Versant Ventures (Menlo Park, California) has closed a $500 million fund that it says will target roughly 30 to 35 medical device, biotech, and pharmaceutical investments throughout the U.S.
The fund, Versant Venture Capital IV, will be focused on early-stage and seed opportunities. However, Versant said that a limited number may target later-stage companies as well.
"A lot of entrepreneurs think of funds of this size as being too large to do seed and early-stage investments, this fund size still allows us to do everything from the very small seed invest from a couple hundred thousand dollar seed just to get started all the way up through a much larger investment," Kevin Wasserstein, a managing director of Versant IV, told Medical Device Daily. "It still allows us to be able to do those things which we love, and we have been doing that all along."
Versant reports having more than $1.6 billion and 75 portfolio companies under management, spanning biotechnology, pharmaceuticals and medical devices.
"What we did historically is what we expect going forward in terms of the balance between medical device, biotech, and pharmaceutical companies ... close to half of the fund would be targeted toward medical devices," Wasserstein said.
The firm has more than 30 medical device investments, which cover 15 or more therapeutic areas, he said. The application areas include ophthalmology, diabetes, aesthetics and the spine.
If it's not the broadest medical device investment net by a fund, "it's right up there," Wasserstein said. "We definitely have investments almost from head to toe – literally – we're pretty broad in terms of our overall focus."
In addition to investing in seed-stage and early-stage companies, Versant is active in the companies it invests in, he added.
Brian Atwood, also a managing director of Versant IV, said, "We are proud to continue to partner with visionary entrepreneurs who are building companies that are transforming healthcare. An extraordinary number of unmet clinical needs remain in healthcare, and we look forward to continuing to be a springboard for these meaningful innovations."
Since its formation in 1999, Versant Ventures has invested in more than 95 healthcare companies.
Versant IV's managing directors, in addition to Wasserstein and Atwood, include Brad Bolzon, PhD, Sam Colella, Ross Jaffe, MD, Bill Link, PhD, Robin Praeger, Beckie Robertson, Camille Samuels, and Charles Warden. The investment team also includes Kirk Nielsen, principal, and Sammy Farah, PhD.
In other financing activity:
A group of CardioNet (Conshohocken, Pennsylvania) investors will sell 5 million shares of CardioNet stock for $26.50 a share, the company said Friday. CardioNet will not receive any proceeds from the sale, which is expected to close Wednesday.
The selling stockholders have also granted the underwriters a 30-day over-allotment option to buy an additional 750,000 shares.
Citi is the sole book-running manager, Banc of America Securities and Leerink Swann are the co-lead managers and Cowen and Company and Thomas Weisel Partners are the co-managers for the offering.
According to CardioNet's filing with the Securities and Exchange Commission, a group of Sanderling funds are the largest participants in the offering, selling 869,565 shares out of nearly 2.6 million shares. H&Q funds will sell 503,240 shares out of about 1.4 million. The offering is expected to raise $125,543,500 in proceeds to the selling stockholders, before expenses, according to the filing.
CardioNet, a wireless med-tech company with an initial focus on the diagnosis and monitoring of cardiac arrhythmias, said in the filing that it has incurred net losses from its inception through March 31, including net losses $300,000 for the quarter ended March 31, 2008, and $400,000 for the year ended Dec. 31, 2007.
The company said that it expects its operating expenses to increase as the company expands in a variety of areas: sales and marketing activities; designing, manufacturing and building its inventory of future generations of the CardioNet system; hiring additional staff; investing in infrastructure; and incurring the added expenses associated with being a public company.
"With increasing expenses, we will need to continue to substantially increase our revenues to be profitable in the future," CardioNet said in the filing.
The company said its business is dependent upon doctors prescribing CardioNet's services. If it fails to obtain those prescriptions, its revenues could fail to grow and could decrease, the company said in the filing.
Thus far, a key barrier in this area has been a general reluctance by insurers to pay for these types of monitoring services, the result of insufficient data validating their worth.
WorldHeart (Oakland, California) said it completed a $30 million private placement and recapitalization. WorldHeart will pay $750,000 and issue warrants to buy 2.5 million shares to its advisors, Pacific Growth Equities, and Stifel, Nicolaus and Company. The warrants are subject to shareholder approval and will have an exercise price of 11 cents a share.
The recapitalization agreement the company entered includes its subsidiary World Heart Inc. (WHI), Abiomed (Danvers, Massachusetts), Venrock Partners V (Palo Alto), Venrock Associates V, and Venrock Entrepreneurs Fund V, Special Situations Fund III QP (SSF; Roseland, New Jersey), Special Situations Cayman Fund, Special Situations Private Equity Fund, Austin W. Marxe and New Leaf Ventures II (New York and Menlo Park, California).
According to the agreement: WorldHeart issued 300 million common shares for $30 million, of which Venrock invested $11 million, SSF invested $9 million and New Leaf invested $10 million; Abiomed converted the full amount of principal and interest owed on the $5 million 8% secured convertible promissory note previously issued to Abiomed by WorldHeart and WHI into 86 million common shares of WorldHeart, released the security interest in all of the assets of WorldHeart and WHI that secured the note, terminated the warrant it held to purchase 3.4 million common shares of WorldHeart, forgave other amounts owed to Abiomed by WorldHeart and terminated all previously existing agreements, arrangements and understandings with WorldHeart; and the purchase price delivered by Venrock and SSF at the closing was offset by the principal and interest owed on the bridge loan facility of $1.4 million Venrock and SSF provided WorldHeart prior to closing.
Also, WorldHeart will call a special meeting of its shareholders to vote on a reverse split of its common shares for the purpose of seeking to comply with the $1 minimum bid price requirement of the Nasdaq Capital Market.
NxStage Medical (Lawrence, Massachusetts), maker of dialysis products, said it has completed a $43 million private placement financing of common stock and warrants. The company issued 9,555,556 shares of common stock for $4.50 a share, and warrants to purchase 1,911,111 shares of its common stock at an exercise price of $5.50 a share, which price may be adjusted to $3 or $6.50 depending on the achievement of certain targets relating to the number of End Stage Renal Disease patients prescribed to receive therapy with the NxStage System One as of Dec. 31, 2008. At the initial closing of the private placement on May 28, the company issued 5,555,556 shares of common stock and 1,111,111 warrants to OrbiMed Advisors and received gross proceeds of $25 million. The second closing of the transaction was subject to the approval of NxStage stockholders, which was obtained last week. At the second closing, the company issued 4 million shares of common stock and 800,000 warrants and received gross proceeds of $18 million.
NxStage said it would use the proceeds to advance the commercialization of its products and the development of new products. The company also intends to use the proceeds for general corporate purposes.