The Year in Seattle Medical Devices, Diagnostics, Health IT
Yesterday, we ran the first half of the Seattle life sciences year in review, which focused on biopharmaceutical companies and global health organizations. Today’s rundown will cover the medical device, diagnostic, and health IT side of the local life sciences cluster.
Medical devices may not fare so well in a glamour contest, but this year the Seattle device community had more success stories, more acquisitions, upheaval, and even a couple of controversies. SonoSite was the biggest acquisition of the year, and although terms weren’t disclosed, it was almost surely followed by Pacific Bioscience Laboratories (the maker of the Clarisonic skin brush you see prominently displayed at Nordstrom). Calistoga Pharmaceuticals, you had a great year, but your deal is probably the third-biggest of the year in Seattle biotech. Sorry.
For the highlights from Seattle med-tech, diagnostics, and various Bio-IT operations, read on:
Sonosite (NASDAQ: SONO): The maker of portable ultrasound machines has been relatively stable, and modestly profitable as an independent company for some time, so I was surprised to see it get acquired for $995 million earlier this month by Japan-based Fujifilm. Shareholders can’t complain, given the price represents a 50 percent premium over SonoSite’s prior closing stock price. This is the biggest deal of the year in local life science, by a long shot.
NanoString Technologies. This was a big year for NanoString. The company, a spinoff from the Institute for Systems Biology, developed a second-generation version of its digital nCounter instrument, which measures the extent to which multiple genes are turned on or off in a biological sample. This was part of a bold plan to turn this scientific instrument into a diagnostic tool. By the end of the year, NanoString had raised another $20 million from GE, former Genzyme CEO Henri Termeer, and others, and it presented some important data that suggests it could compete with Redwood City, CA-based Genomic Health (NASDAQ: GHDX) in the breast cancer diagnostic market.
Clarisonic. Terms weren’t disclosed, but this could be the second-biggest acquisition of the year in Seattle’s life sciences community (although this company is hard to really categorize). Pacific Bioscience Labs, the maker of the Clarisonic skin brush, was acquired by cosmetics giant L’Oreal last month. The Clarisonic surpassed the $100 million sales mark in 2010, was highly profitable, and growing by leaps and bounds. My best guess is that Clarisonic sold for about $500 million. It’s the second home run for the same entrepreneurial team who developed the Sonicare toothbrush.
Geospiza. The Seattle-based developer of software for genomic analysis has long been ahead of its time, but now biomedical researchers are starting to demand more powerful software to crunch all the genomes they can now get from high-speed/low-cost instruments. Geospiza, founded in 1997, amassed enough sales and market penetration to get acquired for an undisclosed sum this year by PerkinElmer (NYSE: PKI), the giant life sciences toolmaker.
Microsoft/GE Health. Microsoft and GE announced earlier this month they are forming a joint venture to capitalize on some of their health IT products. The new company, which doesn’t yet have a name, will be run by a GE exec, while Peter Neupert, the former head of Microsoft Health Solutions, is retiring. The new company will have 750 employees, which sounds like a lot, but not really when you understand that Microsoft’s health group alone had that many people for years. The companies didn’t disclose any layoffs, but you can be sure that cost-cutting of overlapping functions was part of the recipe for making this joint venture a success.
Pathway Medical Technologies. The Kirkland, WA-based company, which makes a device to clear out blockages in blood vessels of the legs, reached the end of the road this year. It agreed to be acquired by Bayer’s Medrad unit for $125 million, in a deal that paid off Pathway’s most recent venture investors and senior managers, but didn’t reward employees or early angel investors. That obviously made many longtime Pathway supporters unhappy, and now the company’s future in Seattle is in doubt, as it has let a lease option expire on its Kirkland headquarters.
Physio-Control. The storied Redmond, WA-based maker of heart defibrillators won back its independence this year, through a $487 million deal in which Bain Capital acquired and spun the company out of Medtronic, the medical device giant. Physio-Control is now free to get back to doing what it does best, which is develop innovative new emergency medicine products, says Kirby Cramer, a prominent local life sciences investor.
Calypso Medical Technologies. The Seattle-based company, which makes technology to deliver radiation therapy for prostate cancer patients with pinpoint precision, also had an unhappy ending. The company was acquired by Varian Medical Systems for the puny sum of $10 million, plus some unspecified milestone payments. It was a painful write-off for a company that raised more than $175 million since its founding in 1999.
Adaptive TCR. This spinoff company from the Fred Hutchinson Cancer Research Center raised another $5.8 million back in June to expand its immune system profiling service for researchers, and to explore how it might be useful in the diagnostics industry.
Sage Bionetworks. The Seattle-based nonprofit, co-founded by Rosetta/Merck alumni Stephen Friend and Eric Schadt, did a lot of behind the scenes work that’s necessary if their vision for an open-source biology movement is going to catch on. Schadt ended up moving into a new position at Mt. Sinai School of Medicine in New York, while retaining a dual role as chief scientific officer of Menlo Park, CA-based Pacific Biosciences (NASDAQ: PACB). That position provides him and his network biology team with access to a big, diverse patient population that could be a key partner in this effort to make genomic information useful for medicine.
Mobisante. This Redmond, WA-based company started the year with a bang, by winning FDA approval for the first diagnostic ultrasound technology that works on a smartphone. The potential to get low-cost basic medical images that can be transmitted via wireless networks to hospitals generated a fair bit of attention for this startup. But there is a difference between getting FDA clearance to sell a device, and being really ready to manufacture, distribute, and market such a device, which is the task now in front of Mobisante.
Mirador Biomedical. The Seattle company has been on the market for a while now with its digital pressure sensor that helps hospital staff tell the difference between when a catheter is being inserted into a vein or an artery. The idea is that by selling a relatively cheap piece of technology, Mirador can reduce the fear that hospitals will make a potentially disastrous medical error. The company raised an additional $1.5 million in its Series B financing in April to help with the commercial push.
Impel Neuropharma. This University of Washington spinoff pulled together more than $2 million of support from local angel investors, the U.S. military, and the state Life Sciences Discovery Fund. Impel also formed a couple of partnerships with Big Pharma companies—which it didn’t name—that are looking to see whether Impel has figured out a truly efficient way to deliver drugs more efficiently to the brain, via the nasal passages.
Cadence Biomedical. This Seattle startup led by Brian Glaister made some more headway with its mechanical-assist system that helps disabled people to walk. The company pulled in a $254,000 federal grant in September, around the same time it attracted local investors to pump in another $255,000 in bridge financing. One of the big selling points here is that Cadence’s system doesn’t need to navigate the FDA approval process before getting clearance to sell its product, a barrier to entry that many U.S. medical device companies say is only getting higher.
Spiral Genetics. This young company is seeking to help scientists do a better job of analyzing the reams of genomic data that are piling up on hard drives as DNA sequencing keeps getting faster and cheaper. Spiral, founded by a couple of UW-Bothell classmates, rolled out its initial products this year that bundle together some of the popular open-source software programs so researchers can perform basic analysis tasks in a matter of hours, not days.
Presage Biosciences. Presage has found its niche in technology that helps drugmakers separate the winners from the losers early in the drug development process, before too much time and money gets wasted. The company, is, however, looking for permanent leadership after CEO Caitlin Cameron stepped down, and is being replaced on an interim basis by board member Jim Towne.
PhysioSonics. The ultrasound company started the year by raising some additional financing from Medtronic and local investor Kirby Cramer, and finished by lining up another $2.5 million defense contract. The aim here is to use ultrasound to monitor brain blood flow, with an automated device that doesn’t require much attention from hospital staff.
Integrated Diagnostics. Leroy Hood’s latest startup, in collaboration with researchers at Caltech, pulled in a small grant from the Bill & Melinda Gates Foundation this month to develop a portable diagnostic test for HIV. That project will be in addition to what InDi has been working on for a while now—tests that aim to diagnose Alzheimer’s and lung cancer based on analysis of tiny droplets of blood samples.
Ekos. This was a pretty quiet year for the Bothell, WA-based maker of ultrasound technologies, although back in January it won European approval for its product to treat blood clots in the lungs, known as pulmonary embolisms.
Cerevast Therapeutics. The company once known as ImaRx Therapeutics was reborn as Cerevast, and collected $6.6 million in new financing this fall. Bradford Zakes, an Icos veteran, says this ultrasound-based stroke treatment is now being primed for the third and final phase of clinical trials normally required for FDA approval.
NeuroVista. This company is developing a technology that aspires to alert people when an epileptic seizure is about to strike. NeuroVista has raised a lot of venture capital, but has been keeping a low profile lately, although it did say in February that it got regulatory clearance to expand a clinical trial in Australia.
RF Surgical. This company raised $12 million in September to keep pushing on with its surgical sponges that are embedded with radio-frequency tags. Why, you might ask, does a simple surgical sponge need to go high-tech? So that surgeons don’t forget about the sponges when they’re done, and stitch people up with foreign objects inside them. It happens more often than most surgeons, or hospitals, would like to admit, which is why RF Surgical has been able to build a growing business.
Seattle Children’s Hospital. The local Children’s Hospital doesn’t ordinarily spin out startup companies, but CEO Tom Hansen has led a team that is pushing hard with a new low-cost ventilator that they think has big potential for helping premature infants survive in the developing world. The Bill & Melinda Gates Foundation agreed to help develop the product further, pumping $2.3 million into the technology in August.
Amnis. Seattle-based Amnis was acquired in August by EMD Millipore, a unit of Germany-based Merck KGaA, for an undisclosed sum. While terms weren’t disclosed, Amnis did say in the takeover statement that it had $14 million in sales in 2010, and the company had been independent and stable for some time, so EMD Millipore almost certainly had to pay a premium to get this maker of scientific instruments.
Cardiac Dimensions. This company has been pretty quiet over the years, but Cardiac Dimensions came out with some news in September when it said it won European approval for its device that tightens up leaky heart valves in heart failure patients. Cardiac Dimensions says it plans to commercialize the device in Europe in 2012.
Cardiac Insight/Aqueduct Neuroscience. These are a couple of startup companies that have spun out of the University of Washington this year, under the guidance of Tom Clement, the founder of Pathway Medical Technologies. Clement described the main idea for Cardiac Insight—a stick-on device to look for a common cause of stroke—back in a November profile.