Venture capitalists have invested $955.2 million year-to-date in medical companies, excluding biotechnology firms, according to our VentureXpert database. That figure so far outpaces last year’s disbursement activity in the sector.
Investments in the health-care and life sciences sector represent 6% of the total capital VCs have deployed this year. In March alone, VCs disbursed $418.4 million into 35 such companies, but in April, preliminary numbers indicate interest in the sector may have flagged considerably, as data analysts recorded a slight $81 million split between three medical companies.
Companies in the sector range from cutting-edge medical device companies like Cyberonics Inc. to old-school enterprises like U.S. Healthworks Inc. Cyberonics develops pacemaker-like devices used on the nervous system to prevent epilepsy and other neurological disorders. U.S. Healthworks runs occupational health centers.
Similar to the biotech sector, companies in Southern California have been the most popular with investors. Seventeen health-care companies in the region have so far pulled in $248.3 million, 26% of the total for the sector. In fact, the two top deals of the year involve San Diego companies Xcel Pharmaceuticals and Syrrx Inc.
Overall, the second most active region was New England where 13 companies attracted $157.5 million. VCs invested $152 million in 14 Northern California companies and $131 million in 12 Southeastern companies.
The medical therapeutics field attracted $310.1 million of the sector?s total. VCs also pumped $188.4 million into the medical diagnostics area and $179.3 million into pharmaceutical companies. On average, pharmaceutical companies pulled in $19.9 million a piece, almost twice the average for the sector.
In March, Domain Associates LLC and New Enterprise Associates participated in the $66.7 million early stage round for Xcel Pharmaceuticals – the largest deal to date. Xcel markets prescription drugs, focusing initially on the neurology market.
In January, Syrrx received a $54 million later-stage infusion. Bay City Capital LLC and Versant Ventures backed the pharmaceutical developer.
Houston-based Cyberonics, a publicly traded company, completed a $45 million private placement in February agented by U.S. Bancorp Piper Jaffray.
Located near Atlanta, U.S. Healthworks also attracted $45 million in an April later-stage deal. BA Venture Partners, CIBC Oppenheimer & Co., J.P. Morgan Partners, Richland Ventures, Salix Ventures LP and Three Arch Partners invested in U.S. Healthworks.
Lexington, Mass.-based Ardais Corp. claimed the fifth-largest deal to date, bringing in $36 million in March Advanced Technology Ventures, Advent International Corp., Bessemer Venture Partners, BioVentures Investors LLC, CIT Group, Kaufmann Fund Inc., Lancet Capital Partners, Pequot Capital Management Inc., Radius Inc. and Silicon Valley Bank invested in the provider of storage facilities for human tissue samples.
Assuming April?s diagnosis becomes a blip, the outlook for investments in the sector seems to remain positive.
Contact Charles Fellers: