Monday, April 28, 2008

OmniGuide nears VC round, plans global expansion

By Ryan McBride

On its way toward a new round of funding, OmniGuide Inc. is focused on taking its laser-based scalpels overseas.

After eight years in business, a strategic shift from telecommunications to medical devices in 2005, and $49.5 million in total venture capital raised, OmniGuide is hoping to wrap up a fifth round of venture capital in the coming months, valued by executives to be around $20 million.

The company plans to use the Series E round to expand its presence in Europe and break into the Asian market, said Yair Schindel, OmniGuide's vice president of clinical affairs. The funding would also be used to gain regulatory clearance to use the firm's device in more medical procedures. Yet the firm isn't ready to revisit telecom and other industrial markets.

"Right now," Schindel said, "the company is laser-focused -- no pun intended -- on the medical laser marketplace."

OmniGuide makes and markets fibers that deliver lasers with carbon-dioxide gas as the active medium to cut soft tissue in surgeries. Though CO2 lasers have been used in medicine for years, OmniGuide claims to be the only provider of bendable fibers that can bend to enable minimally invasive surgeries of the ear, nose and throat.

"This technology fits in very nicely with the idea of doing minimally invasive surgery that is maximally effective," said Anand Devaiah, an otolaryngologist at Boston Medical Center who uses OmniGuide's system to remove tumors in the head and neck. He has done consulting work for the company.

It launched its fiber sales in the United States and Europe last year and reported 2007 revenue of $2 million, company spokeswoman Sara Morgan confirmed. Schindel said that sales in the first quarter of 2008 increased 30 percent from the same period last year.

Company officials credited OmniGuide's success over the past year to Yoel Fink, one of the inventors of its technology, who took a leave of absence from his post as an associate professor of materials science at MIT to become full-time CEO of OmniGuide in June 2007. The company has also recruited 40 sales and customer service workers since 2007 to boost marketing of the laser fibers to hospitals and physicians.

Fink cofounded OmniGuide with fellow MIT researchers John Joannopoulos, Uri Kolodny and Edwin Thomas in 2000, and initially considered selling its fibers into the telecom market. But cost competition and product design issues led them to the medical market.

The firm was initially backed by Ray Stata, founder and chairman of Norwood-based circuit maker Analog Devices Inc., who also serves as chairman of OmniGuide and has invested in its subsequent rounds of financing through Stata Venture Partners of Dover.