data, corporate investors invested in an equal number of Series A, B, C, D and E or later rounds. But even more interesting is the willingness of corporate investors to climb out of the back seat and lead a financing. Medtronic, for example, led the $47 million Series C of Ardian Inc., the neuromodulation company developing technology to treat hypertension. In January, Johnson & Johnson Development Corp. stepped up to lead the $26 million Series D round in Acclarent Inc., the maker of an endoscopic surgical device used to treat severe sinusitis. Acclarent raised the round after scuttling its planned IPO last year.
Purchase this article online as a PDF and receive it immediately via email. Questions? Call (800) 332-2181. 100% Satisfaction Guaranteed. Subscribe to Start-Up.
Companies mentioned in this article:
Acclarent Inc.
Ardian Inc.
CoreValve Inc.
Johnson & Johnson
Medtronic Inc.
Ablation Frontiers Inc.
Medtronic AneuRx Inc.
St. Jude Medical Inc.
Ventor Technologies Ltd.
START-UP: No publication reviews leading edge companies and technology better than START-UP. Each issue of START-UP profiles the most important new product companies, identifies the hottest technology areas, reviews funds flowing into private companies and investment trends, and reports on university tech transfer licensing. Industries covered: pharmaceuticals, biotechnology, medical equipment & devices, and in vitro diagnostics. Subscribe to START-UP.
