Healthcare companies got a smaller piece of Orange County’s growing venture capital funding in the first quarter, but still managed to dominate.
Local medical device and drug companies raised $93 million, or 65% of the $144 million in venture money invested here in the first quarter, according to Dow Jones & Co.’s Venturesource.
The figures show healthcare continues to command most of the funding here, as it has for the past few years. But its slice of the pie got smaller, dropping 25% from the same time last year when healthcare made up 90% of the $131 million invested.
In this year’s first quarter, healthcare companies lost ground to software and other technology companies.
After a strong run for healthcare venture funding in the past few years, some investors are focusing on more mature companies in their portfolios instead of going after more startups, said Ralph Sabin, managing director in the Irvine office of Encino healthcare investor Pacific Venture Group.
“There may be a disproportionately greater interest in ‘growth equity’ as compared to very early stage investments,” he said.
That was the case in the biggest healthcare funding for the quarter: a $30 million round for TherOx Inc., an Irvine developer of heart attack treatments that’s been around since 1994 and has raised more than $100 million.
TherOx is using its investment to take its SuperSaturated Oxygen Therapy product through the Food and Drug Administration approval process and to potentially launch it, said Shelley Thunen, the company’s chief financial officer, in an earlier interview.
The quarter’s second biggest healthcare deal came in January.
Irvine-based Arbor Surgical Technologies Inc., a maker of tissue heart valves, raised $20 million in funding in a round led by Minnesota’s Medtronic Inc. Medtronic, which has a heart valve plant in Santa Ana, gained a minority stake in Arbor.
Arbor makes replacement heart valves as well as surgical instruments to implant them. Arbor’s valves are designed to be implanted with catheters or in open-heart surgery.
In March, Cameron Health Inc. of San Clemente raised $14.1 million of a planned $50 million fifth funding round.
Cameron counts Versant Ventures, a venture capital firm with a Newport Beach office, and Boston Scientific Corp. of Natick, Mass., among its investors.
It is developing an implantable defibrillator that will identify and correct fast heart rhythms.
Other Fundings
Lake Forest-based Orqis Medical Corp. raised $12 million in March. The company’s devices include Cancion, which is inserted through a patient’s skin to treat acute congestive heart failure, and Exceleras, a pump for treating patients with mid- to late-stage congestive heart failure.
In Aliso Viejo, Cianna Medical Inc. raised $9 million in a first round of venture funding led by San Francisco’s Fog City Fund.
Cianna is going to use the money to help commercialize its Savi device, which provides high-dose radiation therapy for women who’ve had lumpectomy surgeries for breast cancer.
The investment is a sign that Savi could be a “breakthrough technology” that gives doctors and patients more treatment options, Cianna Chief Executive Jill Anderson said.
Cianna was created last year in a spinoff from Aliso Viejo’s BioLucent Inc., which was bought for $70 million by Massachusetts-based Hologix Inc.
Healthcare service companies also saw funding in the first quarter.
Irvine-based LifeMasters Supportive SelfCare Inc. raised $15 million from existing investors in March, some 18 months after a deal to buy it fell through.
LifeMasters called off a $307.5 million sale to Healthways Inc., a larger competitor from Nashville, Tenn., in 2007.
The company falls into the mature category with expected sales of $100 million this year. It sells disease management programs to health plans, including Medicare and Medicaid, employers, pension systems and healthcare trusts run by labor unions. Its programs are aimed at helping its customers control healthcare costs stemming from chronic conditions.
