What's happening at Agate Medical

Insulin pump company Valeritas raising $100 million is among the revelations in a presentation by the firm that has reached "Globes".

Valeritas, which has developed a mechanical pump for delivering insulin to type 2 diabetes patients, has raised $100 million, "Globes" has learned. Valeritas is an American company that has two Israeli investors: Pitango Venture Capital, and Agate Medical Investments, which apparently invested several million dollars each in the current round.

From a presentation to investors by Agate that has reached "Globes" it emerges that this is a venture lending round with the participation of the company's existing investors, among them the two Israeli firms, and also USVP, ONSET Ventures, MPM Capital, Abingworth, Kaiser Permanente Ventures, Advanced Technology Ventures, HLM Venture Partners, and CHL Medical Partners. It is not known which additional investors may have participated. In its previous round, in 2011, the company raised $150 million.

The company believes that the current round will be enough for it to reach a Nasdaq IPO in the next two years and become one of the largest ever biomed flotations. The US capital market has not been very hospitable to new medical devices companies, but Valeritas is apparently well positioned, and already has a good image on the market.

Valeritas has developed a disposable insulin pump for adult-onset diabetes patients (type 2 diabetes). These patients do not require the same degree of precision in insulin dosages as type 1 diabetes patients, and so health insurance companies are not prepared to cover expensive insulin pumps. Many companies have tried to develop cheaper pumps: mechanical, disposable, or simply cheap to produce. Insulin, however, is difficult to inject without it becoming damaged, other than by sophisticated electronic pumps. Israeli companies D-Medical, which was floated on Wall Street and then delisted, and Medingo, which was sold to Roche and subsequently closed down, both tried their hands in this field.

It seems that Valeritas, which has already received sales approval in the US, has succeeded in this challenging task. Following a limited launch in 2012, it already has sales of $2 million, and expects (according to the presentation) substantially higher sales in 2013. The product is already covered by insurance companies for 70% of Americans.

The company recently released results of an extensive trial in which it was found that usage of the product improved control of blood sugar levels in type 2 diabetes patients.

Sensimed raising funds

This is not the only news about Agate Medical Investments to emerge from the document. Swiss company Sensimed, in which Agate is invested, recently completed a $17 million round that has not yet been reported. The money was raised from leading European funds and Korean medical equipment and drug companies, and the round was led by Wellington Partners. A further $8 million round raised from a leading venture capital firm is shortly due to close, which will bring the total raised to $25 million.

Sensimed produces a soft, non-invasive contact lens which encapsulates a telemetric sensor to monitor fluctuations in intraocular pressure for glaucoma patients. The lens measures pressure continuously for 24 hours, and then perishes. This represents an advance over conventional uncomfortable methods of periodic intraocular pressure measurement.

Sensimed, it is revealed, has posted sales of $2.5 million in Europe so far, and expects to obtain US Food and Drug Administration (FDA) approval in the next quarter. According to the presentation, the company should be ripe for merger or acquisition in 2014. In any event, it is estimated that it will not require further fund raising.

The presentation also provides information on laser-based medical and cosmetic devices company Lumenis, stating that it has recently seen improvement in profits, sales and cash flow, after a difficult period. Lumenis was traded on Wall Street in the past, but was delisted. If the market is right for new offerings, Lumenis will try to go public again and raise capital in 2013.

Agate is run by former minister of health Dani Naveh and former Elron business development manager Michel Habib. The first Agate fund raised $64 million in 2007. Among investors in the fund are CANAF, Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), Leumi Partners, Prisma, and US investors. It is not known what stake the firm holds in each of its portfolio companies, but it is known that the fund is not making new investments, and it has apparently invested the entire amount raised.

The firm's first portfolio also includes BrainsGate, which is conducting a very large clinical trial for its device for treating stroke. BrainsGaste has already recruited 303 patients for the trial. After it reaches 350 patients, it will be able to open the envelopes and see whether it can continue on to 450 patients, as planned, or whether the trial should be halted because of bad results, or, if the results are very good, whether the it can close the trial and proceed directly to an application for FDA approval.

Another portfolio company, Angioslide, which has developed balloon catheters that combine balloon angioplasty for the lower limbs and debris removal in a single device, has raised $5.2 million in a round led by TriVentures. The company currently has limited sales, because of budgetary considerations, but it hopes to continue growing.

Tulip Medical, which has developed a pill that expands in the stomach to treat obesity, has emerged from its development problems, and is now at the stage of safety trials on human beings. The company will shortly hold a fund raising round.

Also in the portfolio is VisionCare Ophthalmic Technologies, which started to sell its product in 2012. The product is a telescope implanted in the eye that restores sight to patients that have become blind because of end-stage age-related macular degeneration (AMD), one of the world's main causes of blindness. Sales totaled $800,000 in 2012, and are expected to reach $3.5-4 million this year. The company recently raised $5 million, and will probably not need to raise more.

Of the companies invested in by Agate's first fund, Navotek Medical, which is developing radiation-guided therapy systems, initially for use in cancer therapy, is the least successful. Because of the changes in the imaging devices with which its device was supposed to interface, the company found itself with a product unsuited for the market, and it is not clear what will happen to it.

The Korean fund

The Agate Korea MacC Fund, the second fund that Agate raised, is based on collaboration with the South Korean government and two Korean investors. The fund was set up in 2012, and raised $34 million.

So far, the Korean fund has invested in two Israeli companies and two Korean ones. The first Israeli company is Peer Medical, which has developed an endoscope with a 330 degree angle of vision, which compares with 110 degrees in current products. In a move led by Mori Arkin and Uri Geiger's Accelmed fund, Peer Medical merged with US company EndoChoice. As part of the merger, $43 million was raised in a funding round led by Sequoia Capital, and the merged company had sales of $40 million in 2012. With the launch of Peer Medical's product in the US, the company's sales are expected to grow to $50-60 million this year.

Another company connected to the second fund is Ornim Medical, which has developed a non-invasive means of monitoring blood flow and oxygenation of blood in the brain for intensive care units. In the past it was reported that the company had received $19 million funding in a round led by OrbiMed, required to finance market penetration. The product launch took place last week.

The fund is about to invest in another Israeli company. Its Korean companies are Healcerion, whose product makes it possible to use ultrasound in the field, and U2bio, which is in laboratory test technology and services.

Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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