In an era where medtech doesn’t get the same love that biotech does from the av­er­age in­vestor, two medtech-fo­cused in­vestors from a pair of key­stone ven­ture cap­i­tal firms — Ver­sant Ven­tures and New En­ter­prise As­so­ci­ates (NEA) — are com­ing to­geth­er to bridge the gap in pri­vate mar­ket cap­i­tal for the un­der­served sec­tor.

Launched this year, the VC in­vest­ment firm — called Ven­sana Cap­i­tal — closed its in­au­gur­al fund, Ven­sana Cap­i­tal I, with $225 mil­lion in com­mit­ted cap­i­tal from a cadre of in­sti­tu­tion­al in­vestors, in­clud­ing pub­lic pen­sions, uni­ver­si­ty en­dow­ments, foun­da­tions, lead­ing aca­d­e­m­ic health sys­tems, fam­i­ly of­fices, and fund-of-funds, it said on Wednes­day.

Co-found­ed by Ver­sant’s Kirk Nielsen and NEA’s Justin Klein, Ven­sana’s fo­cus will be on the kalei­do­scope of sub­cat­e­gories that con­sti­tute medtech: med­ical de­vices, di­ag­nos­tics and da­ta sci­ence, drug de­liv­ery, dig­i­tal health, and tech-en­abled ser­vices.

“I think one over­ar­ch­ing theme for many prod­ucts we in­vest in is try­ing to move them from the more ex­pen­sive side of care, to the less ex­pen­sive,” Nielsen not­ed in an in­ter­view with End­points News.

For ex­am­ple, de­vices that can com­mu­ni­cate with physi­cians or oth­er providers to iden­ti­fy pa­tients that are at risk for be­ing ad­mit­ted with heart fail­ure, or COPD. An­oth­er op­por­tu­ni­ty is about ad­dress­ing chron­ic dis­eases, where pa­tients aren’t nec­es­sar­i­ly com­pli­ant or ther­a­pies have side ef­fects that pre­vent adop­tion.

“We like the idea of iden­ti­fy­ing sur­gi­cal strate­gies, neur­al mod­u­la­tion based strate­gies or oth­er medtech-based in­ter­ven­tions that can ef­fec­tive­ly treat the un­der­ly­ing con­di­tion,” he said.

Al­though Ven­sana is an in­de­pen­dent firm, Ver­sant will pro­vide sup­port. Shar­ing deal flow can ex­tend the op­por­tu­ni­ties that emerge at the in­ter­sec­tion of the two strate­gies — such as drug de­liv­ery or di­ag­nos­tics, Nielsen added.

Nielsen, who was once a pro­fes­sion­al hock­ey play­er and has pre­vi­ous­ly worked with Medtron­ic, has been with Ver­sant for over a decade and was in charge of the firm’s medtech prac­tice.

In biotech — where Ver­sant op­er­ates — in­vest­ment is large­ly fo­cused on ear­ly-stage com­pa­ny cre­ation. In medtech, the op­por­tu­ni­ty lies in mid-to-late stage op­por­tu­ni­ties, he said.

“Most medtech com­pa­nies are best po­si­tioned to go pub­lic or be ac­quired in a com­pet­i­tive process for the time when they’ve re­al­ly demon­strat­ed the adop­tion of their prod­ucts by clin­i­cians, sur­geons and hos­pi­tals,” Ven­sana’s oth­er founder, Klein, em­pha­sized. Klein served as a part­ner at NEA for more than 12 years.

“Be­cause of the time­lines, cap­i­tal re­quire­ments as­so­ci­at­ed with nav­i­gat­ing the ear­ly-stage con­cept all the way through to a scal­ing US rev­enue stage busi­ness, it’s of­ten been the case that (…) some of the most com­pelling in­vest­ment rounds of fi­nanc­ing from medtech com­pa­nies have come kind of more mid­stream in that process.”

Ven­sana wants to cap­i­tal­ize on a rel­a­tive­ly healthy macro en­vi­ron­ment for medtech.

“If you look at the ex­it mar­kets in medtech, they’ve been re­al­ly strong, and you’ve got M&A (…) that con­tin­ues to have kind of a sol­id, con­sis­tent pace, you’ve got IPO win­dows that are now open, and (…) mul­ti­ples that are all time highs,” Nielsen said.

Da­ta from Sil­i­con Val­ley Bank (SVB) sug­gest strong per­for­mance of de­vice IPOs should spur con­tin­ued lat­er-stage ven­ture in­vest­ment. Mean­while, in­vest­ments in the first half of 2019 in dig­i­tal health have al­ready eclipsed full-year 2017 in­vest­ments and are on track to hit $10 bil­lion in 2019, the re­port said.

Deals for di­ag­nos­tics and med­ical tools are al­so ex­pect­ed to climb in the sec­ond half of 2019, and R&D tool in­vest­ment is set to surge fol­low­ing the suc­cess­ful IPOs of Adap­tive Biotech­nolo­gies and Per­son­alis, SVB an­a­lysts es­ti­mat­ed.

In the last year, the pub­lic mar­ket has been a suc­cess­ful way for Dx/Tools com­pa­nies to cap­ture val­ue. Ac­cord­ing­ly, we an­tic­i­pate more $B+ IPOs than pri­vate M&A for 2H 2019. We al­so be­lieve tech com­pa­nies will start to ac­quire Dx/Tools com­pa­nies in the AI/ML big da­ta space.

Com­pa­nies in the medtech sec­tor — akin to their coun­ter­parts in phar­ma — need to build out their pipelines. “Yet, there are very few… well cap­i­tal­ized, so­phis­ti­cat­ed medtech in­vestors that are avail­able to sup­port these com­pa­nies. And so we’re try­ing to kind of bridge that gap,” he added.

In the ex­it en­vi­ron­ment, there is a tremen­dous need for new tech­nolo­gies and start­up com­pa­nies. Whether that’s build­ing new prod­uct mar­kets in chron­ic dis­ease, or prod­ucts that are re­al­ly com­pli­men­ta­ry to block­buster fran­chis­es such as those in or­tho­pe­dics, re­con­struc­tive de­vices, or in­ter­ven­tion­al car­di­ol­o­gy.

“These (prod­ucts) can pro­vide val­ue growth dri­vers for some of the large ac­quir­ers in our space,” Klein said. “The ex­it mar­kets to­day have been great, but there’s a rel­a­tive dearth of com­pa­nies and in­no­v­a­tive prod­ucts that have made it to that phase.”

With the $225 mil­lion in their cof­fers, Ven­sana hopes to in­vest in a dozen com­pa­nies, in­ject­ing be­tween $10 to $30 mil­lion in each com­pa­ny, Klein not­ed.

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.

Jeffrey Kindler’s plan to take his biotech — which is developing a slate of non-opioid painkillers — public, is back on.

The Boston based company, led by former Pfizer $PFE chief Kindler, originally contemplated a $70 million to $80 million IPO last year— but eventually postponed that strategy. On Wednesday, the company revived its bid to make a public debut in a filing with the SEC — although no pricing details were disclosed.

It was the cellular equivalent of opening your car door and finding an active, roaring engine in the driver seat.

Scientists learned strands of DNA could occasionally appear outside of its traditional home in the nucleus in the 1970s, when they appeared as little, innocuous circles on microscopes; inexplicable but apparently innate. But not until UC San Diego’s Paul Mischel published his first study in Science in 2014 did researchers realize these circles were not only active but potentially overactive and driving some cancer tumors’ superhuman growth.

As Themis gears up for a Phase III trial of its chikungunya vaccine, the Vienna-based biotech has closed out €40 million ($44 million) to foot the clinical and manufacturing bills.

Its heavyweight partners at Merck — which signed a pact around a mysterious “blockbuster indication” last month — jumped into the Series D, led by new investors Farallon Capital and Hadean Ventures. Adjuvant Capital also joined, as did current investors Global Health Investment Fund, aws Gruenderfonds, Omnes Capital, Ventech and Wellington Partners Life Sciences.