Article preview from IN VIVO - June, 2012
Medical device companies raised $1.1 billion, a 40% increase over Q4 2011’s $800 million. Two billion-dollar deals in the resuscitation market boosted device acquisition activity to $4.2 billion. Twenty diagnostics financings brought in a collective $302 million, soaring above the previous quarter’s $269 million. There were seven diagnostics M&A deals completed, totaling $589 million – down yet again.
Article preview from IN VIVO - June, 2012
Late-stage venture capital financing dominated at $524 million, representing nearly half of all funds raised. Late VC rounds have outpaced early-stage fundraisings since the beginning of 2010, but never as dramatically as this quarter, when early venture financing totaled just $115 million. (See Exhibit 2.) Many of the double-digit venture rounds in Q1 went to implantable device developers, some of which reaped very large amounts; in fact two of them surpassed $50 million, a sign that even though device venture capital appears to be sparse, large rounds are still to be found. ConforMIS Inc. pulled in an $89 million Series E from AGC Equity Partners, Axel Johnson and government investment funds from Asia and the United Arab Emirates. [See Deal] The company is soon planning to launch its iTotal knee replacement system, which is customized to each individual patient based on a CT scan of the knee. The other big Q1 round was Sientra Inc.’s $65 million Series C, which included new investors Clarus Ventures and OrbiMed Advisors, plus existing shareholders. Like ConforMIS, Sientra is using its money for a product launch, the Silimed portfolio of silicone gel breast implants.
While early-stage venture rounds were much smaller in comparison, Apollo Endosurgery Inc.’s $48 million Series B stood out, representing more than 40% of the early VC total. Apollo called on first-time backers Novo AS, Remeditex Ventures, and CPMG and existing investors to provide funding for its OverStitch endoscopic suturing system, a less invasive device that utilizes natural orifices for access for the flexible endoscope.
At $330 million, debt offerings comprised 29% of the first quarter’s fundraising. One of the eight transactions outweighed the others, following in the footsteps of the large debt financings seen in 2011 such as NuVasive Inc.’s $341 million offering. Fellow orthopedic device maker DJO Global Inc. pulled in $230 million by selling six-year second-priority senior secured notes. The company is using the proceeds to pay back $210 million in debt. Two other orthopedic medtech developers also took out loans during Q1. In the second-largest debt financing, Amedica Corp. raised $30 million from the sale of senior secured subordinated convertible notes, supporting its work on silicon nitride ceramic materials, in addition to helping it pay back loans associated with its $14 million acquisition of US Spine in 2010. Active Implants Corp. completed a $10 million convertible debt financing to fund its ongoing study of the NUsurface meniscus implant in knee pain and function restoration.
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