The emerging hotbed for med-tech innovation would seem to be Europe. Over the past few years, a whole variety of breakthroughs in medical technology — from cardiac stents to orthopedic implants to medical imaging — have flowed out of Europe for years toward the golden promise of FDA PMA approval or 510(k) clearance. And according to executives from five med-tech investment funds based in Europe, the moment is ripe as money slows for biopharma ventures and investors turn toward medical devices.

The way forward for the Old World, they said, is not to build another Philips, but to churn out fresh companies with novel products and technologies, and then exit through a trade sale to one of the American giants, or failing that, go public and tap into the rich investment community in the U.S.

During a panel session at the Investing In Innovation-Europe conference in Paris last month, Dr. Olivier Litzka, of Edmond de Rothschild Investment Partners, said Europe offers distinct advantages for early-phase and start-up companies. "But making a shift to the U.S. is essential," he said. "You have to look at things globally from the outset, because for the late stage development of a company or for an exit for investors, the U.S. is more positive."

Another Paris-based venture capitalist, Antoine Papiernik, managing partner for Sofinnova Partners, said, "To make it big you need to be big in the U.S., and if you don't start with that premise, the business is not going to get very far.

"It is great to see the activity in Europe," he said, citing the number of technology innovations that are emerging and the ease of moving quickly from patents to first-in-man trials, "but from Day One you need to be able to get to the U.S. for the market dynamics."

European governments and regionally-focused business angels who provide the seed money for many start ups do not share the same goals, according to Thom Rasche of Earlybird Ventures.

He said that Germany, where he is based, "is happy creating small- and medium-sized businesses who stay that way."

The German state fund dedicated to medical technology has invested from 1500,000 ($772,000) to 11 million ($1.54 million) as seed money for more than 120 start-ups.

Rasche also said that business angels in Germany like to go direct to an entrepreneur, and have provided as much as xxxx 15 million ($7.7 million). "They are not looking at the same exit strategies as we are," he said. "We want to build a company that is going to become big enough, with a sustained market opportunity, for us to exit."

The panelists were unanimous in their optimism about the landscape emerging in European med-tech, yet shied away from an overly American-centric enthusiasm to declare that there is a "renaissance" for investing.

"It is more like a slow birth," said Papiernik. "The macro elements are fantastic and they are here to stay," he said, citing the more rapidly aging population in Europe, and a critical mass of technological innovations that continue to create multiple opportunities.

Yet there has not been a sudden shift in European funds toward med-tech, he said, and there remain few funds that specialize in the sector.

That could be changing, according to Yuval Binur of Accelerated Technologies Partners (Hackensack, New Jersey), who said the European venture capital landscape itself "needs an upgrade." He added: "investors ... are impatient, waiting 10 years for a biotech company to mature. They are seeking faster returns and a higher rate of return. Medical devices answer these needs better than biopharma."

A clear trend, according to the panel, is the emerging class of entrepreneurs among European executives who recognize that holding a key position in a large corporation is not as risk-free as in the past.

"The changes at Boston Scientific/Guidant (Natick, Massachusetts) have shown people the risks," said Rasche. "They look at Johnson & Johnson (New Brunswick, New Jersey) or Medtronic (Minneapolis) cutting and changing suddenly, and they are a lot more willing to consider alternatives."

Euro GP connectivity high — but a north-to-south digitial divide

General practitioners (GPs) in Europe are following the upward curve as Europeans accelerate acceptance of computers and the Internet in daily work practices, according to a report delivered at the European eHealth Conference in Portoroz, Slovenia, in early May.

A survey of 7,000 general practice physicians in Europe found that 87% of GPs in the 27 countries of the European Union now use a computer in daily practice — and almost 70% say they also have an Internet connection, with 48% saying that the connection is broadband.

The digital divide in Europe is north to south among the major developed nations. Denmark, Finland, Sweden, the Netherlands and the UK report the highest uptake at 95% or greater; France, Italy, Spain and Portugal report under 85%.

Not unexpectedly, the newest and easternmost members of the EU recorded the lowest e-health readiness, and here again the north-south divide revealed itself, with access to the Internet in physicians' offices falling under 50% in Bulgaria, Hungary, Romania and Slovakia, compared to Estonia, Finland, Denmark and Sweden, where Internet use has reached saturation levels.

The gap is even greater for broadband connection, with 93% of doctors in Finland making use of a high-speed connection compared to only 5% of their colleagues in Romania.

While welcoming the efforts of healthcare administrations and doctors to work more efficiently, Viviane Redding, EU commissioner for information society and media, said, "This diagnosis shows that it is now time to use these electronic services much more widely as they have the potential to bring extraordinary benefits to all patients, all over Europe."

The study was conducted during 3Q07 by Empirica, Gesellschaft f r Kommunikations-und Technologieforschung (Bonn, Germany) for the InfoSoc Directorate General.

Some 80% of GPs said they use computers to store administrative patient data and a surprising 92% also said they store medical data on diagnoses and medication, with 81% saying they also routinely log laboratory results. One-third said they are able to store radiological images.

User rates are low across Europe in general for connecting to external health electronic systems, such as other doctors' practices, specialists and hospitals, health authorities, insurance companies, pharmacies, care homes and patients' homes. Only 21% of doctors say they access other physicians' systems, for example.

An exception noted in the report is the relatively extensive access to IT systems belonging to laboratories, reported at 40% of European medical practices.

The emerging area of telemonitoring of patients — the transmission of vital data from patients' homes, which is a pillar in the strategic plan of most national health authorities — "is virtually non-existent," according to the survey findings.

Telemonitoring was most advanced in Sweden, where 9% of physicians provide telemonitoring services, and in the Netherlands and Iceland, each reporting about 3% participation.

While doctors in the western developed nations do not consider the cost of procuring and maintaining IT systems as a serious barriers to e-health use, their colleagues in the emerging east and southeast, such as Greece, Poland, Romania, Lithuania and Latvia, believe those barriers are very real and firmly in place. And they say that still another obstacle to a wider acceptance and use of e-health is a lack of training.

Ireland VC group makes initial close on fund of $117 million

Fountain Healthcare Partners (Dublin, Ireland) has reported the first close of its inaugural fund, Fountain Healthcare Partners I, with €75 million ($117 million) of committed capital, and is, according to Fountain, one of the largest emerging VC funds raised in the life science sector globally in the past two years.

Fountain bills itself as the largest dedicated life science venture capital firm based in Ireland. It is a spin-out investment team from the corporate venture capital group of Elan (Dublin). The principals include Dr. Manus Rogan (Elan, GlaxoSmithKline), Aidan King (Bio-IB, Elan), Dr. Ena Prosser (Enterprise Ireland, Elan) and Justin Lynch (LegendCare, Fyffes, Jones Group and NCB).

Fountain said it will invest the majority of its capital in Europe, with an emphasis on Ireland's life science sector. The firm said the first close "significantly exceeded" initial expectations and is now targeting about €100 million in commitments at its final close.

The firm identifies its focus as on medical devices and diagnostics, biotechnology and specialty pharmaceuticals. And it describes itself as "a product-focused VC fund [that] will invest in companies with product development programs that have a defined pathway to commercialization, value enhancement and exit," Fountain said its principals will take "an active role with investees and will bring considerable industry expertise and a deep network of contacts in the U.S., Europe and Asia to investee companies."

More than 90% of the capital invested in the fund came from institutional investors, 75% Irish-based. Those investors include the European Investment Fund, the National Pension Reserve Fund and Enterprise Ireland. Fountain said that a "select number" of high-net-worth individual investors also participated.

In addition to its main office in Dublin, Fountain has established a New York office.

Indian government said to be eyeing new device regulations

News reports out of New Delhi, India, indicate that the Indian government is planning to introduce new guidelines for the medical device industry and is working on regulations in discussion with the industry.

"The government is in the process of creating a new and better regulatory structure for the medical devices industry as part of its effort towards achieving quality healthcare for all," Ministry of Health and Family Welfare Joint Secretary Debasis Panda said, addressing a med-tech conference organized by the industry body CII (New Delhi).

The PTI news service quoted Panda as saying that the government is concerned about the "haphazard" growth of the medical device industry in India, and that it plans to provide regulations for the industry in the next few months. "The Health Ministry is working [toward] a switch from a control regime to a regulatory regime to cope with the new technologies and treatments that are now available," Panda said.

The report said the device industry "has been demanding a separate regulatory mechanism for better functioning of the complex industry."

Alok Mishra, area manager-South Asia for Johnson & Johnson, said, "There is an urgent need to understand and regulate the composite and complex medical technology industry."

The PTI report said the domestic medical equipment industry in India is estimated at $2.17 billion, growing at 15% annually. It is estimated to reach $4.97 billion by 2012.

P>Compugen reports on new lung cancer biomarker

Compugen (Tel Aviv, Israel) reported the discovery of CGEN-438 as a potential blood-based biomarker for lung cancer. The company described CGEN-438 as "a novel splice variant peptide of delta-like protein 3 precursor (DLL3)." The peptide is secreted from the cell into the bloodstream, whereas the previously known DLL3 is a protein located on the cell membrane.

Compugen said initial clinical evidence indicates that the molecule "could potentially serve as both a serum biomarker for the diagnosis of small-cell lung cancer and as a component in a biomarker combination for the diagnosis of non-small cell lung cancer patients."

Using a test developed by Compugen to detect CGEN-438 in serum, the blood levels of the peptide were measured in about 40 lung cancer patients and healthy individuals. The company said CGEN-438 concentrations detected in serum samples of small-cell lung cancer patients were higher than those detected in controls, demonstrating its potential to become a diagnostic biomarker for small-cell lung cancer.

Compugen said it has filed a patent application covering the biomarker.

CGEN-438 is one of a group of possible cancer and cardiovascular biomarkers which was initially predicted in silico using Compugen's immunoassay computational discovery platform, and then further validated experimentally.

Anat Cohen-Dayag, PhD, VP of diagnostic biomarkers and drug targets at the Israeli company, said, "In this particular case, although the peptide is a splice variant of DLL3 protein, it shares no sequence similarity to DLL3, thus further demonstrating the unique predictive power of this specific platform and of our in silico prediction and selection discovery capability in general."

He said yjsy Compugen will further use the platform "both in our own discovery activities and in collaboration with partners."

European Union approves stem cell study by Cytori

Cytori (San Diego) has received approval to begin its European stem and regenerative cell-enhanced breast reconstruction study in breast cancer patients who have undergone partial mastectomy. The post-market study is designated as RESTORE II.

The primary goal is to obtain European reimbursement for cell-enhanced reconstruction using the Celution 800 System by measuring key quality of life improvements in breast cancer patients desiring reconstruction. Up to 70 women will be enrolled at six clinical centers in the UK, Italy, Spain and France.

Primary endpoints will be patient and physician satisfaction with functional and cosmetic outcomes at six and 12 months after surgery. Cytori's goal is to complete enrollment before the end of March 2009.

The company said there currently is no generally accepted reconstructive technique for partial mastectomy patients, "despite the fact that breast-conserving therapy is standard practice in the treatment of women with breast cancer worldwide."

In the RESTORE II study, tissue loss resulting from partial mastectomy will be reconstructed with the patients' own fat tissue, which will be enhanced with their adipose-derived stem and regenerative cells. That procedure is referred to as cell-enhanced reconstruction.

The cells in the study will be made available at the time of surgery using Cytori's Celution 800 System.

"RESTORE II is important for advancing reconstructive options for women with breast cancer," said Emmanuel Delay, PhD, the study's principal investigator and chief of plastic and reconstructive surgery at the Leon Bérard Cancer Center (Lyon, France). "A successful study should broaden availability of this therapy to partial mastectomy patients in Europe."

"Unfortunately fewer options are available to women desperate for reconstructive surgery following partial mastectomy due to the effects of the adjuvant radiotherapy," said Eva Weiler-Mithoff, surgeon at the Glasgow Royal Infirmary (Glasgow, Scotland) and lead investigator for the UK study site. "Adipose tissue enriched with stem and regenerative cells represents a new approach that we believe allows for predictable graft retention."

Secondary endpoints include six-month and 12-month assessments of breast volume and shape via MRI and improvement in skin pigmentation. The study will evaluate patients who have undergone their last breast treatment at least 12 months prior and are recurrence-free.

ECM moves from animal imaging to human clinical sector

One of the top manufacturers of ultrasound scanners for veterinarians is rolling out a lightweight version for medical clinics. The Imagyne scanner, introduced by ECM (Angouleme, France) in March, is PC-based and includes post-processing, full-color Dop-pler, pulsed-wave Doppler or triplex mode, and a 4D display.

Eva Galmar, a company export manager, said that CE-marking for the device is expected this month, but that ECM already has presented the Imagyne scanner at medical expos in China, Dubai, Russia and Turkey. The European debut was set for Hospital Expo, at the end of May, in Paris.

Imagyne will be offered in ECM's well-established market for diagnostics of farm animals and household pets, but the company said that with a minimal change to the scanner head and significant software adaption, the same hardware is appropriate for human use.

ECM developed the new scanner over several years to make it more powerful, more compact and "user-friendlier" than its current veterinarian line, it says.

The scanner can be fitted with four different probes for convex, micro-convex, phased array and linear abdominal. The rectal probe used by veterinarians is not offered with the medical line.

Galmar said that ECM, the only manufacturer of ultrasound scanners in France, has carefully considered its entry into a fiercely competitive medical market dominated by multi-national giants and has booked orders for the medical version of the Iagyne scanner, thanks to the early introduction at medical expos in emerging markets. She said that ECM is negotiating with distributors in all target markets, including the U.S.

ECM is an affiliate of Noveko International (Montreal), an investor in medical equipment and supply manufacturers.

First procedure completed with Volcano's new OCT catheter

Volcano (San Diego) reported the first human procedure using its Optical Coherence Tomograph (OCT) Imaging catheter in a procedure performed by Patrick Serruys, MD, at the Thoraxcenter (Rotterdam, the Netherlands). The company said Volcano OCT will complement its existing line of IVUS imaging catheters and pressure guidewires used for coronary imaging and lesion assessment.

Volcano acquired the OCT technology through its purchase of CardioSpectra (San Antonio) at the end of 2007. The OCT platform provides high-resolution images in the 10-micron to 15-micron range, opening the door, the company says, for new applications to complement both IVUS and angiography.

Serruys said the Volcano OCT Imaging Catheter is "another step closer to delivering interventionalists ... the true cath lab of the future. To better serve my patients, I want the flexibility to select from an array of different tools, quickly interrogate the vessel, and immediately process the information." He said that having these various technologies including IVUS, OCT and FFR all integrated into the lab, with a common user interface, review points, data storage and staff training provides this flexibility.

Scott Huennekens, president/CEO of Volcano, said, "Our investment in this OCT product line underscores that commitment, and opens a series of new clinical applications and opportunities to complement our existing product line. We are delighted to be under way with our OCT effort just four months after completing the acquisition."

He added: "With our two imaging technologies, we are the leader in intravascular imaging and commercializing this technology will provide us further competitive advantages. We are working on offerings that incorporate OCT functionality into our s5i IVUS platform, as well as stand-alone OCT systems."

Covidien acquires Tissue Science and spins off incontinence unit

Covidien (Hamilton, Bermuda) has acquired Tissue Science Laboratories (TSL; Aldershot, UK), a developer of tissue-implant products for surgical and woundcare therapies. Covidien launched a public tender offer in the UK for all of TSL's outstanding shares held by UK residents as of March 12.

Covidien, which paid 103.5 pence (about $2.10, a share, or about $80 million) in cash for the company, makes product lines in four segments: medical devices, imaging solutions, pharmaceuticals and medical

Covidien also reported completing the sale of its European incontinence business in Lille, France, to a private French company that will rename the business Lille Healthcare. Terms of the agreement were not disclosed.

The business was part of Covidien's Medical Supplies segment, with sales of $109 million in FY07.

Covidien also reported that its surgical devices business unit in North Haven, Connecticut, introduced the VascuSeal vascular sealant system throughout Europe and in select Middle East markets. The VascuSeal sealant technology is a synthetic, absorbable hydrogel delivered by a dual-syringe applicator.

Covidien said the VascuSeal sealant "polymerizes within seconds when sprayed on the suture line and is blue in color, which provides the vascular surgeon visualization of coverage and thickness of the material upon application."

VascuSeal, CE-marked, is used as a surgical sealant during arterial and venous reconstructions to seal suture lines. Unlike hemostatic agents, a vascular sealant can seal blood leaks and does not depend on either the time for the blood to clot or the strength of the blood clot to perform successfully.

In brief ....

Nanogen (San Diego) said last month that it will consolidate its point-of-care manufacturing operations by closing its operations in Canada by the end of the year in an effort to improve margins of its rapid-testing products. The company said its current operations in Toronto would be moved to its San Diego facility.

Nanogen estimates that it will reduce its workforce by about 30 people and cut overall costs, starting in 2009, by roughly $3 million.

The company's qualitative cardiac products, purchased two years ago from Spectral Diagnostics, are made in Toronto, while development and pilot manufacturing activities for the company's immunoassay activities are in San Diego.

Nanogen's congestive heart failure product, based on NT-proBNP, will continue to be supplied by Princeton Bio Meditech and is not affected by these actions.

The company said it would transition manufacturing activities to San Diego over the next several months, with no interruption in supplies to customers.

• Royal Philips Electronics (Amsterdam, the Netherlands) reached an agreement to acquire Dixtal Biomédica e Tecnologia (S o Paulo, Brazil), a manufacturer of in-hospital patient monitoring, anesthesia and ventilation equipment, and ECGs as well as other sensors for vital sign measurements.

It will become part of the Patient Monitoring business within Philips' Healthcare sector. Terms of the deal were not disclosed.

• Resuscitation devices manufacturer Zoll Medical (Chelmsford, Massachusetts) said the Beijing Airport Group has selected the company's AED Plus to be installed in the Beijing Capital International Airport's newly-built Terminal 3, billing it as the largest single airport building in the world.

Plans call for the installation of 80 AED Plus units at Terminal 3, the gateway terminal for the 2008 Beijing Summer Olympics, expected to welcome 55.6 million passengers to the summer games.

The Beijing International Airport AED project is the first large public AED deployment project in China, Zoll said, and that the project marks a "milestone" for public access defibrillators in China.

The company said that before this project, 15 AED Plus units were deployed in Terminal 2 of the Beijing airport in 2007, thus "setting a new standard for public safety devices in China and sparking a public demand for more AEDs in public places, such as airports, railway systems, shopping centers and community centers."