Medical Device Daily Executive Editor
Inogen (Santa Barbara, California) — the developer of a long-term oxygen system — reported securing $22 million in funding from a group of investors led by Novo A/S (Bagsvaerd, Denmark).
Inogen's product, the Inogen One portable oxygen concentrator, provides supplemental oxygen for those with chronic lung diseases. It is designed to perform, the company says, "as both a stationary and a portable device."
While those needing oxygen have some portability with tanks carrying oxygen, the Inogen One produces oxygen and has allowed people to travel with the device for as long as four months at a time, according to Kathy Odell, CEO of Inogen. A key here is the ability to plug the device into AC/DC outlets, or recharge battery power.
The device has been accepted for use on planes by 28 airlines, Odell told Medical Device Daily. "It makes oxygen as long as you have access to power," she said, comparing its portability to that of a laptop computer or cell phone.
"The main way we like to state it is that it's oxygen anytime, anywhere," she said, so that those needing supplemental oxygen "can live life the way they choose."
"We believe we are the leading seller of portable concentrator oxygen systems," Odell added, noting "a couple of other devices are like ours, but some are heavier, some don't last as long, don't have as much as capacity."
Inogen is not yet profitable but Odell predicted that profitability will happen for the company in the second half of this year. The company puts the oxygen therapy market as growing at a rate of greater than 10% annually in the U.S.
Inogen developed the device itself, and Odell credited a 19-person technical staff as "the leading development team of all the portable oxygen concentrator developers."
Odell said that the new funds will be used to expand manufacturing capacity and also to move commercialization into international markets, first of all Germany and the Netherlands.
Heath Lukatch, a partner at Novo who will serve on Inogen's board, said, "We believe that Inogen is at the forefront of a paradigm shift in home oxygen therapy. The Inogen One device has the potential to obviate the need for expensive home oxygen tank delivery services, while allowing COPD patients greater flexibility and freedom in their day-to-day lives."
Novo and Arboretum Ventures are first-time investors in Inogen. Other participants in this round are existing investors Versant Ventures, Avalon Ventures and Accuitive Medical Ventures.
Novo A/S is the holding company of the Novo Group, and is wholly owned by the Novo Nordisk Foundation. It reports more than $8 billion under management.
In other financing activity:
• InSight Health Services Holdings (Lake Forest, California) reported that, following discussions with the ad hoc committee of the holders of its 9.875% senior subordinated notes, due 2011, InSight proposes to offer 87% of its common stock in exchange for all of the notes.
InSight said it will effect the offering by filing a registration statement with the Securities and Exchange Commission.
The exchange offer will result in the elimination of about $194.5 million in principal amount of the notes and reduce InSight's interest expense by over $19 million annually. InSight expects that this reduction in interest expense will improve its ability to operate its business, fund capital projects, and execute its core market strategy.
InSight is a provider of diagnostic imaging services serving managed care entities, hospitals and other contractual customers in more than 30 states, including the targeted regional markets of California, Arizona, New England, the Carolinas, Florida and the Mid-Atlantic states. As of Dec. 31, InSight said that its network consists of 109 fixed-site centers and 108 mobile facilities.
• Crdentia (Dallas), a provider of healthcare staffing services, reported closing a new $10 million receivables-based working capital facility with Systran Financial Services, a subsidiary of Textron Financial.
The facility replaces all of Crdentia's obligations with Bridge HealthCare Finance at a lower cost and more favorable terms, Crdentia said.
It said that proceeds from Systran were used to repay a $3.2 million revolving credit facility and a $692,000 term loan, both owed to Bridge. Proceeds were also used to pay nearly $500,000 of penalties for early withdrawal from the Bridge agreement.