Medical Device Daily Associate Managing Editor

When a company says it has just completed its 'G' round of financing as fluidjet jet-based surgical tool maker HydroCision (Billerica, Massachusetts) reported today, one has to wonder if the company is in a holding pattern of some sort, hovering between an initial public offering and a merger but just not certain which approach would work best.

That's not the case with this company, according to its President and CEO, Douglas Daniels who noted that the latest private round, valued at $12.7 million, brings the total funding in HydroCision to about $28 million, and he added, it's the first equity financing round the company has made since March 2002.

Those early rounds of financing, he told Medical Device Daily, were small angel investors. “This will be [only] the fourth round of institutional investors really getting into it,“ said Daniels.

What truly boggles the mind is how the company was able to get by for more than four years on the last round it raised which was about $6 million.

While Daniels acknowledged that the staff of the company has been reduced from 45 to 27 since the March 2002 round, he said the company had an ace in the hole that has kept things humming along quite nicely.

“[We] had actually constructed a licensing deal with Smith & Nephew [S&N; London] around January 2004 and that's pretty much sustained us since then,“ said Daniels, adding that “it helps to have a technology that's versatile enough to go into multiple markets.“

In that January 2004 arrangement, S&N's Advanced Wound Management business acquired the Versajet surgical debridement product from the company to add to its advanced wound bed preparation products (Medical Device Daily, Jan 26, 2004). S&N purchased the Versajet line for $5 million, plus future milestone payments.

Hydrocision is a developer of fluid jet-based surgical tools that are the foundation of “hydrosurgery,“ which it terms “a new surgical modality“ for selectively removing tissue, minimizing collateral damage and bleeding and promoting healing.

The company is focusing the lion's share of its own development efforts in two areas: spinal fusion and spinal discectomy.

The fusion platform is called the Spinejet XL, and it is used to repair spinal endplates. The discectomy system is called the Spinejet microresector.

The company said the funding will be used to complete a prospective controlled randomized trial for the microdiscectomy application to complement the initial clinical trial completed in microdiscectomy and to expand sales coverage and training in the U.S., Europe and Asia. Additionally it will use some of the funds to increase marketing communications support and to purchase capital equipment to “increase speed to market and to reduce product cost.“

Daniels, who noted that this is most likely the last round of private funding that the company will raise, said the company will be launching several new products in the minimally invasive spine market in the beginning of 2007.

“The capital raised in this round of financing will provide the resources to expand on our initial success in the spine market and become a leader in the fusion, discectomy and nucleus replacement preparation segments.“

As for what the future holds, IPO, acquisition or some other avenue, Daniels said that the company's goal at this time is “building value and I think the market is going to dictate what's going to be the most appropriate exit for this company.“

Triathlon Medical Ventures was the lead investor in the Series G round of financing. Additional investors included current investors Oxford Bioscience Partners, Newbury Ventures and Zero Stage Capital, as well as other preferred shareholders and officers of the company.

Dennis Costello, co-founder and managing partner of Triathlon Medical Ventures, will be joining the company's board of directors as part of this financing round.

In other financing news:ThromboVision (Houston), a biomedical diagnostics company, has closed on a tranche of $400,000 in Series A financing from private investors.

The company said it will use the investment to fund clinical trials, build its infrastructure, and advance the FDA approval process for its ThromboGuideplatelet function monitor system.

“This initial funding round will let us expedite ThromboVision's commercialization strategy,“ said Dr. Edward Teitel, president and CEO.

To date, ThromboGuide research and development has been funded via three rounds of grants from the National Institutes of Health (NIH) totaling nearly $4 million.

Currently in late-stage development, the ThromboGuide (T-Guide) is a platelet function monitor system. The system consists of a disposable test kit and a point-of-care base unit. The system will help physicians individualize antiplatelet therapy that they use to prevent heart attacks, strokes and stent occlusions.