Monitoring NE Medical Device Startups

Developing new products to improve patient care is the best part of being in the medical device industry. Who can argue with that?

You’ll find the most exciting devices being developed in venture-funded start-ups – a structure that provides the single-minded, do-or-die focus needed for success, along with the risk capital needed to fuel the work. Here in New England, we have a great medical device start-up ecosystem, with dozens of companies working to solve significant medical problems with great new devices.

Each quarter, the MoneyTree Survey lists virtually all venture financings in the US. The 2011 Q1 numbers just came out. Reviewing the data, I thought it would be a good time to look back at the New England medical device companies started in the past several years.

I was surprised by what I found.

Take a look at the table below, which lists the New England venture-funded medical device companies that received their first venture funds between 1/1/2005 and 3/31/2011. While there was a bump in 2007 and a dip in 2008, the good news is that new companies are being funded on a pretty steady basis. On average, about 2 medical device companies are newly venture-funded in New England each quarter.

Quarter Number Companies
2005Q1

0

 None
2005Q2

1

 WaveRx
2005Q3

1

 Exogenesis
2005Q4

4

 Spirus Medical, Rhythmia Medical, Tomophase Corp, Avedro
2006Q1

0

 None
2006Q2

1

 Aurora Imaging
2006Q3

3

 Tremont Medical(Interlace), Living Microsystems (now in CA), Histogenics
2006Q4

4

 Biobehavioral Diagnostics, Cambridge Devices (now Sierra Molecular in CA), Gelesis, T2 Biosystems
2007Q1

7

 SmoothShapes/Eleme, Serica, Hypermed, Soteira, IlluminOss Medical, Claros Diagnostics, Neuroptix
2007Q2

2

 Fluidnet, Innovative Metabolics (now Setpoint Medical)
2007Q3

4

 Cardiosolutions, Still River Systems, iWalk, WMR Biomedical(Arsenal Medical)
2007Q4

0

 None
2008Q1

3

 I-Therapeutix (Ocular Therapeutix), Allegro Diagnostics, Vortex Medical
2008Q2

1

 Consitution Medical
2008Q3

1

 Cambridge Endo
2008Q4

2

 Seventh Sense Biosystems, Semprus Biosciences
2009Q1

0

 None
2009Q2

3

 CardiAQ Valve Technologies (now in CA), DC Devices, Taris Biomedical
2009Q3

3

 CardioRobotics, Augmenix, Daktari Diagnostics
2009Q4

2

 On-Q-ity, CorNova
2010Q1

1

 Isis Biopolymer
2010Q2

3

 SynapDx, MedMinder Systems, Foundation Medicine
2010Q3

5

 Lantos Technologies, Bio2 Technologies, Advanced Dx (FKA Eyetel Imaging), Affinimark Technologies, DiagnosisONE
2010Q4

1

 NinePoint Medical
2011Q1

1

 SoundCure

Here’s the surprise: about 40% of these newly-funded start-ups are developing new imaging, measurement or diagnostic products. That rate is a lot higher than I expected. While the technologies are amazing, these are not the first sectors that come to mind when thinking of great venture-funded exits (I’m thinking of Ardian, Sadra, CoreValve, Confluent, Cryocath, Evalve, Ablation Frontiers and AsthmaTx for example).

It’s difficult to generalize about these companies, but a few patterns emerge: movement of tests from lab to point-of-care, novel genetic testing, quantifying the previously unquantifiable, and cost-reduction and speed. Nothing wrong with any of that.

Still, the New England venture-funded startup portfolio seems a little out of balance. Perhaps its not a surfeit of imaging, measurement, and diagnostic companies, but a shortage of novel therapeutic devices.

What’s your take?

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6 thoughts on “Monitoring NE Medical Device Startups

  1. The effect of healthcare cost trends I suspect has something to do with this. Big ticket capital equipment seems to have lost its luster. The drive to outpatient, personalized, point-of-care (in the home) testing/treatment/management is a trend that appears to be gathering steam. It would be interesting to review the strengths and weaknesses of the New England venture community and identify areas of risk/opportunity that would be required to take a leadership role in this area. Supportive technologies such as information management, remote connectivity, data privacy, visualization, and aggregation are logical additions to round out the shift that appears to be taking place.

  2. I find the 40% surprising as well. In spite of being in medical imaging my entire career, I have always believed that securing venture funding for therapeutic devices was always easier than diagnostic (read imaging) devices. The explanation is that a successful therapy is more likely to get reimbursed than a successful diagnosis and the reimbursement level will be higher. Given the the data you show, I would conclude that the cost of getting regulatory approval for therapies (almost always PMA devices) has risen so high as to offset the reimbusement advantage.

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