As the end of the year approaches, medtech venture financing activity looks to have picked up in November to be on par with the previous year's level – but not enough to bridge the gap in annual performances.
[Editors' note: For more details about VC deals in 2016 and previous years, go to Medtech Insight's VC deal tracker: https://medtech.pharmamedtechbi.com/datasets/vc-funding]
Temperatures might have dropped in some countries as winter approaches, but investor interest in medtech started to heat up in November after an extremely sluggish October.
Medtech Insight's VC deal tracker recorded 23 medtech venture financing deals of $1m-and-over in November, a much better turnout than the 14 in October and slightly better than the 22 recorded in November 2015. More importantly, a good proportion of last month's deals were in meatier end of the deal value spectrum, with nearly a third of – 6 out of 23 – deals having raised $30m and above. (See Figure 1).
The biggest deal of November was a CNY515m ($75m) series B round raised by Chinese next-generation sequencing company Novogene Technologies. (See Table 1). The Beijing-based company was established only five years ago, but has grown to become the largest genomic sequencing center in the Asia-Pacific region, with labs in Tianjin and the US, and subsidiaries or joint ventures in Hong Kong, the US, the UK and Singapore.
Novogene provides tumor gene detection and genetic testing services to patients, hospitals and pharmaceutical companies, using imported sequences from NGS leaders like Illumina. The company is also working with Illumina to develop a diagnostic NGS platform with reproductive health and oncology assays.
Novogene's successful financing – of which the funds will be used to expand operations and support R&D – reflects an apparent insatiable appetite for Chinese genomic testing companies. (Also see "A Bubble Fit To Burst? China Genome Testing Firms Soar To New Heights" - Medtech Insight, 22 Nov, 2016.). With the lead investors in Novogene's Series B being mainly Chinese, it illustrates the continued flow of investor money from China into both domestic and foreign companies.
November's biggest deal might be in IVD but companies in this sector did not pique as much interest from investors this month as it normally does most of the other times. Instead, the companies that totted up the biggest number of venture investment deals were in cardiology/vascular with six transactions. (See Figure 2). The remainder were more or less equally spread across a wide variety of sectors that have been attracting a steady flow of investment over the year, such as orthopedics, ophthalmology, patient monitoring, and respiratory disorders, among others.
The total amount raised in November, from the 22 deals that disclosed financial details, was around $400.6m, almost twice as much as the paltry $240.1m recorded in October but a similar level to the $410.8m raised the same period last year.
Could this boost be the result of investors regaining confidence following the US presidential election last month? While Donald Trump's victory over Hilary Clinton – whom many saw as a shoo-in to the White House hot seat – came as a shock, a Trump administration is viewed by many in pharma and medtech as a boon to the industry, not least as this might accelerate deregulation of the US FDA. (Also see "Republican Congress, Trump Policies May Seek To 'Undo' FDA Device Safety Guidances; LDT Plan First To Go" - Medtech Insight, 18 Nov, 2016.)
November's boost means that the total amount of medtech venture dollars raised this year to date is around $4.55bn, which is still around $680m short of the total raised in 2015. If investment in December is around the $300-350m level as previous Decembers in the last two years, that would still not be enough to make up the shortfall. (See Figure 3 above).
It would take more than one or two nine-figure deals of $100m or over – or a deal like the size of Magic Leap's $542m whopper round back in 2014 – for 2016 to get even with 2015. It would take a Christmas miracle.
From the editors of Clinica.