A Diagnostics & Imaging Week
According to a report by PricewaterhouseCoopers Health Research Institute (Washington), venture capital (VC) firms invested $6.33 billion in health industries during 2004, including companies in biotechnology and pharmaceuticals, medical devices and equipment and health services and health information technology.
Reversing three consecutive years of declines, health industry companies received a record share of venture capital investment during 2004, leading all other industries and scooping up 30.2% of all VC dollars invested during the year.
"VC investment in the health sector has steadily increased, even through the post-[web] bubble hangover, as investors have, on one hand, sought to diversify their IT-heavy portfolios, and on the other come to recognize the long-term potential of the sector," said Tracy Lefteroff, global managing partner for Life Sciences Industry Services at PricewaterhouseCoopers.
She added: "We believe the aging population in the developed world and recent commercial successes of life sciences companies will continue to fuel investment in this sector to a point where investment in health-related industries will rival or surpass IT investments."
The increased funding was due to an increase in the number and size of deals. The number of venture deals in the health industries increased to 696 in 2004 from 666 in 2003, and the average investment increased to $9.1 million in 2004 from $8.4 million in 2003.
In other financing news:
Chembio Diagnostics (Medford, New York) reported that it has completed a $5 million private placement with institutional and other accredited investors. The company issued Series B 9% convertible preferred stock and Series B warrants to a group of investors led by Crestview Capital. Millennium 3 Opportunity Fund also was a major investor. Midtown Partners & Co. acted as the lead placement agent in this transaction.
"This new capital provides us with the opportunity to achieve significant growth, in part because of our products and platforms, but also because of our dedicated and creative management team," said Lawrence Siebert, Chembio's president, who also invested in the placement. "Proceeds from the placement will be used primarily for sales and marketing, research and development, manufacturing, intellectual property and working capital, all so that we can monetize our portfolio of rapid tests as quickly as possible."
Chembio Diagnostics manufactures rapid test products for various indications, including HIV, tuberculosis and bovine spongiform encephalopathy.
Micro Therapeutics (MTI; Irvine, California) reported receiving a $3.7 million payment resulting from the acquisition by C. R. Bard (Murray Hill, New Jersey) of certain assets of Genyx Medical (Aliso Viejo, California), a company in which MTI held a minority equity interest.
Privately held Genyx licensed MTI's liquid embolic technology for certain non-vascular applications in 1997. Genyx recently reported that it had received FDA approval for Uryx, an injectable tissue bulking agent for the treatment of stress urinary incontinence that is based on the technology licensed from MTI.
MTI makes minimally invasive medical devices for the diagnosis and treatment of vascular disorders. The company's primary focus is on catheter-based technologies and products for the interventional neuroradiology market.
MTI's products include the Sapphire and NXT lines of embolic coils, the Onyx liquid embolic system and a broad line of micro catheters, guidewires and occlusion balloons that are used in the treatment of cerebral vascular disorders.
InSight Health Services (Lake Forest, California) reported extending the expiration date of its offer to exchange up to an aggregate of $25 million principal amount of its 9-7/8% senior subordinated notes due 2011, for a like principal amount of its registered 9-7/8% senior subordinated notes due 2011. The date was extended from Jan. 31 to Feb. 1, unless further extended.
InSight provides diagnostic imaging and information, treatment and related management services. It serves managed-care entities, hospitals and other contractual customers in 36 states.
Quest Diagnostics (Teterboro, New Jersey), the nation's largest provider of diagnostic testing, information and services, reported that its board of directors declared a quarterly cash dividend of 18 cents per common share, a 20% increase, payable on April 20 to shareholders of record on April 6.
Additionally, the board expanded its share repurchase authorization by an additional $350 million, bringing the total amount authorized and available for repurchases to $512 million.
"The increase in the quarterly dividend and the expansion of the share repurchase program reflect confidence in our ability to continue generating strong cash flow," said Surya Mohapatra, PhD, chairman and CEO. "We are increasing the value we return to shareholders while continuing to invest to drive growth."
During 2004, the company repurchased 8.3 million common shares for $735 million. Since the inception of the share repurchase program in May 2003, Quest has repurchased 12.3 million common shares for almost $1 billion.
The company had about 101 million common shares outstanding as of Jan. 24.