Few standouts among the top Dx VC deals of Q1 2014

Look at the top 5 diagnostics-related venture capital deals in the 2014 first quarter, and a few things become clear.

Only three of the deals hit in the double-digit million-dollar range. One even landed below the psychologically important million-dollar threshold, according to numbers gathered by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) for the most recent MoneyTree report, based on Thomson Reuters data.

We learned in April that the 61 medical device and equipment venture capital deals concluded with money in the bank in Q1 were the fewest since 2004, though the amount invested jumped 28% to $588 million. NVCA President Bobby Franklin commented at the time that companies were moving to the next stage of their development, requiring larger funding rounds, but that left less room for additional deals.

Medical diagnostics are a subset of the device and equipment sector, and they produced $85.96 million in VC investments during the 2014 first quarter. That's up substantially from $61.89 million in VC deals closed in the 2013 fourth quarter. Even so, deal volume for the medical diagnostics sector reached just 7 during the 2014 first quarter, versus 16 in the 2013 fourth quarter, a trend that seems to mirror Franklin's sentiments.

The top 5 diagnostics deals were relatively tepid outside of the top two, late-stage development or not, according to industry-specific data supplied by PwC/NVCA for the quarterly MoneyTree report (again, based on Thomson Reuters info).

The top 5 are listed below. Keep in mind that the funding raised, according to Thomson Reuters data, may be different than dollar amounts reported during the quarter. Funding deals compiled as part of the MoneyTree report count money in the bank versus dollars promised.

1. Seno Medical tops the list, having raised $34.6 million of a planned $39 million Series C funding round, money from Medcare Investment Fund and an undisclosed investor that will help the San Antonio, TX, company take its Imagio breast cancer diagnostic imaging device to the next level. Plans call for using the money to fund a pivotal U.S. study and to obtain CE-mark approval in Europe. The device offers an alternative to traditional breast cancer diagnostics, using optoacoustic technology and ultrasound, avoiding patient exposure to X-rays or injectable contrast agents.

2. NinePoint Medical takes the number two slot. In late March, the Cambridge, MA-based developer of a cutting-edge organ imaging system (and 2012 Fierce 15 winner) pulled in more than $34.5 million in a successful Series B round. Corning, Prospect Venture Partners and Third Rock Ventures rounded out the list of prominent investors who took part. Again, the money is designed to help a growing outfit mature to its next stage of development. Funding will back the ongoing commercial launch of its signature NvisionVLE Imaging System in the U.S., as well as development of an expanded product roster.

3. At number three, we have Cheetah Medical, a Newton, MA, outfit that raised $13.77 million in new financing during the quarter, according to Thomson Reuters/MoneyTree data. A slew of investors took part: Ascension Health Ventures, Fletcher Spaght Ventures, MVM Life Science Partners, Robert Bosch Venture Capital GmbH and an undisclosed investor. The large syndicate reflects the reality that med tech and diagnostics companies often need to piece together a fairly large collection of investors these days to complete their round. This helps reduce investor risk, but the VCs collectively stand to gain if Cheetah makes good on its goals. Cheetah is developing diagnostic technology that helps measure blood flow, and the funding will help propel U.S. and overseas expansion of sales and marketing efforts.

4. Pittsburgh, PA-based Nanovision Diagnostics grabs the number four slot, having raised $1.25 million toward commercialization of a diagnostic system designed to determine which precancerous lesions will advance to full-fledged cancer. An undisclosed investor participated in the round. The Pittsburgh Business Times reported on the funding at the time, noting that the company spun out of the University of Pittsburgh, and that its technology performs an optical analysis of a standard biopsy slide with significantly more sensitivity than the standard optical microscope. The new funding is slated to back broader clinical studies and the commercialization process.

5. Neuro Kinetics rounds out the top 5 diagnostics-related venture capital fundings from the 2014 first quarter. The Pittsburgh company pulled in just $890,000 from an undisclosed investor. Neuro Kinetics is hardly a new kid on the block. According to its website, the company launched 25 years ago and has long produced neuro-otologic diagnostic tools globally for audiologists, ENTs, neuro-otologists, neuro-ophthalmologists and neurologists. The company explains that it has been updating and overhauling its product line since 2006. Neuro Kinetics' I-Portal testing platform is part of that new wave of products, which is designed to more precisely and sensitively measure reflexes and responses generated by parts of the brain in response to specific stimuli, according to the company.

-- Mark Hollmer (email | Twitter)

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