Bijan Salehizadeh of NaviMed Capital recently presented more statistics on the great returns that VC investors have realized in the life science industry over the past decade. Life Science investing has outperformed IT over the past 10 years. Really.
You might be surprised to learn that quite of few of those successful investments were New England medical device startups.
In the last half-dozen years, there have been more successful exits than you may think. While a handful have exited in the hundreds of millions, success for many was defined as a solid return on a less-than-$20M total investment.
Somehow these exits have managed to stay under the radar screen. Until now.
Who are these New England medical device startups? Who are the entrepreneurs who led their companies to success?
In October 2011, OPKO Health acquired microfluidic device maker Claros Diagnostics for $49M. Serial med-tech CEO Mike Magliochetti had teamed with founders David Steinmiller and Vincent Linder to develop a novel microfluidic point-of-care diagnostic testing device, with a first application for testing prostate cancer.
Thoratec purchased the medical business of Levitronix Medical in August 2011 for $110M up front plus milestone payments up to $40M. Levitronix CEO, Kurt Dasse, was previously CSO of Thermo Electron, and saw the potential of Levitronix’s mag-lev pump technology for a variety of medical applications, and built the medical business into a significant force prior to its sale.
GI Dynamics raised $86M in an Australian IPO in August 2011 to fund commercialization of their unique treatment for obesity and diabetes. GID was the second successful exit for the Seedling Ventures team of Josh Tolkoff, Andy Levine and John Cvinar.
In July 2011, Olympus acquired GI endoscope maker Spirus Medical for a reported $60M (including earn-out payments). This is the second exit for Steve Tallarida’s incubator STD Medical. Before the Spirus sale, Tallarida sold vascular closure device developer Angiolink to Medtronic in 2004 for $45M.
Medtronic bought Salient Surgical in July 2011 for $525M. Salient began operations as TissueLink under the direction of founding CEO Jacqueline Eastwood, who retired in 2007. Salient’s second CEO, Joe Army, led the company to over $100M in annual sales prior to the acquisition by Medtronic.
Interlace Medical was acquired by Hologic in January 2011 for $125M upfront, plus two annual milestone payments based on revenue growth. Interlace Medical developed the Myosure hysteroscopic myomectomy system. Subsequently, CEO Bill Gruber and Spray Ventures’ Kevin Connors have re-teamed for Solace Therapeutics, which is developing non-surgical office-based treatments for common bladder disorders, such as stress urinary incontinence (SUI).
In July 2010, St. Jude Medical purchased local company LightLab Imaging for $90M from Goodman Company Limited, the leading Japanese interventional cardiovascular device maker. Lightlab CEO David Kolstad was previously veteran of a number of local startups, including Transmedics and Viacor. Founded in 1998, Lightlab developed the first catheter-based OCT imaging system for improved cardiovascular imaging, and was sold to Goodman in August 2002 by then-CEO Paul Magnin.
Serica Technologies was purchased by Allergan in February 2010, for an undisclosed amount described as “highly successful” by one of the VC investors. Serica was developing biodegradable silk-based scaffolds for use in tissue regeneration. Gregory H. Altman, Ph.D., CEO and Founder of Serica led the company since its founding in 1998.
Volcano Corporation purchased forward-viewing intravascular-ultrasound maker Novelis Inc. in May, 2008 for an undisclosed sum. Novelis founder/CEO Paul Magnin was previously CEO of LightLab Imaging, which he sold to Goodman Company Limited, a leading Japanese cardiovascular device company.
In November 2007, Covidien bought sports surgery startup Scandius BioMedical, for an undisclosed amount. Scandius founder and CEO Mark Johanson subsequently co-founded Audax Medical, which is developing a new nanomaterial for orthopedics and spine applications.
Angstrom Medica was sold to Pioneer Surgical Technologies in October 2007 for an undisclosed amount. Founder Ed Ahn worked with Seedling Ventures’ Josh Tolkoff, Andy Levine and John Cvinar to develop a novel nanomaterial used in bone and tissue repair. Ahn is still with Pioneer as CTO.
In May 2007, diabetes pump maker Insulet raised a $116 IPO, and the company currently has a market cap of nearly $900M. The company was originally started by John Brooks (a seasoned medical device exec at Prism Ventures at that time), John Garriboto, and Chris Flaherty (who has been involved in the formation of numerous medical device startups).
Medtronic’s surgical navigation business acquired Breakaway Imaging, for an undisclosed amount in April 2007. CEO Rich Grant led Breakaway since its founding, in the development of the “o-arm,” a 360 degree version of a c-arm.
In February 2007, Zimmer acquired Endius Inc, a maker of minimally invasive spine products and implants, for a reported $80M in cash. Serial entrepreneur co-founded Endius just after the successful sale of his prior startup, Ultracision to J&J. Davison went on to run Sontra Medical, and now is CEO of Histosonics (an ultrasound company) and President of MedTech Innovations, his own medical device strategy consulting firm.
Selva Medical was sold to W.L. Gore in December 2006 for an undisclosed sum. Selva was developing a novel laser catheter for treating ischemic stroke. Founder/CEO Bob Rabiner had previously started Omnisonics, and recently founded IlluminOss, making a novel bone fracture stabilization system.
Brontes Technologies Inc., maker of an digital scanning system for improved dental impressions, was sold to 3M in October 2006 for $95M. Brontes co-founders Eric Paley and Micah Rosenbloom were featured in Jeff Bussgang’s book ‘Mastering the VC Game’ and now are partners at the venture firm Founders Collective.
In July 2006, founder/CEO Amar Sawhney sold Confluent Surgical to Covidien for $245M. Confluent developed Duraseal, a novel neurosurgical sealant which helps prevent adhesions. Previously Sawhney was the technical founder of Focal, ultimately acquired by Genzyme. Currently, Sawhney is running two new startups, Augmenix and I-Therapeutix. Sawhney has also been involved in the formation of Sadra, Access Closure, Embolic Protection, Nellix, Hotspur, and other medical device startups.
In October 2005, founder/CEO Jeff Burbank took NxStage Medical public, raising $60M to fund market expansion for its breakthrough home hemodialysis system. The currently has a market capitalization of $1B, and sells a broad line of dialysis products. Prior to NxStage, Jeff founded Vasca, a developer of novel vascular access systems.
I’ll stop there. The impressive number of successful NE medical device exits over the last several years continues the pattern of the prior decade, when legendary serial entrepreneurs like Jim Nicholson and Stan Lapidus built great medical device companies like Mitek and Cytyc. NE continues to be a hotbed of medical device startup activity, and the likelihood of startup success is as high as ever.