Article preview from In-Vivo -October, 2010
Highlights from the Q1 2010 review of medical device and in vitro diagnostics/research dealmaking: With most of the funding in the form of venture rounds, medical device financing totaled $548 million in the second quarter, a 10% drop from Q1. Device acquisitions picked up, with 18 transactions completed for an aggregate $4.4 billion. Including GenMark's IPO, the first done in the sector since November 2007, in vitro diagnostic/research financing more than doubled Q1's dollar volume, reaching $364 million in the second quarter. The four IVD/Research acquisitions done in Q2 totalled $226 million.
Article preview fromIn-Vivo -October, 2010
Medical device financing totaled $548 million in the second quarter, a 10% drop from Q1. However, taking Mindray Medical International Ltd.'s huge $151 million follow-on from March out of the equation, the second quarter's total actually surpassed that of Q1 by $90 million. [201030141]
Again most of the Q2 financing for device companies came in the form of venture capital – an impressive $422 million, 20% more than what the early and late VC rounds brought in during the first three months of the year. ( See Exhibit 1.) That increase stems from a rise in late venture funds; money from the earlier financing rounds actually dropped slightly in Q2 to $95 million compared with the previous quarter, but not from lack of deals, just fewer dollars raised. There was, however, one noteworthy early venture financing in Q2: iRhythm Technologies Inc.'s Series B. [201030233] Not only did iRhythm secure $10 million in funding from existing backers Mohr Davidow Ventures and Synergy Life Science Partners, it also nabbed device giant St. Jude Medical Inc. as a new backer as well as co-promotion partner for iRhythm's Zio single-use monitor and event card, which are used to continuously record intermittent episodes of arrhythmia. [201020235] ( See "St. Jude Joins with iRhythm in Wireless Cardiac Monitoring," START-UP , June 2010 [2010900147].)
Late venture capital accounted for more than half of the second quarter's financing, not very surprising since the category boasted the most transactions of any financing type, and of those deals all but four were in the double digits, a positive sign that existing shareholders are continuing to support these companies and their portfolios as these investments mature. The big winner was ophthalmology player TearScience Inc., which landed $44.5 million in Series C funds plus new backers Essex Woodlands Health Ventures, Investor Growth Capital, and General Catalyst. [201030198] The firm is awaiting FDA approval on a system that measures the oily lipid layer of tear film that is decreased in dry eye patients. TearScience's transaction – as well as ReVision Optics Inc.'s $35 million Series E fundraise in May and AqueSys Inc.'s $7.5 million June Series C – is just one of many recent examples of the bump in VC investments into the ophthalmology device sector. [201030227] [201030297] In fact, a survey of venture capitalists completed earlier this year by START-UP showed that eye disease is becoming an area of great interest in the device VC community. ( See "For Device VCs, the Eyes, Heart and Stomach Have It," START-UP , February 2010 [2010900026].) And the numbers are backing that claim – in the 2008 to 2010 year-to-date time period, there has been a 73% jump in ophthalmic device venture investments versus the three previous years, and an increase in the number of transactions. ( See Exhibit 2.) Venture-backed ophthalmic firms have also been grabbing higher returns for investors in terms of M&A over the past five years. ( See "VC Investment In Diagnostics And Eyes Delivering Strongest Returns," START-UP , September 2010 [2010900178] .)
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