Reports

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Pharmaceuticals

One of the most intriguing pharmaceutical startups funded in the quarter was Acceleron Pharma, a Cambridge, Mass. concern aiming to stimulate tissue regeneration with drugs that target various growth factors and other developmental proteins. The company, which raised $31 million in a series C round, has one drug candidate that it hopes will stimulate bone re-growth in cancer patients, and another for boosting muscle mass and strength.

Another recently-funded startup with a regenerative medicine focus was Fate Therapeutics, which raised $12 million in a series A round. While technically classified as a biotech, the Seattle company plans to use traditional non-biotech drugs -- small molecules, that is -- to push normal cells into a primordial, stem-cell state in order to regenerate lost or damaged organs.

Overall, the largest funding among non-biotech drug developers was that of Zosano Pharma, a Fremont, Calif., startup that announced the close of a $90 million in series A funding for needle-free drug patches. (In fact, Zosano announced in mid-November that it had just closed a $45 million financing, bringing its total series A to $90 million. The company didn’t disclose when it received the first tranche of that funding.) Zosano’s patches are designed to provide time-released dosing of large biological molecules, which normally can’t pass through the skin.

Menlo Park, Calif.-based Cogentus Pharmaceuticals was the runner-up, pulling in $62.5 million in a series C round. Cogentus is developing combined formulations of existing drugs designed to reduce side effects.

Medical Devices

Devices for measuring or repairing the heart dominated venture funding in the fourth quarter. For instance, Menlo Park, Calif.-based Evalve, a device maker developing minimally invasive devices and methods for repairing damaged valves in the heart, raised $60 million in a series D round. Evalve is pushing into a potentially crowded market; it faces at least two other startups whose valve-repair systems are at a comparable stage of development.

Two of those competitors, it turns out, were also funded in the quarter. One is Cardiac Dimensions of Kirkland, Wash., which raised $35.5 million in a series D round for its own minimally invasive mitral-valve repair system. Mitralign, a Tewksbury, Mass., startup that raised $24 million in a series C round, is doing much the same thing.

Other intriguing cardiac technologies blessed by venture capital in the quarter include a physical restraint for failing hearts developed by Acorn Cardiovascular of St. Paul, Minn., which raised $21.6 million in an unspecified round; implantable wireless heart sensors from CardioMEMS of Atlanta, which raised $33 million in a series E round; and dissolvable stents produced by TriReme Medical of Pleasanton, Calif., which raised $15.6 million in a series C.

Pelikan Technologies, a Palo Alto, Calif., device startup aiming to improve diabetes management via “smart” glucose-testing devices, racked up the largest funding in the quarter with an $89 million series F. Only $69 million of that figure, however, represents venture equity financing; the remaining $20 million consists of venture debt.

Table 1

Venture Funding Activity – 4th Quarter 2007


Industry
Click Industry For Detail
($25 Subscription Req’d)
Total
Amount
Funded
% Change
Vs. Prior
Quarter
Number of
Companies
Funded
% Change
vs. Prior
Quarter
Biotechnology $921 Million + 103 % 89 + 82 %
Pharmaceuticals $716 Million - 7 % 50 + 6 %
Medical Devices $946 Million + 20 % 81 + 7 %
Total $2.58 Billion + 28 % 220 + 28 %

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