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Massachusetts has seen a spate of recent medical device funding rounds, even as capital remains tight. Analysts say a combination of pent-up demand and wariness about investments in biotechnology has helped fuel a string of venture capital rounds for medical device companies.
“There are projects that investors were looking at in September or December, and they have recently started looking at them again and deals are getting done,” said Anupendra Sharma, a partner at Siemens Venture Capital.
The largest of the recent deals was Interlace Medical Inc., which hauled in $20.5 million, while Cappella Inc. reeled in just over $17 million worth of investments, also from a combination of new and existing investors.
Sharma said that since company valuations have come down during the recession, this has made many device companies more attractive to investors. Sharma said he is seeing deals with companies at all stages of development, but it’s notable that none of the recent deals have involved early-stage investments. In some cases the funding rounds are small, designed to tide the company over until uncertainty about either the capital markets or the regulatory pathway clears up a bit.
Still, med devices are picking up interest simply because investors on average, are able to cash out in four to six years compared with six to eight years for biotech investments, experts said.
For instance, Facet Solutions has offered $4.1 million in shares to existing investors and so far has raised $3.2 million. New York-based FirstMark Capital, Newton-based Spray Venture Partners and Palo Alto, Calif.-based De Novo Ventures participated in the round. Hopkinton-based Facet will use the proceeds to advance its lead product, a device used during lumbar fusion surgery. The company recently announced results of a U.S. pilot study and is now enrolling patients at 12 U.S. sites for a pivotal trial. CEO Geoff Pardo said that the company expects to announce a larger deal in the fall.
Viacor Inc. is another pre-approval company that received a modest series C venture round recently, pulling in $2.4 million from existing investors Canaan Partners of Westport, Conn., and New Enterprise Associates of Chevy Chase, Md. The company is running a clinical trial outside the U.S. for its mitral valve repair device.
Three companies now ready to sell their products took in $53.3 million since June 15.
Interlace raised $20.5 million in a round that included existing and new investors. The Framingham company will use the money to commercialize its MyoSure device for the treatment of uterine fibroids. Baird Venture Partners in Chicago and Boston’s HLM Venture Partners led the round alongside Hambrecht & Quist Capital Management LLC and Aperture Venture Partners.
Michael Liang, a partner at Baird, said the deal came together because the company is promising on so many levels. “Clearly, women’s health is a huge unmet medical need in medical devices. The company has a good product, a good management team and a good consortium of investors behind it.”
Cappella’s recent round was led by new investors Fountain Healthcare Partners and Mitsui & Co. Venture Partners, alongside Cappella’s existing investors, Polytechnos Partners and ACT Venture Capital. Capella, which does most of its development in Ireland, is now seeking a new local office. The company’s stent, to be used in the treatment of bifurcated vascular disease, is already approved in Europe.
Waltham-based I-Therapeutix Inc. won a round worth $15 million that was led by new investor Polaris Venture Partners in Cambridge and existing investors Versant Ventures and SV Life Sciences. Proceeds will be used to commercialize the company’s ophthalmology product called the I-Zip Ocular Bandage.
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