Nearly $250 million was invested in Orange County device and drug makers during the first half of 2007.
Figures from Ernst & Young LLP show that about $154 million was invested in local device makers, while drug makers received $39 million.
In 2006, a total of $93.6 million was invested in local device and drug makers, according to Ernst & Young.
Nearly all of that,$92 million,went to device makers.
Medical device companies, particularly those that make products for eye and heart care, are more deep-rooted in the county than drug or biotechology companies, which have a bigger prominence in San Diego and the Bay area.
Behind the pickup in venture investments: aging baby boomers, according to Michael Schoenfeld, an Ernst & Young audit partner and director of its Pacific Southwest Venture Capital Advisory Group.
The first boomers turn 65 in 2011,only four years from now.
“There are lots of people looking for different drugs and technologies,” Schoenfeld said.
The device and drug sectors have been pretty hot so far this year, he said.
There have been “significant deals,” he said, such as ReVision Optics Inc., a Lake Forest eye device maker, Interventional Spine Inc. and Pegasus Biologics Inc., both of Irvine.
Versant Ventures, an investor with offices in Newport Beach, and Domain Associates LLC, which previously had an office in Laguna Hills, were among the most active investors in Southern California. Versant and Domain each invested in 12 companies last year, according to Ernst & Young.
‘Good Market’
OC’s “a good market, a good location for medical devices,” said William Link, a Newport Beach-based Versant managing director, in an earlier interview.
“What we find is that when there’s really strong corporate leadership in an area, then it’s likely there will be opportunities for device companies,” Link said.
The county has that, he said, with companies based here such as Advanced Medical Optics Inc. in Santa Ana and Edwards Lifesciences Corp. in Irvine.
Schoenfeld said he expects the current quarter and the fourth to “shape up well” if initial public offerings and acquisitions,two key exits for venture investors,remain healthy and strong.
CoreValve Inc., a maker of replacement heart valves that moved from France to Irvine in 2006, landed this year’s largest device-related venture investment in March. It raised $33 million in a third round of funding.
The company’s product line includes the Percutaneous ReValving technique, which can be done on a beating heart via a catheter, cutting the need for invasive, open-heart surgery.
Maverick Capital Ltd. led the round. Existing investors also participated, including Apax Partners, which has an office in Menlo Park, Swedish venture fund HealthCap and Sofinnova Partners Inc., a French firm.
The second biggest funding of late was ReVision, which raised $25 million in April in a fourth investment round.
ReVision, which previously was known as IntraLens Vision Inc., is developing PresbyLens, a corrective lens for presbyopia. ReVision said it’s using the money for several purposes, including conducting clinical trials.
Domain Associates, a venture capital firm with offices in San Diego and Princeton, N.J., led ReVision’s round. Two prior investors, InterWest Partners and Canaan Partners, also participated.
Interventional Spine, an Irvine-based company previously known as Triage Medical Inc., followed closely behind ReVision. It raised $24 million in May in a third round of financing.
Ascension Health Ventures LLC of St. Louis was Interventional’s lead investor. Other investors included MedFocus LLC, an Irvine venture capital firm ran by Michael Henson, a longtime influence in the local device market.
Interventional is planning to use the money to complete launching its implantable devices, which are used to treat spinal disorders. Interventional also hopes to build a distribution network and acquire other devices.
Irvine-based Visiogen, an eye device maker, also picked up $24 million in March from new and existing investors, its first funding since 2003. Visiogen is using the money to support developing Synchrony, an intraocular replacement lens used in cataract surgery.
CMEA Ventures of San Francisco was the lead investor. Foundation Medical Partners of Rowayton, Conn., Three Arch Partners of Menlo Park, New Leaf Venture Partners of New York and Menlo Park and Palo Alto-based Prospect Venture Partners also participated.
Pegasus, which is headquartered in Irvine, said in May it raised $20 million in a third round of funding. That investment brings Pegasus’ investment total to $32 million.
Pegasus makes collagen implants to fix soft tissue after spine surgery, sports injuries or other conditions. The implants are derived from horse collagen.
Onset Ventures, a new investor in Menlo Park, led Pegasus’ latest round. Affinity Capital Management of Minneapolis was another new investor. Returning investors Three Arch Partners of Menlo Park and Frazier Healthcare Ventures of Seattle also took part.
Other Investments
WaveTec Vision Systems Inc. of Aliso Viejo raised $13 million in a second round of funding. WaveTec’s developing a diagnostic device that could be used during eye surgeries where an intraocular lens is used. Those include surgeries for cataracts or to correct presbyopia, the loss of the eye’s natural ability to focus.
Accuitive Medical Ventures LLC, an Atlanta venture capital firm, and Menlo Park-based De Novo Ventures led WaveTec’s funding round. Versant also took part.
Orqis Medical Corp., which is based in Lake Forest, raised $12 million in March as part of a fourth round of venture financing. Orqis’ devices include Cancion, which is inserted through a patient’s skin to treat acute congestive heart failure, and Exceleras, an implantable pump that is used to treat patients with mid- to late-stage congestive heart failure.
Three new investors,Salt Lake City’s Wasatch Advisors Inc. and its private equity affiliate, Cross Creek Capital, and the Omega Fund, which has offices in London,led Orqis’ round. Existing investors also participated.
Enclarity Inc., an Aliso Viejo medical software company raised $10 million in a second round of venture funding back in January. Enclarity’s software is designed to help health insurance companies reduce data errors.
Bain Capital Ventures of Boston, the venture arm of Bain Capital LLC, led Enclarity’s new investment. Ignition Partners of Bellevue, Wash., which provided Enclarity’s original round of funding, also took part.
Smaller Fundings
Smaller investments during the past year or so include:
– Coda Genomics Inc. of Laguna Hills, which raised $7 million in a third round in July. Coda is developing technology that is used in producing proteins.
– Lake Forest-based Water Health International Inc. raised $4 million in a third round of venture funding at the end of 2006. Water Health makes water purification systems for developing countries. Sail Venture Partners LP, which has offices in Costa Mesa and Arlington, Va., led the round, while Plebys International LLC, a fund run by Tralance Addy, WaterHealth’s chief executive, also invested.
– And Numira Biosciences, an Irvine medical imaging startup, raised $2.5 million in a March first round of funding, which was led by the Tech Coast Angels, the Pasadena Angels and Spring Capital Investors LLC of Baltimore and Radnor, Pa. Numira is developing 3-D medical scans that can show genetic defects and how drugs might counter them.
