Top 10 Med Tech Investments of Q2

In 2013, biotechnology venture investing began to see a healthy rebound in the second quarter, but medical device investing stayed essentially flat compared to the first three months of the year.

Thus continued a vexing, disappointing, years-long trend. After almost continual declines, the most positive element for the med tech industry in the newest MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association is that investment levels didn't get worse.

Even so, the 2013 second quarter did have its highlights. Two major deals closed in June. One involving Mevion Medical Systems was worth an impressive $55 million. That's nothing to sneeze at, of course. But Mevion attracted interest with a commercial-ready product--a proton-therapy system for cancer. And that's a safer and more typical med tech investment these days than early-stage operations with an uncertain future.

The rest of the investments that made the 2013 Q2 top 10 were much smaller in scale and not easy to complete, notes Gary Kurtzman, a managing director of Pennsylvania-based investment firm Safeguard Scientifics, which focuses heavily on med tech and healthcare IT companies.

"There were a few big ones and a lot of small" funding rounds, Kurtzman told FierceMedicalDevices. "These are companies that had a lot of challenging financings. It took them a long time, which means they probably didn't get the valuations they wanted."

Venture funding remains challenging for med tech, in large part because of the changing healthcare market, Kurtzman said. While regulatory delays have improved to a degree, companies are left in the lurch because even when they reach approval, they have an increasingly hard time obtaining insurance reimbursement unless they can prove their product is also cost-effective.

And that reality--uncertainty about payment--is "the major issue hampering investment and innovation in the medical device and med tech space" today, Kurtzman said. He added that investors, as a result, look for the safest med tech options or another sector entirely.

"In the healthcare space in general there is less capital, and [there are] less people investing, and that is the trend we have been seeing for a few years now, since the 2008-09 era," Kurtzman explained.

At the same time, Kurtzman expressed hope for the future. If the biotech investment resurgence (including more IPOs) can be maintained, that good fortune should spread to med tech, devices and diagnostics, he said. But industry watchers must be patient.

"A rising tide will raise all ships, but it will take a while to filter down to the med tech space," he said.

Below, we present to you the top 10 medical device and med-tech-related investments for the 2013 second quarter. As before, this roundup is based on the MoneyTree NVCA/PWC report, which relies on Thomson Reuters data. Let us know your thoughts, and thanks for reading. -- Mark Hollmer (email | Twitter)

Who: WaveTec Vision Systems

What: Maker of a cataract surgical diagnostic tool

Investors: Accuitive Medical Ventures, Burrill & Co., De Novo Ventures, Versant Venture Management

How much: $10.76 million

Who: Inova Labs

What: Maker of portable oxygen concentrators

Investors: Gilde Healthcare Partners BV, Latterell Venture Partners, Three Arch Partners

How much: $12 million

Who: Insightra Medical

What: Developer of devices designed to treat inguinal and ventral hernias.

Investors: Undisclosed

How much: $12 million

Who: ReVision Optics

What: Came up with a replacement eye lens implanted through a tiny, laser-created opening in the cornea.

Investors: Canaan Partners, Domain Associates, InterWest Partners, ProQuest Investments

How much: $15 million

Who: Tandem Diabetes Care

What: Maker of a touch-screen insulin pump

Investors: HLM Venture Partners and an undisclosed investor

How much: $16.1 million

 

Who: Sonendo

What: Maker of a sonic energy device designed to clean root canals in 5 minutes

Investors: Fjord Ventures, Neomed Management AS, OrbiMed Advisors, Themes Investment Partners

How much: $18 million

Who: Vertos Medical

What: Maker of a pain-reducing spinal surgery device

Investors: Aweida Venture Partners, CHL Medical Partners, Dfj Mercury, Foundation Medical Partners, ONSET Ventures, Pitango Venture Capital Management Israel Ltd.

How much: $22.75 million

Who: electroCore

What: Pursuing work on a noninvasive vagal nerve stimulation therapy for headaches and related conditions.

Investors: Easton Hunt Capital Partners, Merck Global Health Innovation Fund, and an undisclosed investor

How much: $40 million

Who: Spinal Modulation

What: Developer of an intraspinal neurostimulation therapy designed to treat chronic pain.

Investors: De Novo Ventures, Johnson & Johnson Development Corp., Kleiner Perkins Caufield & Byers, Medventure Associates, and two undisclosed investors.

How much: $45 million

Who: Mevion Medical Systems

What: Maker of a proton therapy device to treat cancer

Investors: CHL Medical Partners, ProQuest Investments, Venrock, Caxton Health and Life Sciences and Life Sciences Alternative Funding.

How much: $55 million

 

Top 10 Med Tech Investments of Q2
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