Israel's biomedical industry is giving some joy to the country's venture capital business. As high tech has struggled in recent years to make substantial returns on investment, its small brother, the medical devices sector, has kept its honor with large investments and glorious exits.
Exits include the sale of cardiology company Ventor Technologies Ltd. last year to Medtronic Inc. (NYSE: MDT) for $325 million, the sale of glaucoma treatment company Optonol Ltd. to Alcon (NYSE: ACL) last December, while St. Jude Medical acquired Mediguide, developer of an interbody navigation catheter for $300 million, as well as the sale earlier this year of insulin pump developer Medingo Ltd. to Roche AG (SWX: RO) for $160 million.
Although it is premature to declare an exit for BioControl Medical Ltd., Medtronic's large investment in the company is an encouraging vote of confidence in it.
BioControl's management faced a tough decision: the investment will enable the company to start and finish clinical trials of its device and obtain US Food and Drug Administration (FDA) approval for it, but it also ties the company to Medtronic.
The option to acquire a young start-up by a US medical devices giant is not just a joyous occasion, but also holds back the young company from markets. In the case of BioControl, it seems that even if it had been able to raise substantial capital to finance clinical trials, the stakes of the company's current shareholders would have been so diluted that it would have erased their previous investments.
The strategic deal enables Medtronic to get its hands on the most promising cardiac muscle stimulation technology on the market. BioControl gets a giant's hug in the form of financing, which will enable the company to complete the costly clinical trials. If the trials succeed, BioControl's product could reach market in 2013-14, at which point Medtronic may reap the rewards of its investment.
Published by Globes [online], Israel business news - www.globes-online.com - on May 24, 2010
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