Medical Device Daily
A new private investment group, Life Science Angels (LSA; Palo Alto, California), has been formally launched, back- ed by what it termed 15 “exclusive sponsors.“
LSA was founded by life science executives and angel investors Allan May, Casey McGlynn and Greg Scott.
May, chairman of LSA, characterized the new firm as “an organized angel group, in the classic angel tradition“ rather than a traditional equity fund.
“When a company makes it through our screening process, we'll make an individual decision to participate“ in that company, May told Medical Device Daily. “Each deal will have its own LLC [limited liability corporation].“
Investments will range from $250,000 to $1 million with targeted companies to work with “a limited set“ of angel groups, venture capitalists and “select outside investors.“
“We set out to build a team that represented the top-tier technology and service providers to the biotech and medical device industries and are pleased that we've been able to do just that,“ May said.
“The perfect target [for LSA],“ he said, “is an early seed or early-stage company where less than a million dollars can achieve identifiable milestones that we think will guarantee an up-round behind us — the kind where, with that kind of money, our experience and contacts can, in 12 to 18 months, make a specific difference to achieve those milestones.“
In medical devices, he listed cardiology, orthopedics and “neuro“ as “classic areas“ that LSA will be interested in backing.
Supporting companies in biotech, he said, will be “more complicated“ with LSA being “much more careful“ in its model. As a type of milestone, he described a company with a compound “in preclinicals, then in clinicals the next year.“
May added: “We're going to do a lot of early stage stuff, but we're not averse to doing later-stage rounds.“
LSA described its members as having “significant experience in life science operations and investing“ and able to provide a range of services: from sponsor introductions to mentoring to working with realtors, bankers and auditors.
The group will be mining opportunities at upcoming investor conferences, May said, and hold its first investment meeting in late February.
LSA's founding sponsors are Wilson Sonsini Goodrich & Rosati (Palo Alto, California), Silicon Valley Bank (Santa Clara, California) and PricewaterhouseCoopers (New York).
In other financing activity:
• Tissue engineering firm Ortec International (New York) reported completing a series of transactions resulting in proceeds of about $6.4 million. Additionally, about $9.6 million of promissory notes issued during the past year converted into common equity. The approximate $6.4 million in gross proceeds includes around $1.4 million generated from a recently completed equity financing.
In conjunction with the private placement, substantially all of Ortec's Series C preferred shareholders agreed to convert their preferred shares into common stock on the same terms offered to investors participating in the placement.
As a result of completing the financing, around $9.6 million of promissory notes, plus accrued and unpaid interest thereon, issued in connection with capital received by Ortec in a series of transactions over the last year, will convert into 14,842,886 common shares and redeemable five-year warrants to purchase those shares of company common stock at $1.80 a share.
Ortec's focus is the application of its OrCel (bilayered cellular matrix) to heal chronic and acute wounds. OrCel is composed of a collagen sponge seeded with allogeneic epidermal and dermal cells. These cells secrete growth factors and cytokines normally found in acute human wounds and “are believed to have a beneficial role in promoting tissue repair,“ according to the company.
Ortec has received FDA approvals for Orcel to treat Epidermolysis bullosa and donor sites in burn patients. It also has completed a pivotal clinical trial for treatment of venous ulcers, and has filed a PMA.
Ron Lipstein, vice chairman and CEO, said, “As we await what we expect to be a positive response from the [FDA], this financing provides the immediate capital necessary to continue our preparation for the commercial launch of OrCel with our marketing partner. Additionally, by completing these series of financing transactions, combined with our having recently entered into a forbearance arrangement related to the Paul Capital Revenue Interest Agreement, Ortec has dramatically improved its balance sheet and simplified its capital structure.“
Ortec also has received FDA approval to initiate a pivotal trial in diabetic foot ulcers. The company says its platform technology “may extend to the regeneration of other human tissue such as tendons, ligaments, cartilage, bone, muscle and blood vessels.“
• Imalux (Cleveland), developer of the Niris imaging system based on optical coherence tomography, reported final closing of its Series B capital funding. The company reported nearly $4.84 million in the offering and that it has raised $10.4 million since its 1996 founding.
Investors in the Series B offering include lead investor Biomec, as well as Early Stage Partners, Symark, RMS Investment, BioInfo Accelerator, Reservoir Venture Partners, and several Cleveland-based angel investors.
“As we begin commercialization of the Niris Imaging System, I am grateful for the confidence shown from both our original investors and those new investors that participated in this current round,“ said Imalux CEO J. Lloyd Breedlove. “We have already begun to deliver the system to researchers and clinical collaborators, and as we enter 2005, we will begin an intensive marketing effort, including a trade show presence, and the addition of key marketing and sales staff.“
The company's Niris imaging system is designed to provide real-time, high spatial resolution, 2-D, cross-sectional depth visualization of tissue microstructure. The compact, point-of-care system creates images utilizing harmless near-infrared light. The spatial resolution of the system is on the order of 0.01 mm, surpassing conventional ultrasound imaging by an order of magnitude.
• The board of disease management provider Matria Healthcare (Marietta, Georgia) has declared a 3-for-2 stock split in the form of a stock dividend at the rate of one additional share of common stock for each two issued and outstanding shares of common stock. The additional shares will be distributed Feb. 4 and will be payable to stockholders of record as of the close of business Jan. 19. The stock split will increase the number of company shares from 10.6 million to about 15.8 million.