Flurry of Med Device IPO Activity on the Heels of the J.P. Morgan Healthcare Conference 2014

Life science investing in 2014: VC investment to gain momentum

Kara Reed

Jan 24, 2014

Private Investors will continue to take advantage of investment opportunity. 

As FDA shows signs of reform. IPO boom will continue in the biotech sector but drift to  Medical Device sector as the regulatory and revenue   seems to be more predictable

After sitting on the sidelines many VCs are jumping back. JP Morgan saw a very enthusiastic investor sentiment. 

It was the best in a decade said Mr David Pyott at a CHI biomedical /PWC report meeting in Newport Beach, Ca. Among the attendees were Mr David Gallager, CEO of CHI, Peter Claude of PWC, HJ Paik of PWC, Terence Green from Childrens Hospital, Dennis Drislane from Belhealth Investment Partners, Paul Stein from Onciomed, Inc.

JPMorgan meeting was all about "will the Biotech IPO boom continue" Answer is "Yes with a twist"

The IPO boom is going to continue with a twist that now more medical device companies will be part of the IPO boom.

It is fairly easy to predict the time for a medical device approval than a biotech said one expert. Moreover, there are new therapuetic areas that have not been touched like diabetes, Obesity, sleep apnea and womens health. Morgan Lewis reception saw over 500 attendees and the conversations were very positive. 2014 will see companies getting funded, VCs raising more capital, VC taking more risks, Med devices going public. This trend has already started in Israel and Australia and slowly steaming up in US.

This year JPM saw over 10,000 attendees in and around the Union Square in San Francisco. California life science sector is very heavy on devices and biotech. California needs more incentives and attention from Gov Brown or these companies are being solicited by out of state government incentives to move operations to take the company and innovation out the state or even out of the country. Several companies have moved operations to Boston for better tax incentives,  property gain, more state government funding and grants to assist with R&D. 

China story has weakened as US life science sector is booming. More private investors are jumping in before the VCs correct their mistakes and reinvest in the early stage companies. 

"The ROIs are going to be back like good old days" said an investment expert attending Morgan Lewis cocktail reception at JPM. "Early stage companies tackling unmet needs like diabetes or obesity may make 20-30X if they invest in the right company and right technology. Large companies are waiting to enter this space and the appetite for a medical device in this space is growing. There is going to be a frenzy to buy companies in this Diabesity sector. Investor timing is everything".  he said

 Amgen had a large presence at the JW Marriott. Trout group had several activities at the JPM and their reception was well attended. 

Soffinova venture saw a large crowd for their reception. Hilton Hotel lobby was full of entrepreneurs and investors form around the world. The St Francis hotel lobby was full as usual and saw deals happening in the lobby even press was present at the Hilton to cover some private deals. 

Investors from China, India, Brazil and Australia were engaged in investing in early stage medical device companies at a special event hosted by medtech group at the Marriott on Market St.

Posted by Karen Reed

All opinions expressed are those of the author. The Blog  is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.

 

 

Big Brains in Davos World Economic Forum Stumped by Obesity. 

The Need for New Technologies to Treat DIABESITY (Diabetes & Obesity)

Jan 23rd, 2014

MenloPark, Ca

Karen Reed

Obesity is the fastest-growing chronic disease, killing 2.8 million adults every year. With 1.4 billion overweight adults, we live in a world where unhealthy food, labour-saving devices, motorized transport and sedentary work are prevalent. Fast food sales are also on the rise, blurring the boundaries between meals and snacks.

  American Medical Association took a great step to declare obesity as a disease.  Next step is to support researchers and entities focused on treating obesity. We have seen some progress with pharmaceutical industry, but we need more less invasive medical intervention technologies  like the lap band and other  technologies that can help patients fight obesity and reduce the cost , morbidity and mortality burden.
Medical Schools and Universities need to increase programs for bariatric and obesity medicine and surgery. There are over 30 Million Super Obese individuals who suffer from obesity and have one or more chronic conditions like Diabetes.
Weight loss surgery cost approximately $20,000 to $35,000. Drug treatment cost approximately $8000/yr for the drugs to treat up to 10% excess weight.
Clearly, less invasive surgery seems to be the more attractive treatment for obesity. The Stampede trial conducted by Cleveland Clinic suggested that the weight loss surgery helps resolve diabetes.
The fight against obesity is spreading worldwide.
Emerging countries like India has gone from undernourished to obesity in the last decade. A sobering thought, if all the people acted responsibly and started reversing the trend it will take 3 decades to get back to the 1990 level of obesity. 

The facts are staggering:

• In 2008, more than 1.4 billion adults over the age of 20 were overweight
• 30% of Mexican adults are obese
• 65% of people live in countries were obesity kills more than undernourishment does

In 2008, medical costs associated with obesity in the US were estimated at US$ 147 billion
 Posted by Karen Reed
All opinions expressed are those of the author. The Blog  is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.

Medical Device IPOs are the next big thing in 2014-2017

Medical Device IPOs are the next big thing in the Life Science IPO boom.
The investment community is done with the FBs, Twitter and Linkedin social media IPOs. They are now moving to technologies that are the life and blood of the next generation. The healthcare, life-science companies. In the 2011 -2013 saw a huge boom in Biotech sector. This boom stemmed from the lack of funding from Venture community for the biotech sector, some investment banking firms saw this as an fiscal opportunity and found a way to take these emerging biotech companies public, one after another biotech companies have been on the IPO route, valuations have been crazy and the investor enthusiasm is at its peak.
Now, the investment banks have found even better sector in the life science space "Medical Device" the story is the same, VCs slowed the funding on the sector, giving investment banks and opportunity to learn about this gold mine. Medical devices are the fastest to market when compared to pharma or biotech sector.
The key about the medical device sector is its use, most of this product is single use, implantable or use and throw away type of device. The longest path for commercialization is in the US due to FDA. But, the FDA is accelerating its process and has had record number of approvals in the last 2 years.
The opportunity for an investors in this sector is to get in and out quickly. These companies get acquired for up to a Billion dollars. Typically, a medical device exit on a decent technology is up to $800Million.
This new trend of Medical Device IPOs is a slap in the face of venture capitalist and now most of them are abandoning the IT and social media sector and coming back to invest in med device and life sciences.
Is it too late for the VCs..cannot comment on that..Also, VC group do not like the idea of medical devices being snatched from them just like the biotech. So, you will see many VCs trying to discourage the investment community to get into Med device IPOs.
Hong Kong, Germany, Australia, Taiwan, India are all seeing medical device companies wanting to go public.
New generation of investors are looking at technologies in the following sectors. eg: Diabetes, Obesity, infection control, Orthopedics/Spine, sleep, Psychiatric conditions (depression).

New Medical Device IPOs : Tandem Diabetes’ positive experience with the IPO market was different than another device world IPO.
Arundhati Parmar one of the Senior Editors for MDDI and one of the most seasoned editors  in the medical device space wrote recently that: " a few more successful IPOs in the next several months, 2014 might bode well device industry IPOs".  Please see her article: http://www.mddionline.com/article/does-tandem-diabetes-%20cares-successful-ipo-mean-device-ipo-drought-over
Australia has seen a array of successful medical device IPOs eg: is GiDynamic