Monday, January 21, 2008

Wound sealant startup sewing up $6M funding

By Ryan McBride

Venture capitalists who have bet on medical technology veteran Amar Sawhney -- and won -- have returned to invest millions more dollars in his new company, I-Therapeutix Inc.

The Waltham-based startup is the latest in a line of firms to develop hydrogel, which Sawhney pioneered to seal surgical wounds. After reaping millions from previous hydrogel firms, Sawhney, chairman and CEO of I-Therapeutix, launched the startup in late 2006 to apply the technology to the eye. Hydrogel is a water-based polymer designed to react in the body to seal wounds and dissolve within days, Sawhney said.

I-Therapeutix is expected to close a $6 million Series B financing this month to fund clinical trials of hydrogel to seal wounds on the eye after cataract surgeries, according to Sawhney. California's Versant Ventures is slated to lead the round, which includes funding from SV Life Sciences of Boston, London and San Francisco, as well as Pinnacle Ventures of Palo Alto, Calif., and angel investors. The startup had raised $1.2 million.

Many of those investors hit pay dirt when Sawhney's last hydrogel firm, Confluent Surgical Inc., a Waltham maker of wound sealants for cranial and other surgeries, was sold to industrial giant Tyco International Ltd. in 2006 for $245 million in cash. Confluent is now part of Mansfield-based Covidien Ltd., the former health-care unit of Tyco. At least three other startups have licensed hydrogel technology from Sawhney and his partners.

"What excites me most about this (I-Therapeutix) investment is that this is a proven team that knows how to build companies," said Charles Warden, a managing director at Versant, who will join the board of the startup upon the closing of the Series B round. Before Warden joined Versant in 2004, he said, he invested in Confluent while a partner at SV Life Sciences.

Fellow Series B investor Pinnacle is another Confluent backer. The venture firm also invested in Mountain View, Calif.-based Access Closure Inc., a private firm that focuses on the use of Sawhney's hydrogel to seal vascular wounds. Sawhney is a director of Access Closure.

In the second quarter of 2008, Sawhney said, I-Therapeutix plans to begin human trials of hydrogel to seal eye wounds from cataract surgeries at 10 medical centers. The firm's hydrogel sealant, called I-Zip, will be compared with corneal bandages, which are typically used to cover eye wounds after such procedures, he said.

Sawhney said he believes the annual U.S. market for I-Zip would be $500 million. He plans to gain U.S. market approval for the product in 2009 and begin sales later that year. Meantime, the company plans to develop hydrogel as a method to deliver drugs as treatments for diseases of the eye, he noted.

But the company isn't alone in developing hydrogel to patch eye wounds. HyperBranch Medical Technology Inc., of Durham. N.C., reported in December 2007 it had received clearance to market a hydrogel sealant for the eye in the countries of the European Union.