Justin Klein and Kirk Nielsen. (Credit: Jeffrey Graetsch)

Co-found­ed by Ver­sant, NEA in­vestors, new medtech VC firm kicks off in­au­gur­al fund with $225M boun­ty

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.

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Remarkable advances in cell and gene therapy over the last decade offer unprecedented therapeutic promise and bring new hope for many patients facing diseases once thought incurable. However, for cell and gene therapies to reach their full potential, researchers, manufacturers, life science companies, and academics will need to work together to solve the significant challenges facing the industry.

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Sci­en­tists are fi­nal­ly learn­ing how to de­sign pro­teins from scratch. Drug de­vel­op­ment may nev­er be the same

SEATTLE — It’s a cloudy Thursday afternoon in mid-July and David Baker is reclining into the futon in his corner office at the University of Washington, arms splayed out like a daytime talk show host as he coaches another one of his postdocs through the slings and arrows of scientific celebrity.

“Be jealous of your time,” he says, before plotting ways of sneaking her out of Zooms. “It’s this horrible cost to science that you’re tied up in some stupid meeting.”

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Biotech is one of the smartest, best educated industries on the planet. PhDs abound. We’ve had a long enough track record to see a new generation of savvy, experienced execs coming together to run startups.

And in these times, they are being tested as never before.

Biotech is going through quite a rough patch right now. For 2 years, practically anyone with a decent resume and some half-baked ideas on biotech could start a company and get it funded. The pandemic made it easy in many ways to pull off an IPO, with traditional road shows shut down in exchange for a series of quick Zoom meetings. Generalist investors flocked as the numbers raised soared into the stratosphere.

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The Senate health committee on Tuesday released its first version of the bill to reauthorize all the different FDA user fees. But unlike the House version, there are only a few controversial items in the Senate’s version, which does not address either accelerated approval reforms or clinical trial diversity (as the House did).

While it’s still relatively early in the process of finalizing this legislation (the ultimate statutory deadline is the end of September), the House and Senate, at least initially, appear to be starting off in different corners on what should be included.

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Berk­shire Hath­away pulls out of Ab­b­Vie, Bris­tol My­ers Squibb in­vest­ments

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The billionaire CEO of Berkshire Hathaway backed out of two major holdings in the pharma industry, Forexlive first reported, including a $410 million investment in AbbVie and a $324.4 million stake in Bristol Myers Squibb.

The move comes after Berkshire abandoned its Teva shares just last quarter, Bloomberg reported.

Long-ex­pect­ed UK lay­offs im­mi­nent for No­var­tis fol­low­ing sale

Nearly a year ago, more than 200 workers at Novartis’ Grimsby, UK, facility were able to hang on to their jobs after the pharma closed a Switzerland site as a part of its workforce restructuring plan. Now, it looks like those employees’ time is up, as the site has been sold, Grimsby Telegraph reported today.

The manufacturing site has been sold to Humber Industrials, a subsidiary of International Process Plants. None of the current staff members will be working with the new owners, however.

Clay Siegall (Photo by Dimitrios Kambouris/Getty Images for Gabrielle's Angel Foundation)

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Since that shocking revelation, more details about the claims have emerged into the public eye. As Endpoints News reported, Siegall was arrested on April 23. A police report about that night and a subsequent temporary restraining order described a pattern of abusive behavior against his wife and a physical altercation that left her with multiple bruises. Siegall denied the claims.

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