Micro and nanotech medicine

We’re working on finalizing this report. It shouldn’t be a surprise to anyone who has looked at the nanotech “industry” over the past couple years (we did a report three years ago) that it is the most hyped, promise-filled industry that has kept forestalling investors and any other interested parties from seeing concrete successes. Producing a report on this subject that achieves even the least resemblance to realistic timelines or realizable potential demands a diligent, critical eye to filter out the unlikely-to-ever-be-fulfilled potential.

Having said that, even the most conservative analyst would have to look at this industry and recognize that, REVENUES ASIDE, the industry is exploding with activity. The number of companies pursuing applications in nanotech and MEMS is huge. When you then distill the content down to focus only on those in the medical arena, the numbers are still huge.

There is revenue, too, and it is growing steadily toward that hockey stick upward shot that will take place, well, I’m not saying yet… We’re still applying our analysis and tracking multiple technologies approaching the launch pad.

* * *


Micro- and Nano-Medicine: Technologies, Applications, Industry, and Markets Worldwide

April 2006

Report #T625

· 250 pages · 45 Exhibits · 72 Company Profiles · Pub. Date April 2006 · Report #T625

The Report will be a detailed assessment of the products and technologies under development in the nanometer scale and micrometer scale levels with clinical applications, and an assessment of the market potential for products/technologies to be successfully commercialized for use in clinical practice within a ten year forecast period. This assessment will identify the technological, market, regulatory or other hurdles to be crossed en route to commercialization. The report will provide particular emphasis in detailing the current activities and status of product development at active companies. The analysis will be directed toward revealing specific opportunities for current or hopeful competitors.

Our VC tracking URLs

These are some of the VC and other sites we track to keep an eye on new investments and new technologies in order to identify formation of new medtech companies.


http://www.atvcapital.com/portfolioGroup.php?id=9

http://www.aperturevp.com/portfolio.htm

http://www.arcapita.com/corporate/current/current-healthcare.html

http://www.canaan.com/portfolio_life.html

http://www.carecapital.com/companies.asp
http://www.dpbioventures.com/

http://www.domainvc.com/Portfolio.asp?Filter=A
http://www.frazierhealthcare.com/portfolio/index.asp
http://www.goldenpineventures.com/portfolio.htm
http://www.herculestech.com/portfolio/portfolio.asp?CompanyID=3225&IndustryID=15

http://www.denovovc.com/portfolio/index.html
http://www.wispartners.com/

http://www.kpcb.com/portfolio/portfolio.php?lifescience

http://www.lifescienceangels.com/content.php?cid=1013
http://www.magicvc.com/portfolio/index.html

http://www.masonwells.com/Portfolio.htm

http://www.massmedic.com/members_primary.htm
http://www.nea.com/PortfolioCompanies/Healthcare/Devices/index.cfm?&SA=1

http://www.nlvpartners.com/portfolio.html#medical
http://silk.nih.gov/public/cbz2zoz.@www.sbirsttr.fy2006.txt
http://www.northbayangels.com/pages/DealsDone.jsp

http://www.onset.com/portfolio/index.html

https://www.pequotventures.com/portfolio/healthcare.html

http://www.pitango.com/portfolio.asp

http://www.polarisventures.com/Portfolio/ViewBySector.asp#

http://www.pwcmoneytree.com/moneytree/nav.jsp?page=industry
http://www.prismventure.com/portfolio/lifescience.asp
http://www.radiusventures.com/healthcare_industry.asp
http://www.tvmvc.com/site/lsportfolio.php
http://www.threearchpartners.com/html/portfolio.html
http://www.tmvp.com/Portfolio.html
http://www.tricardia.com/
http://www.usvp.com/home.html

http://www.devicelink.com/links/venture.html
http://www.versantventures.com/portfolio.html
http://www.wfdventures.com/index.html

Startups Redux

In my previous post, I went generous and added the startups I planned to include in our March publication. I hav subsequently realized I was being too generous, as I keep finding out that many people in the medical product industry are clamoring for new technology/ideas, but (partly because of the interest) the small medical technology companies are increasingly inclined toward stealth. SOOO, it behooves me to try to recoup the costs I have incurrent in my hard-earned effort at ferretting out these little company gems. So, I’ve published a compilation of the startups I have identified who have been founded from January 2005 to March 2006.As good readers of this blog (sigh), I will be more than happy to reward you with occasional free listings of those companies.

See the new Startup report/listing described here.

Some new startups (wink)

Normally, I would not do this (add subscription content to this blog), but I thought I would drop a list of some new companies (from my Startups table in MedMarkets that I publish every month). Here are the ones from the upcoming March issue. For reference, my goal is to find companies that have been founded in the past month (not when they say they were founded, but when their corporate filings were done — a harsher measure of how “new” they are). Sometimes I’ll go a little farther back and publish on companies who have done an exceptional job at staying in stealth mode, but who have suddenly become apparent to me. If they are new to me (I am constantly looking), then maybe my customers haven’t heard of them either.

Company

Principal

Location

Product/Technology

Founded

Aragon Surgical, Inc.

Onset Ventures

Palo Alto, CA

Surgical device platform designed to reduce OR time

2005

EpiTeK, Inc.

Jean Paul Rasschaert

Pittsburgh, PA

Minimally invasive device to prevent strokes in atrial fibrillation

2004

i25tech, Inc.

John Dunning, President

Santa Fe, NM

Undisclosed device for treatment of a variety of diseases

2005

Keramed, Inc.

Yichieh Shiuey

Cupertino, CA

Device for facilitating corneal transplantation

2005

Oringen, LLC

John Krusinski, President & CEO

Tallmadge, OH

Liquid crystal sensor for bacteria and viruses

2006

Transtimulation Research, Inc.

Jiande Chen

Oklahoma City, OK

Intestinal pacing for obesity

2005

Aragon Surgical, LLC — Palo Alto, CA; no URL
EpiTeK, Inc. — Pittsburgh, PA; http://epitek.com (under construction)
i25Tech, Inc. — Santa Fe, NM; http://i25tech.com (under construction)
Keramed, Inc. — Cupertino, CA; http://keramed.com (under construction)
Oringen, LLC — Tallmadge, OH; no URL
Transtimulation Research Inc. — Oklahoma City, OK; no URL



Cartilage paste, devices, commerce and optimism

In the healthcare arena, I keep finding it amazing how so many technologies that are different in so many ways are changing the definitions of what constitutes a medical device. I came across this article on cartilage paste in March issue of Arthroscopy: Journal of Arthroscopy–Related Surgery. Now, while this is not a new technology, it does represent the kind of marriage of technologies that happens frequently these days in the medical field. I then came across details of a Tallmadge, OH, company called Oringen, which has licensed a technology (from Northeastern Ohio Universities College of Medicine and Kent State University) to be developed into a liquid crystal sensor for detection of bacteria and viruses (Pathogen Detection Systems of Boulder, Colorado, has also licensed the technology).I am not an obligatory cheerleader for technology, because I really do believe that in the U.S. we have spent far too much on healthcare without it producing the intended or necessary improvements in quality of life. Too frequently, “innovations” have just resulted in higher premiums for us all. However, when you consider the steady progression of materials technologies, nanotechnologies, cell/tissue engineering technologies, the development of drug/device hybrids and other technologies, it becomes difficult to imagine a clinical problem that isn’t destined to be solved by medical technology. This may be wildly optimistic and ignore the lessons of history, but this sense of optimism is the driving force (that, and its associated commercial success!) behind the great diversity of medical technologies being pursued in different applications.

And the winner is…

In a final move that seemed (at least in the eyes of some industry analysts) as likely to be designed to increase J&J‘s price tag for the acquisition of Guidant as it was an actual competitive bid, Boston Scientific had this month upped its bid to $27 billion ($80 per share), and when the midnight (January 24) deadline passed without J&J responding with another offer, it now appears likely that the winner in this bidding war will be Boston Scientific. Guidant has accepted Boston Scientific’s offer and terminated the agreement to be acquired by J&J. For its part, J&J issued a statement saying, “it had determed not to increase its last offer for Guidant Corp., because to do so would not have been in the best interest of its shareholders.”Confidence is high in the likelihood of BSX making a success of this, given the related deal with Abbott (to acquire Guidant’s vascular business), the fit with Boston Scientific and, at least in general, the relative value of the acquisition price tag and the Guidant revenue streams and balance sheets. But one has to give pause to this and consider several points:

  • J&J is as experienced in acquisitions as any monolith out there and it viewed the $27B price tag as too high. Do they know something that BSX doesn’t?
  • BSX and J&J have been bitter rivals in the DES market and one can’t help but wonder if the rivalry hasn’t clouded BSX’s judgment, making this little more than a pyrrhic victory for BSX. A loss for J&J does not equate with a win for BSX.
  • The combined BSX/GDT business now has $12 billion in debt, a hefty burden that can only be lightened by market performance (oh yes, see “Guidant Defibrillator Recalls”).

It’s very hard not to think back to the Time/Warner acquistion of AOL, and in that case Time/Warner did not have a competitor who balked at the value of the deal, and we all know how well the AOL acquisition worked for T/W.

Guidant ping pong

In the latest turn in the burgeoning bidding war over Guidant between J&J and Boston Scientific, Guidant on Wednesday accepted J&J’s $23.2 billion acquisition offer, but Boston Scientific has indicated it is not yet walking away from the deal. Moreover, Guidant has expressed to Boston Scientific that it is willing to consider additional talks and a better offer, and it is entirely likely that Boston Scientific will, given the $14 billion in funding available to them from banks who have agreed to help finance the deal.Both sides appear prepared to really go to the mat on the deal, which further supports the likely significance of “winner’s curse”, in which the ultimate acquirer ends up paying more for the deal than they should. Already, J&J has offered to pay $1.9 billion more than it offered in November, when it had then dropped the price to $21.9 billion as a result of the recalls that, in J&J’s views, had effectively reduced the value of Guidant. Of course, the $1.9 billion premium does not reflect any added Guidant value, but instead represents the price J&J is attempting to pay to take Boston Scientific out of the game.

One has to wonder, in this high stakes poker game, if one or both players recognizes that the goal is not to acquire Guidant but to make the other pay more than necessary while improving the likely terms to acquire the alternative ICD player, St. Jude.

Growth in Bone Graft Substitutes

The bone graft substitutes market, comprised of synthetic bone graft substitutes, demineralised bone matrices (DBMs), and bone morphogenic proteins (BMPs) is the subject of a report we have added from a well regarded U.K. based analyst, Dr. Nelesh Patel. The report details products, applications, companies and the associated markets in the U.S. and in major Western European countries. The report is described here.

Nanomedicine material science to structural engineering

In our December ’05 issue of MedMarkets, we addressed applications, products and companies developing nanotech and MEMs (microelectromechanical machines) in medicine. There we address applications and companies focused on nanomedicine developments in biosensors, pacemakers, implantable pumps, personalized medicine, drug delivery, cancer therapeutics and diagnostic systems.From a macro view, it is worthwhile to step back and look at the migration of nanotechnologies from the more purely materials science, in which nanoparticles or nanosurfaces are developed to provide properties intrinsic to such small scale, toward structurally engineered products at the nanoscale, including nano products that provide the more complex sensor-type performance or even beyond, with specialized structural and functional components.By comparison to a prior analysis that we provided on nanotech and MEMs, this developmental trend has become more pronounced, illustrating the growing sophistication of the science. In our current analysis, a limited, but fairly representative sample of companies suggests the following current distribution

of the essential functional characteristics provided by the nanotechnologies being developed, as measured by the simple frequency of companies:

  • particle/surface: 64%
  • analysis: 8%
  • functional structure: 28%

By “particle/surface”, we mean products that are nanoparticle, nanoparticle coating or other products based simply on nanoscale materials.

By “analysis”, we mean products designed to reveal structure or function at the nanoscale level, rather than products that are themselves nanoscale or that provide analytical (e.g., sensor-based) functions at the nanoscale.


By “functional structure”, we mean those products that are themselves nanoscale in simple or complex structure (i.e., beyond surface coating) providing functional performance beyond nanoparticles as materials.


In this, we have seen, even in the past two years, an impressive increase in nanotechnologies in the functional structure category, the most advanced of nanotechnology development. Indeed, the predominant types of nanotech products, both in nanomedicine applications and in the broader applications, fall in the area of particle and/or surface-based nanotechnologies, in which there is little or no performance of nanotech beyond that provided materials science. In nanomedicine, this particle/surface category, even cursorily surveyed, stands at 64% of the nanotech companies.
This is not to say that nanotech development necessarily has as its endpoint (in ultimate market potential) the development of complex nanostructures. Tremendous market potential may well reside in nanotech as surface coatings (let’s remember what coatings did to the stent market), whether for devices or for pharmaceuticals. Impirically, there are more challenges in the development and testing of complex nanostructures than in the development of nanosurfaces. But there may also be nanoscale applications of complex nanostructures that we have envisioned neither technologically nor from a market potential.If there is a take home message (sorry to have taken so long to get here), it is that the survival-conscious device manufacturer has recognized that nanotech is an area that it cannot afford to ignore. Over the next 1-2 years, witness the number of developmental, investment or other deals involving device companies and nanotech companies.

Stealth medical technologies

The need to keep innovation under wraps until it has been allowed to develop enough to maximize the value is driving more and more companies to eschew any kind of promotion until they are actively seeking investment to formally bring the technologies out into the open as part of market introduction.At least by our anecdotal evidence — in the number of companies who we identify (by corporate filing or otherwise) but who have successfully avoided disclosing the nature of their technology anywhere.

There is a change in the dynamics at work here. It is doubtful that it is a diminution of hubris among entrepreneurs that is undercutting self-promotion, since pride is the trait that sets them out on their own in the first place. It is instead the result of at least two forces: (1) tacit recognition that with funding comes insidious influence to be studiously avoided until absolutely unavoidable and (2) tacit recognition that the hunger is great enough for new technologies that the innovator can take greater risk in funding from the 3F’s before seeking formal investment at market introduction.Of course, we have ways of piercing the stealth veil, and we’re getting better at doing so.