Top 10 VC Device deals of H1 2012

These are dubious times for medical device companies seeking venture investment.

ConforMIS easily leads the top ten medical device deals in the first 6 months of 2012, as compiled by the National Venture Capital Association and PricewaterhouseCoopers in their MoneyTree report (based on data from Thomson Reuters). But having raised $89 million early this year to help fuel the commercial launch and manufacturing of its new iTotal total knee replacement system, the Burlington, MA company stands alone at the top.

The next deals are relatively small-scale, ranging from $65 million to $26.3 million from the number 2 to 10 slots, respectively.

Jimmy Rosen of Intersouth Partners in Durham, NC, told FierceMedicalDevices that the numbers "seem tepid" to him on the surface. ConforMIS' funding level appropriately reflects a company that is on the verge of a commercial launch. But the reality that the money levels drop off substantially for the rest of the top ten reflects a possible "lack of companies that meet that criteria, and that could be a good thing and a bad thing," according to Rosen, who serves on a steering committee for the NVCA medical industry coalition.

The bigger issue is overall financing for the sector. According to the NVCA PWC report, medical devices and equipment companies attracted $700 million in 84 deals during the second quarter. That reflects an 11% increase in the number of deals from the previous quarter, but the dollar amount remained flat. Even more concerning, however, is the reality that investment in biotechnology and medical devices companies fell 9% in dollars and 6% in deals, accounting for 20% of all VC dollars invested during that quarter. That number was at 29% in 2011.

Yes, Rosen notes, "the best deals are still getting funded" and "there are still active investors seeking opportunities in the device world." But "these are some of the worst numbers we have put up in over a decade," Rosen said. "And that is disconcerting."

He reminds us that in all venture funding--including medical devices--there is simply less funding to go around. That means device companies have to plan to get to market more efficiently, using less venture funding overall.

A note of hope: Device and diagnostics companies seeking venture investment can boost their chances by focusing on manufacturing at a lower cost, on products that can be used in both the U.S. and emerging economies, and on products that maintains the quality of care, Rosen said.

And to address longer-term issues concerning regulatory challenges, Rosen calls for a "national strategy on biomedical innovation," with participation of Congress, the FDA and industry. -- Mark Hollmer (email | Twitter)

Who: ViewRay

What: maker of next-generation radiotherapy products

How much: $26.3 million


Who: Invuity

What: maker of visualization tech for minimally invasive breast cancer and other surgeries

How much: $27 million

Who: NeoTract

What: maker of urology device treatments

How much: $32.4 million


Who: MyoScience

What: cryothrapy for tissue ablation and peripheral pain treatment

How much: $33 million

Who: Mitralign

What: catheter-based tech for mitral valve repair

How much: $35 million


Who: TriVascular

What: stent graft system to treat abdominal aortic aneurysms

How much: $35.4 million


Who: Arstasis

What: vascular access surgical tool for implant-free arterial closure

How much: $37.8 million

Who: Apollo Endosurgery

What: flexible surgical tools for gastrointestinal disorders

How much: $40.2 million


Who: Sientra

What: breast and facial implants, body contouring, tissue expanders

How much: $65 million


Who: ConforMIS

What: total knee replacement system

How much: $89 million