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Dry Spell for Medical-Technology Exits in First Quarter
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By Brian Gormley, WSJ Pro
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Good day. Venture investment in medical technology is slipping as the market for acquisitions and initial public offerings has retreated, according to a report by market tracker PitchBook Data.
In other words, exiting investments is becoming more difficult for medtech investors.
Venture funding in medtech—which includes medical-device, diagnostic and imaging-software startups—stumbled at the beginning of this year. Startups globally raised $1.8 billion in the first quarter, behind the pace of 2022, when these companies collected $8.7 billion for the full year, according to PitchBook.
Deterioration of the overall venture-funding market is partly to blame. Along with the rest of the sector, medtech startups also are struggling to go public or be acquired. The market for IPOs has largely frozen, and top medtech companies, in cost-cutting mode, have pulled back from acquiring startups.
Last year, medtech startups globally recorded $15.7 billion in exit value, a figure that includes money raised in IPOs and the amounts paid for acquisitions, according to PitchBook. In the first quarter of this year, the exit value was zero.
“We’ve seen exits fall off a cliff,” summed up Aaron DeGagne, an emerging-technology analyst with PitchBook.
But PitchBook also expects M&A to rebound in time because acquisitions remain an important growth strategy for large medtech companies.
And now on to the news...
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Micron Biomedical said a study of its measles-rubella patch in Gambia found the patch triggered an immune response similar to an injected vaccine. PHOTO: MICRON BIOMEDICAL
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Vaccines. In several countries the effort to eradicate measles runs into the logistical obstacle of insufficient cold storage for vaccines. Patches from startups including Micron Biomedical and Vaxxas could overcome this difficulty and extend the reach of vaccines in nations where measles outbreaks occur because of relatively low vaccination rates.
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Measles vaccine doses must be kept cold. That is an obstacle to vaccinations in remote areas of sub-Saharan Africa and other locations where access to electricity and refrigeration is limited.
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Micron and Vaxxas say vaccines delivered through their patches are stable at higher temperatures. Micron recently disclosed promising results from a study of measles-rubella vaccine patch. Vaxxas, whose measles-rubella patch recently went through an early study, expects a larger study to begin next year.
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Micron and Vaxxas expect to make little if any profit on measles-rubella patches. Both also are applying their technology to vaccines with applications in the U.S. But they say they have a sense of urgency to tackle this global-health threat. “The motivation is as high as it can possibly be to get it to market in a safe and effective way,” Micron Chief Executive Steven Damon said.
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Makers of Covid-19 Treatments Hit by Falling Demand
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Allied Healthcare Products, a respiratory medical-devices maker, spent hundreds of thousands of dollars in 2020 expanding its product line to meet what it believed would be a surge in demand for ventilators at the onset of the pandemic. By the time it churned out more machines, demand fell short of expectations, The Wall Street Journal reports. Earlier this month, the company filed for bankruptcy and plans to sell its assets. Other healthcare suppliers, including a vial manufacturer and a Covid-19 test-kit maker, are among companies that have filed for chapter 11 bankruptcy. Many such companies are rattled by diminishing sales as pandemic worries recede, and they are now burdened with products piling up
in storage.
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Funds
Selva Ventures, which makes early-stage investments in health- and wellness-focused consumer brands, closed its second fund with $34 million in commitments. The Los Angeles-based firm launched in 2019 with a $10 million inaugural fund.
People
Good Measures, a Boston-based personalized nutrition and food prescription provider, appointed Donna K. Lencki as chief executive. She was most recently CEO of Old Field Ventures.
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Strive Health, a Denver-based kidney-care startup, scored $166 million in Series C funding from investors including New Enterprise Associates, CapitalG, Town Hall Ventures and others.
Carrum Health, a South San Francisco, Calif.-based provider of oncology benefit offerings and surgical care services to employees, landed $45 million in Series B funding. Led by Omers Growth Equity, the round included participation from Revelation Partners, SpringRock Ventures and others. Teresa Lee, managing director of Omers Growth Equity, will join the company’s board.
Anocca, a Swedish company focused on developing cancer cell therapies, secured a 400 million Swedish krona (about $37 million) investment from Michano and others.
Violet Therapeutics, a Cambridge, Mass.-based drug discovery startup focusing on central nervous system diseases, closed a $10.6 million seed round from investors including the Dementia Discovery Fund.
BrightHeart, a Paris-based startup developing artificial intelligence software focused on improving the detection of congenital heart defects in fetuses, raised €2 million in seed financing from Sofinnova Partners.
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Purdue filed for bankruptcy in 2019 to address litigation against the company and its Sackler family owners alleging that aggressive marketing of its flagship painkiller, OxyContin, fueled opioid addiction. PHOTO: TOBY TALBOT/ASSOCIATED PRESS
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