Medtech fundings for June 2017

Fundings in medical technology for June 2017 stand at $503 million to date, led by the $140 million debt funding of Spectranetics, followed by the $57 million funding of Bonesupport, the $52 million debt funding of Accuray and the $42 million funding of Micell Technologies.

Below are the top medtech fundings thus far for June 2017:

Source: Compiled by MedMarket Diligence, LLC

For the complete list of medtech fundings for June 2017, see link.

For a historical listing of medtech fundings by month since 2008, see link.

The reasons behind the growth in surgical sealants, glues, hemostats

Surgical sealants, glues, and hemostats are now a routine part of closing and managing wounds, with their use determined by demand from patients, surgeons, and healthcare systems that has in turn been enabled by innovations from technology development.

From our global analysis of sealants, glues, and hemostats, here are the elements that determine the forecast for their sales:

  • Product adoption trends, driven by better formulations, especially for use in MIS and other applications
  • Growth in different formulations developed for different clinical applications
  • Geographic market growth patterns and trends
  • Patient preferences
  • Growth in minimally invasive surgical procedures
  • Growth in products designed to work in MIS procedures
  • Growth rates driven by growing clinical utility
  • Surgeon preferences and adoption rate
  • Geographic market shifts (slowing growth rates in the U.S. and burgeoning growth in A/P, especially China due to its effort to modernize its healthcare system)
  • Demographically driven population shifts — age-related demand
  • Growth in surgical procedure volumes in MIS and other applications
  • Growth in the # of procedures performed in ambulatory surgical centers and doctors offices

 

Companies in the Market

Companies focused on wound closure find plenty of competition. Below is a selected list of current companies active in this field. M&A and even new startups will mold this list over the next five years.

Adhesys Medical, Adhezion Biomedical LLC, Advanced Medical Solutions, Arch Therapeutics, B. Braun Melsungen AG, Baxter, Cellphire, Chemence Medical, Cohera Medical, Connexicon Medical Ltd., Covalon Technologies, Covidien (Medtronic), CR Bard, CryoLife, CSL Behring, Endomedix, Entegrion, Ethicon (JNJ), Gecko Biomedical, Grifols International, Hyperbranch Medical, Integra LifeSCiences, LifeBond, Mallinckrodt, Medline Industries, Meyer-Haake GmbH, Ocular Therapeutics, Pfizer, Sealantis, Suneris.

The cumulative result of all these forces, drivers, and trends is a market with significant growth in some geographic markets and specific products. One need only consider the hemostat market to recognize these trends.

Source: MedMarket Diligence, LLC; Report #S290; Order online.

The rise and fall of medical technologies

When does one recognize that horse-and-buggy whips are in decline and auto-mobiles are on the rise?

When does one recognize that a new technology is a definite advance over established ones in the treatment of particular disease, in cost or quality?

Technologies go through life cycles.

A medical technology is introduced that is found effective in the management of a disease. Over time, the technology is improved upon marginally, but eventually a new technology, often radically different, emerges that is more effective or better (cheaper, less invasive, easier to use). It enters the market, takes market share from and grows, only to be later eclipsed by a new (apologies) “paradigm”. Each new technology, marginal or otherwise, advances the limit of what is possible in care.

Predicting the marginal and the more radical innovation is necessary to illustrate where medicine is headed, and its impact. Many stakeholders have interest in this — insurance companies (reimbursing technologies or covering the liabilities), venture capitalists, healthcare providers, patients, and the medical technology companies themselves.

S-curves illustrate the rise in performance or demand over time for new technologies and show the timing and relative impact of newer technologies when they emerge. Importantly, the relative timing and impact of emerging technologies can be qualitatively and quantitatively predicted. Historic data is extremely useful predicting the rise and fall of specific medical technologies in specific disease treatment.

Following are two examples of diseases with multiple technologies arcing through patient demand over time.

  • Ischemic Heart Disease Past, Current, and Future Technologies
    • Open bypass
    • Percutaneous transluminal coronary angioplasty
    • Minimally invasive direct coronary artery bypass (MIDCAB)
    • Percutaneous CABG
    • Stem-cell impregnated heart patches

The treatment of ischemic heart disease, given the seriousness of the disease and its prevalence, has a long history in medicine and within the past fifty years has a remarkable timeline of innovations. Ischemia is condition in which inadequate blood flow to an area due to constriction of blood vessels from inflammation or atherosclerosis can cause cell death. In the case of cardiac ischemia, in which the coronary arteries that supply the heart itself with blood are occluded, the overall cell death can result in myocardial infarction and death.

The effort to re-establish adequate blood flow to heart muscle has evolved from highly invasive surgery in which coronary artery bypass graft (CABG) requires cutting through the patient’s sternum and other tissues to access the heart, then graft arteries and/or veins to flow to the poorly supplied tissue, to (2) minimally invasive, endoscope procedures that do not require cutting the sternum to access the heart and perform the graft and significantly improve healing times and reduced complications, to as illustrated, multiple technologies rise and fall over time with their impacts and their timing considered.

Technology S-Curves in the Management of Ischemic Heart Disease

(Note: These curves are generally for illustrative purposes only; some likely dynamics may not be well represented in the above. Also note that, in practice, demand for old technologies doesn’t cease, but declines at a rate connected to the rise of competing technologies, so after peaking, the S-curves start a descent at various rates toward zero. Also, separately note that the “PTCA” labeled curve corresponds to percutaneous transluminal coronary angioplasty, encompassing the percutaneous category of approaches to ischemic heart disease. PTCA itself has evolved from balloon angioplasty alone to the adjunctive use of stents of multiple material types with or without drug elution and even bioabsorbable stents.)
Source: MedMarket Diligence, LLC

Resulting Technology Shifts

Falling: Open surgical instrumentation, bare metal stents.
Rising and leveling: thoracoscopic instrumentation, monitors
Rising later: stem-cells, extracellular matrices, atherosclerosis-reducing drugs
Rising even later: gene therapy

The minimally invasive technologies enabled by thoracoscopy (used in MIDCAB) and catheterization pulled just about all the demand out of open coronary artery bypass grafting, though the bare metal stents used initially alongside angioplasty have also been largely replaced by drug-eluting stents, which also may be replaced by drug-eluting balloon angioplasty. Stem cells and related technologies used to deliver them will later represent new growth in treatment of ischemia, at least to some degree at the expense of catheterization (PTCA and percutaneous CABG). Eventually, gene therapy may prove able to prevent the ischemia to develop in the first place.

  • Wound Management Past, Current, and Future Technologies
    • Gauze bandages/dressings
    • Hydrogel, alginate, and antimicrobial dressings
    • Negative pressure wound therapy (NPWT)
    • Bioengineered skin substitutes
    • Growth factors

Another great example of a disease or condition treated by multiple evolving technologies over time is wound management, which has evolved from simple gauze dressings to advanced dressings, to systems like negative pressure wound therapy, hyperbaric oxygen and others, to biological growth factors to bioengineered skin and skin substitutes.

Technology S-Curves in the Management of Ischemic Heart Disease

Source: MedMarket Diligence, LLC

Resulting Technology Shifts

Falling: Traditional gauze and other simple dressings
Falling: NPWT, hyperbaric oxygen
Rising: Advanced wound dressings, bioengineered skin, growth factors

Wound management has multiple technologies concurrently available, rather than sequential (when one largely replaces the other) over time. Unsurprisingly, traditional dressings are in decline. Equipment-related technologies like NPWT and hyperbaric oxygen are on the wane as well. While wound management is not a high growth area, advanced dressings are rising due to their ability to heal wounds faster, an important factor considering that chronic, slow-healing wounds are a significant contributor to high costs. Bioengineered skin is patient-specific, characterized by faster healing and, therefore, rising.

Medtech fundings for April 2017

Medtech fundings for April 2017 stand at $524 million, led by the $120 million credit facility secured by Endologix, followed by $40 million raised by Cardiovascular Systems, $36 million by ALung Technologies, $32 million by Frequency Therapeutics, and $30 million by ProTom International.

Below are the top listings of medtech fundings for the month to date. For a complete listing of fundings to date, see link.

Source: Compiled by MedMarket Diligence, LLC

For a complete list of medtech fundings recorded since 2009, see link.

Medtech fundings for March 2017

Medtech fundings for March 2017 totaled over $2 billion, led by the $1.2 billion raise by ConvaTec, the $59 million IPO of Symetics, the $50 million Series C funding of Moximed, the $45 million funding of Corindus, and the $40 million funding round of VertiFlex.

The complete list of fundings in medtech for March 2017 are shown at link. Below are the top fundings for the month.

Source: Compiled by MedMarket Diligence, LLC

For a historical list of fundings by month since 2009, see link.

Medtech fundings for February 2017

Medtech fundings for February 2017 stand at $500.4 million, led by the $75 million credit facility secured by BioDelivery Sciences, the $45 million private placement by Corindus Vascular Robotics, the $41 million funding of Rhythm, Inc., the $37.2 million funding of Entellus Medical, and the $33 million funding of startup Surrozen.

Below are the top fundings for the month. For a complete list of fundings, see link.

Source: Compiled by MedMarket Diligence, LLC

For a historical listing of fundings in medtech, see link.

Investment in medtech and biotech: Outlook

Medtech and biotech investment is driven by an expectation of returns, but rapid advances in technology simultaneously drive excitement for their application while increasing the uncertainty in what is needed to bring those applications in the market.

MedMarket Diligence has tracked technology developments and trends in advanced medical technologies, inclusive of medical devices and the range of other technologies — in biotech, pharma, others — that impact, drive, limit, or otherwise affect markets for the management of disease and trauma. This broader perspective on new developments and a deeper understanding of their limitations is important for a couple of reasons:

  1. Healthcare systems and payers are demanding competitive cost and outcomes for specific patient populations, irrespective of technology type — it’s the endpoint that matters. This forces medical devices into de facto competition with biotech, pharma, and others.
  2. Medical devices are becoming increasingly intelligent medical devices, combining “smart” components, human-device interfaces, integration of AI in product development and products.
  3. Medical devices are rarely just “medical devices” anymore, often integrating embedded drugs, bioresorable materials, cell therapy components, etc.
  4. Many new technologies have dramatically pushed the boundaries on what medicine can potentially accomplish, from the personalized medicine enabled by genomics, these advances have served to create bigger gaps between scientific advance and commercial reality, demanding deeper understanding of the science.

The rapid pace of technology development across all these sectors and the increasing complexity of the underlying science are factors complicating the development, regulatory approval, and market introduction of advanced technologies. The unexpected size and number of the hurdles to bring these complex technologies to the market have been responsible for investment failures, such as:

  • Theranos. Investors were too ready to believe the disruptive ideas of its founder, Elizabeth Holmes. When it became clear that data did not support the technology, the value of the company plummeted.
  • Juno Therapeutics. The Seattle-based gene therapy company lost substantial share value after three patients died on a clinical trial for the company’s cell therapy treatments that were just months away from receiving regulatory approval in the US.
  • A ZS Associates study in 2016 showed that 81% of medtech companies struggle to receive an adequate return on investment

As a result, investment in biotech took a correctional hit in 2016 to deflate overblown expectations. Medtech, for its part, has seen declining investment, especially at early stages, reflecting an aversion to uncertainty in commercialization.

Below are clinical and technology areas that we see demonstrating growth and investment opportunity, but still represent challenges for executives to navigate their remaining development and commercialization obstacles:

  • Cell therapies
    • Parkinson’s disease
    • Type I diabetes
    • Arthritis
    • Burn victims
    • Cardiovascular diseases
  • Diabetes
    • Artificial pancreas
    • Non-invasive blood glucose measurement
  • Tissue engineering and regeneration
    • 3D printed organs
  • Brain-computer and other nervous system interfaces
    • Nerve-responsive prosthetics
    • Interfaces for patients with locked-in syndrome to communicate
    • Interfaces to enable (e.g., Stentrode) paralyzed patients to control devices
  • Robotics
    • Robotics in surgery (advancing, despite costs)
    • Robotic nurses
  • Optogenetics: light modulated nerve cells and neural circuits
  • Gene therapy
    • CRISPR
  • Localized drug delivery
  • Immuno-oncology
    • Further accelerated by genomics and computational approaches
    • Immune modulators, vaccines, adoptive cell therapies (e.g., CAR-T)
  • Drug development
    • Computational approaches to accelerate the evaluation of drug candidates
    • Organ-on-a-chip technologies to decrease the cost of drug testing

Impact on investment

  • Seed stage and Series A investment in med tech is down, reflecting an aversion to early stage uncertainty.
  • Acquisitions of early stage companies, by contrast, are up, reflecting acquiring companies to gain more control over the uncertainty
  • Need for critical insight and data to ensure patient outcomes at best costs
  • Costs of development, combined with uncertainty, demand that if the idea’s upside potential is only $10 million, then it’s time to find another idea
  • While better analysis of the hurdles to commercialization of advanced innovations will support investment, many medtech and biotech companies may opt instead for growth of established technologies into emerging markets, where the uncertainty is not science-based

 

Below is illustrated the fundings by category in 2015 and 2016, which showed a consistent drop from 2015 to 2016, driven by a widely acknowledged correction in biotech investment in 2016.

*For the sake of comparing other segments, the wound fundings above exclude the $1.8 billion IPO of Convatec in 2016.

Source: Compiled by MedMarket Diligence, LLC.

 

Medtech fundings in February 2017

Fundings in medical technology for the month of February stand at $148 million, led by the $37 million funding of Entellus Medical, followed by the $26 million funding of Viewray.

Below are the top fundings for the month thus far.

Source: Compiled by MedMarket Diligence, LLC.

For a complete list of fundings for the month, see link, and bookmark this post during February to see additional financings as they occur.

For a historical list of fundings, see link.

The best medtech investment opportunities

In reviewing patents, fundings, technology development trends, market development, and other hard data sources, we feel these are some of the strongest areas for investment in not only the medical device side of medtech, but also the broader biomedical technology arena:

  • Materials technologies
    • graphene
    • bioresorbables
    • biosensors
    • polymers
    • bioadhesives
  • Cell therapy and tissue engineering
    • cell-based treatments (diabetes, spinal cord injury, traumatic brain injury)
    • extracellular matrices in soft tissue repair and regeneration
  • Nanotechnology (subject of forthcoming report)
    • nano coatings
    • nano- and micromedical technologies for localized drug delivery
    • nanoparticles
  • 3D printing
    • prototype development
    • patient-specific implants
  • Minimally- and non-invasive technologies
    • transcatheter alternatives to surgery
    • NOTES (natural orifice transluminal endoscopic surgery)
  • Diabetes non-invasive glucose testing
  • Intraoperative surgical guidance
    • Cancer probes (e.g., fluorescent or optical coherence tomography, frozen section, cytologic imprint analysis, ultrasound, micro-computed tomography, near-infrared imaging, and spectroscopy)
  • neurostimulation and neuromodulation
  • point-of-care diagnostics
  • point-of-care imaging
  • AI-enhanced devices

In addition, there are many areas in healthcare in which there is much untapped demand with problems that, so far, seem to have eluded medtech solutions. These include infection control (Zika, MRSA, TB, nosocomial infections, etc.), chronic wound treatment (including decubitus/stasis/diabetic ulcers), type 2 diabetes and obesity.

 

Tracking Medtech Fundings in January 2017

Fundings for medtech in January 2017 stand at over $700 million, led thus far by the $55 million funding of Intuity Medical, the $54 million for Apollo Endosurgery, $50 million debt funding of ConforMIS, and the $50 million funding of Neuropace. Below are the top fundings for the month. For a complete list of fundings (to be updated during the month), see link.



Source: Compiled by MedMarket Diligence, LLC

For a historical list of fundings since 2009, see link.