A pair of Orange County medical device makers have raised nearly $45 million in funding.
Glaukos Corp., a Laguna Hills eye device startup, said it raised $29.5 million in a fifth round of venture capital funding.
VertiFlex Inc., a San Clemente spinal device maker, raised $14 million from existing investors and one newcomer.
Glaukos is working on an implantable medical device that’s placed in the eye and used to treat glaucoma, a major cause of blindness.
Meritech Capital Partners of Palo Alto led the Glaukos funding, contributing $16 million to the round. Returning Glaukos investors also participated, including Versant Venture Management LLC, which has an office in Newport Beach, and Domain Associates, which once had a West Coast office in Laguna Hills and now is in San Diego.
The device maker’s management team includes several veterans of local medical device and drug makers such as Allergan Inc. and Edwards Lifesciences Corp., both of Irvine, and Santa Ana’s Advanced Medical Optics Inc., which now is Abbott Medical Optics.
Glaukos’ founders include Olav Bergheim, a longtime medical technology entrepreneur, and Richard Hill, an ophthalmologist at the University of California, Irvine.
VertiFlex makes the Superion Interspinous Spacer, which is implanted in a patient and used to treat lumbar spinal stenosis, or a narrowing of the spinal canal.
In a release, VertiFlex said it planned to use the money to fund clinical trials of Superion and for market development.
VertiFlex’s funding came from returning investors Aberdare Ventures and Alta Partners, both of San Francisco, New Enterprise Associates of Menlo Park as well as a new investor, Thomas, McNerney and Partners of Stamford, Conn.
The company said its funding deal had a provision to raise an additional $14 million within 12 months.
Questcor Concerns
Questcor Pharmaceuticals Inc., an Anaheim drug maker, took a blow last week when an article in Barron’s raised questions about sales of its lead drug, H.P. Acthar Gel, for multiple sclerosis.
One analyst called the concerns overblown. Barron’s hinted that Questcor could see profits vanish in 2011 on Acthar prescriptions that are covered by Medicaid managed care.
The company may not have sufficient cash reserves to cover federal rebate requests for Acthar, according to the story.
A provision in federal healthcare reform offers a 100% rebate on Acthar to Medicaid plans.
Questcor, which moved to Orange County from the Bay Area last fall, said that it created a $5.6 million reserve in 2010, and expects to record an additional reserve of $2.6 million to account for Medicaid changes.
Acthar, an injectable drug, is cleared for various usages, including infantile spasms, a rare form of epilepsy, as well as treating a kidney disorder.
Maxim Group analyst Yale Jen told Reuters that concern about Acthar was “overblown” and that any weakness in the stock should be seen as a buying opportunity.
Questcor had a recent market value of about $900 million.
Jen argued that only a small portion of Medicaid patients who previously were under managed-care coverage require Questcor to pay additional rebates to the government. Most existing Medicaid patients already have received Acthar for free, the analyst said.
Auxilio Updates Business
Auxilio Inc., a Mission Viejo company that trades on the low-profile Bulletin Board exchange, updated its recent activities on an investor conference call last month.
Auxilio helps hospitals and other healthcare providers cut their dependence on paper records.
The company said that it expanded an existing contract with Sacramento-based Sutter Health’s California Pacific Medical Center to include hospitals in Santa Rosa, Lakeport and Novato, as well as the Sutter Pacific Foundation medical group.
Auxilio also added contracts with hospitals in Santa Rosa, Petaluma and Napa through the extension of its master service agreement with Orange-based St. Joseph Health System.
Additionally, Auxilio said it signed four contracts from its relationship with Gaithersburg, Md.-based food and facilities management company Sodexo Inc., including a previously announced contract with Johns Hopkins Health System in Baltimore and New York Hospital Queens and St. Joseph’s Hospital in Yonkers, N.Y.
CHOC
Cranial Technologies Inc., a Tempe, Ariz.-based medical device maker, opened a clinic on the Orange campus of Children’s Hospital of Orange County.
Cranial Technologies offers the Doc Band, which is used to reshape the heads of babies born with a condition called plagiocephaly.
Speaking of CHOC, we got some feedback on our Jan. 31 Corner Office story about the hospital for babies, kids and teens.
The article should have said CHOC got outside management services from St. Joseph Hospital-Orange, which is part of Orange-based St. Joseph Health System. The article also should have said CHOC’s endowment is $22.5 million.
Quality Systems
NextGen Healthcare Information Systems Inc., a unit of Irvine-based Quality Systems Inc., said it expanded its business relationship with the Palm Beach Orthopaedic Institute in Florida.
Under the deal, the orthopedic practice is going to use NextGen’s revenue cycle management services to ensure prompt payments, stay current with reimbursement changes, medical billing trends and regulatory developments.
