A healthier mergers and acquisitions market nationally and in Michigan has benefited the state’s medical device companies, as large companies beef up their bottom lines through acquisitions of companies with proprietary technology, said Peter Roth, an M&A attorney and a partner at Varnum LLP in Grand Rapids.
“We’re slightly above average in the companies we have,” Roth said. “The money is out there — larger strategics are out there looking to do deals.”
One of the deals — the sale of Grand Rapids-based DLP Inc. to Minneapolis-basedMedtronic Inc. — took place a little longer ago, in 1994, but is notable in how isolated it was at the time. There weren’t that many deals in the medical device space then because there weren’t many companies to buy. Companies such as DLP were harbingers of things to come.
Following this list of deals is a list of some of the more promising companies in the state’s pipeline — companies consistently referenced by industry professionals as ones to watch.
These startups are heading into a healthy deal environment. Large companies continue to thirst for smaller, IP-based companies, said Roth, who has represented several medical device companies in their sales to large, publicly traded corporations — including the sale of Marquette-based Pioneer Surgical Technology Inc., among the companies listed here.
“A number of them will be potential acquisition targets,” Roth said. “It’s good for the deal market going forward. A lot of those companies will be looking to do deals.”
Accuri Cytometers Inc.
City: Ann Arbor
Sold to: Franklin Lakes, N.J.-based Becton, Dickinson and Co. in 2011 for $205 million
Investors: Included Arboretum Ventures, Plymouth Venture Partners, Flagship Ventures, Baird Venture Partners
Business: University of Michigan spinoff making cytometers (automated cell analysis devices) small enough to sit on a desktop
Sold to: Vancouver, British Columbia-based Angiotech Pharmaceuticals Inc. in 2005 for $21.5 million
Investors: Included Apjohn Ventures and TGap Ventures
Business: Maker of a small device used to deliver an anti-scarring drug to blood vessels after surgery
Aspen Surgical Inc.
Sold to: Batesville, Ind.-based Hill-Rom Holdings Inc. for $400 million in 2012
Investors: Majority owner RoundTable Health Partners of Lake Forest, Ill., buyer of the company in 2006 from founder Dan Bowen, who remained a shareholder
Business: Contract manufacturer of surgical and operating room equipment
City: Grand Rapids
Sold to: Minneapolis-based Medtronic Inc. in 1994 for $128 million
Business: Maker of disposable instruments for open heart surgery
City: Ann Arbor
Sold to: Becton, Dickinson and Co. in 2009 for $275 million
Investors: Included Ardesta LLC, EDF Ventures, Arboretum Ventures, Lurie Investments, Dow Ventures and Pfizer Strategic Investments Group
Business: University of Michigan spinoff making a speedier DNA analysis device based on urine, plasma and blood samples
Sold to: Murray Hill, N.J.-based CR Bard Inc., which bought Inrad’s biopsy marker business in 2007 for $33 million
Business: The company, which began as a division of DLP Inc., continues to manufacture needles and biopsy devices.
Ostial Solutions LLC
Sold to: South Jordan, Utah-based Merit Medical Systems Inc. in 2012 for $30 million
Investors: Self-funded, angel investors
Business: Maker of a catheter used to implant coronary artery stents, founded by CEO R. Kevin Plemmons and the Fischell family of medical device inventors
Pioneer Surgical Technology Inc.
Sold to: Alachua, Fla.-based RTI Biologics Inc. in July for $130 million
Investors: Included Beringea, Highlander Partners, Hopewell Ventures, Pharos Capital Group and River Cities Capital Funds
Business: Maker of spinal implants, bone grafts and other spine, cardiothoracic and orthopedic products; also offers contract manufacturing services.
Sold to: Dublin, Ireland-based Covidien plc for $250 million in 2010
Investors: Publicly traded (at time of sale)
Business: Maker of oximeters, devices that monitor oxygen levels in the blood
Ablative Solutions Inc.
CEO: Tim Fischell
Product/technology: A device that uses fine catheters to deactivate renal artery nerves — those that support the main artery to the kidney but also contribute to hypertension — without damaging the artery. The company expects to receive European approval in late 2014, followed by approval in 2016 from the U.S. Food and Drug Administration.
Fischell, an interventional cardiologist, comes from a family of medical entrepreneurs. He, along with his father, Robert Fischell, and brother, David Fischell, have more than 300 medical device patents and have started more than 16 companies based on their patents.
Funding: Ablative has received $9.5 million in two rounds, the second of which is still underway. Investors include BioStar Ventures and the Michigan Accelerator Fund I.
City: Ann Arbor
CEO: Kevin Nickels
Product/technology: Proprietary use of dialysis filtering technology in a way that deactivates white blood cells, reducing the risk of mortality and organ failure, including damaged kidneys leading to dialysis dependency
Funding: CytoPherx has raised $38 million in three rounds. Investors include Early Stage Partners, North Coast Technology Investors, Apjohn Ventures, ONSET Ventures, Capital Midwest Fund, Kaiser Permanente Ventures, Dow/Union Carbide employee pension plans, Lurie Investments and the Biosciences Research and Commercialization Center of Western Michigan University. The Michigan Strategic Fund lent CytoPherx $2 million in 2008 as part of the 21st Century Jobs Fund competition.
Although still offered up by local investors as a company to watch, CytoPherx has had a tough year. The company made headlines in January 2012 when it announced it had raised $34 million, the largest round for a Michigan company in three years. The announcement followed FDA approval in 2011 for a trial of the product. CEO Jim Danehy told Crain’s in early 2012 that if testing went according to plan, the company could have a device on the market by the end of 2013.
But last December, Danehy left the company in a mutual decision between him and the board, said Mina Patel Sooch, general partner at Apjohn Ventures. Nickels replaced him several months later. CytoPherx declined to comment on its current status.
Delphinus Medical Technologies Inc.
City: Plymouth Township
CEO: Bill Greenway
Product/technology: The spinoff of the Barbara Ann Karmanos Cancer Institute in Detroit, makes a 3-D ultrasound imaging device to detect breast cancer more accurately and less painfully.
Funding: Delphinus has raised $23 million in two rounds. Investors include Arboretum Ventures and Beringea. FDA clearance is pending; the company expects sales to begin in the latter part of 2014.
DeNovo Sciences Inc.
City: Plymouth Township
CEO: Kalyan Handique
Product/technology: DeNovo makes a microfluidic system that captures and analyzes cancer cells floating in the bloodstream to detect the disease in a less painful and invasive way than traditional biopsies.
Funding: DeNovo is backed by angel investors including Roger Newton, co-founder of Esperion Therapeutics Inc.; Esperion CEO Tim Mayleben; and Walt Young, who was an investor in Accuri Cytometers. The company has raised $2 million in convertible debt, with the Detroit-based First Step Fund and Ann Arbor Spark participating. In 2011, DeNovo won the $500,000 first prize at the Accelerate Michigan Innovation Competition. The company is working toward FDA clearance.
City: Ann Arbor
President and COO: Christine Gibbons
Product/technology: HistoSonics, the University of Michigan spinoff, makes an ultrasound device to noninvasively treat enlarged prostates. The device uses sound pulses to liquefy tissue.
Funding: HistoSonics has raised $11 million in one round and looks to raise $12 million to $15 million in a second. Investors include TGap Ventures, Early Stage Partners, Fletcher Spaght, Hatteras Venture Partners and Venture Investors. The company aims for commercialization and sales to begin in 2015 or 2016.
Tangent Medical Technologies Inc.
City: Ann Arbor
Founded: 2009, spun out of the University of Michigan’s Medical Innovation Center
Chairman and CEO: Jeff Williams
Product/technology: The company works on the improvement of intravenous catheters. Its main NovaCath Integrated IV catheter system, which received FDA approval last year, is designed to reduce complications caused by intravenous catheters and to make them more comfortable. Sales began last June.
Funding: Tangent has raised $13 million in two rounds. Investors include Arboretum Ventures and Flagship Ventures.
Sources: Company executives, investors, Crain’s and MiBiz archives, press releases, Michigan National Venture Capital Association
Oct. 13, 2013 | Crain’s Detroit Business – New Michigan Deal Supplement