A Medical Device Daily
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.
According to a report by PricewaterhouseCoopers Health Research Institute (Washington), 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.
“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.
Privately held TyRx Pharma (Monmouth Junction, New Jersey) reported that it has received an equity investment from Boston Scientific (Natick, Massachusetts).
Since 2002, Boston Scientific and TyRx have been co-developing drug-eluting coatings for cardiovascular stents under a licensing agreement. TyRx is focused on developing a family of proprietary bioresorbable drug-eluting polymers for use in combination medical devices and specialty pharmaceuticals.
Terms of the agreement were not disclosed. The law firm of Brown Rudnick Berlack Israels represented TyRx Pharma in the financing round.
TyRx was organized in 1998 to advance its core technology — a novel class of tyrosine-based biodegradable polymers, referred to as polyarylates. Using combinatorial chemistry, TyRx has created libraries of related polymers with systematically varied chemical structures and predictable physical properties. Using a proprietary polymerization process, TyRx has synthesized and characterized more than 100 tyrosine-based polymers that allow TyRx to quickly create custom polymers to meet precise product specifications.
TyRx is deploying its coating and delivery technologies across a broad range of medical devices. Saying that combination products are expected to be the highest-growth segment of the medical device industry, TyRx added that it is “positioned to be an innovative applications leader in the space.“
CEO Bill Edelman said, “TyRx is delighted to see its three-year relationship with Boston Scientific result in an equity investment, and we are excited to continue development of a new generation of medical devices in collaboration with such a world-class organization. Our relationship with Boston Scientific is another step to expanding our core technology beyond polymer synthesis to end-product development.“
In other financing activity:
• 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 was also 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 possesses expertise in the development and manufacturing of rapid test products for various indications, including HIV, tuberculosis and bovine spongiform encephalopathy.
• Nexense (New York), an emerging sensing technology company, said it has raised more than $3 million in equity funding from a group of private investors operating under Emmes (Chicago). The funds will be used to accelerate the commercialization of the company's patented technology, with an emphasis on the consumer health market.
Nexense's biosensor platform is based on the company's patented method of measuring parameters such as temperature, acceleration, pressure, distance, weight and any other physical entities. Measurements are made in a direct digital manner and not constrained by the limitations of traditional sensor technologies.
“Nexense is at the final stage of product integration and customization for a number of its vital sign monitoring devices targeted for home use, which utilize our exclusive 3N technology so they are non-intrusive, non-contact and non-radiating,“ said Arik Ariav, CEO. “This funding will enable us to move faster in adapting our technology to additional monitoring applications and to accelerate our market entry.“
• Henry Schein (Melville, New York), the largest distributor of healthcare products and services to office-based practitioners in the combined North American and European markets, reported that its board of directors has authorized a 2-for-1 stock split, in the form of a 100% stock dividend, payable on or about Feb. 28, to shareholders of record as of Feb. 15.
The split is the company's first since becoming a publicly-traded company in November 1995, and will increase the total number of shares of common stock outstanding to roughly 86.6 million.
“We believe this stock split is in the long-term interest of our shareholders, as it will increase liquidity and make equity ownership in Henry Schein more accessible, in particular for individual investors,“ said Stanley Bergman, chairman, CEO and president.
The company's four business groups — Dental, Medical, International and Technology — serve more than 450,000 customers worldwide, including dental practices and laboratories, physician practices and veterinary clinics, as well as government and other institutions.