The second quarter’s drought of venture funding for healthcare startups broke last week when San Clemente-based Opus Medical Inc. raised $13.6 million in a third-round investment.<\/p>\n
Opus plans to use the money to market its AutoCuff device, which is used to repair rotator cuff soft tissue, said Chief Executive James Hart.<\/p>\n
The money is from new investor Prospect Venture Partners of Palo Alto and returning investor Three Arch Partners of Menlo Park.<\/p>\n
“We found the C round to be easier than our last round,” Hart said. “In 2001, when we started the B round, it took us nearly a year to complete that financing. In comparison, this round went probably six to eight weeks.”<\/p>\n
In another healthcare funding, Refractec Inc., an Irvine maker of devices to fix vision problems, said it is about to wrap up a $9 million third round, according to Chief Executive Mitch Campbell.<\/p>\n
Versant’s Link: “A lot of the exit strategies are acquisitions”<\/p>\n
Refractec, which Campbell said should do some $12 million in sales this year, is using the money to further push its ViewpoinT CK system, which uses radio waves, instead of a laser, to correct farsightedness.<\/p>\n
“The nice thing with us is if you have a proven business model that you know can work, it makes it a lot easier for (venture capitalists) to make a decision,” Campbell said.<\/p>\n
It had been quiet on the healthcare venture front in recent weeks following a decent first quarter. The Money Tree survey from PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association showed healthcare, life sciences and biotechnology investments in Orange County were $22 million in the first quarter.<\/p>\n
That was down from $36.2 million in the first quarter of 2002. A $31.5 million investment in San Clemente’s Cameron Health Inc. helped push up the year-ago figure. Cameron Health is developing a defibrillation device.<\/p>\n
“Many of us are certainly careful about new investments,” said Ralph Sabin, managing director of the Irvine office of Encino-based Pacific Venture Group, a healthcare investor.<\/p>\n
But Sabin also offered this: “I’m not so sure that last year was necessarily a hot market-it only seems hot compared to how bad tech has been.”<\/p>\n
“There’s no doubt this environment in the past two years has been challenging,” said Refractec’s Campbell. “Funding’s definitely gone down, I think, because (venture capitalists) are becoming more picky.”<\/p>\n
Venture capitalists are being more cautious because “they know the IPO market’s not there, so they’ve got a longer window,” he said.<\/p>\n
William Link, a managing director at the Newport Beach office of Menlo Park-based healthcare investor Versant Ventures, said he looks beyond public offerings.<\/p>\n
“A lot of the exit strategies are acquisitions,” he said. “Since it takes years to develop value in medical devices, entrepreneurs and venture capitalists are not turned off by a lack of an IPO market.”<\/p>\n
In the first quarter, Arbor Surgical Technologies Inc., an Irvine developer of aortic heart valves, led in fundraising, snagging a $10.8 million round. Arbor’s investors include Three Arch Partners and Sapient Capital, a Wyoming firm.<\/p>\n
Other companies that raised money in the quarter: SenoRx Inc., an Aliso Viejo-based developer of noninvasive breast biopsy devices, $6.4 million; Lathian Systems Inc., a Newport Beach healthcare software developer, $3 million; USGI Medical Inc., a San Clemente maker of gastrointestinal devices, $1.5 million; and Novacardia Inc., a heart drug developer in Laguna Niguel, $500,000.<\/p>\n
Copyright CBJ, L. P. Jun 23-Jun 29, 2003<\/p>\n","protected":false},"excerpt":{"rendered":"
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