Dive Brief:
- After a sluggish first quarter, investment in medical device makers roared back in April through June to hit $8.2 billion, with early-stage startups among the biggest beneficiaries, according to a new report from CB Insights, whose research focuses on equity rounds to private healthcare companies.
- Late-stage funding kept pace with the prior quarter: Robot manufacturer CMR Surgical's $600 million round and portable dialysis system maker Quanta Dialysis Technologies' $245 million Series D deal led the category.
- Diabetes tech developers Fractyl Health and CeQur and pathology software startups CellsVision, Aiforia and PathAI also garnered fresh backing from investors.
Dive Insight:
The global healthcare sector attracted equity investment throughout the pandemic, and it is still pouring in. The April-to-June period marked the seventh straight quarter of increased funding, which reached $34.7 billion across nearly 1,600 deals in the period.
Last year, CB Insights tallied record healthcare equity funding of $80.6 billion, spanning more than 5,500 deals. The firm attributes the industry's lure to the potential for medical innovation to address the challenges of aging populations and the rising prevalence of chronic disease.
The funding rebound in medtech in the second quarter represented a jump of more than 70% from the previous quarter and included 396 deals, which was still fewer than the recent peak of 510 notched in the third quarter of 2020.
Interest in early-stage funding deals was especially pronounced in the latest quarter, comprising 54% of all private financing transactions in healthcare, the highest level since the third quarter of 2019. In the medical device industry alone, early-stage deals' share of funding transactions rose for the first time in nine quarters, to 51% in the period.
Late-stage medical device investment held steady at 10% of the healthcare sector's deals in the second quarter. Mid-stage deals were 21%, slipping from 25% last quarter.
CMR Surgical's $600 million Series D financing, the second-largest funding influx across the healthcare universe, brings the robot maker's total disclosed investments to $986 million. SoftBank Group, Ally Bridge Group, Tencent Holdings, GE Healthcare, Lightrock, Cambridge Innovation Capital, RPMI Railpen, Watrium, and Chimera are the backers.
The latest round of funding is intended to help the U.K.-based company expand the range of procedures of its Versius surgical robot, support development of its digital capabilities and enter new international markets. Versius is not yet approved in the U.S. but is used in hospitals in the U.K., India, Germany and Australia.
Next in size in medtech, Quanta's $245 million Series D round represents the largest-ever private funding round to a dialysis device company. The British medtech, whose portable hemodialysis system recently gained FDA clearance for acute and chronic care facilities, plans to use the latest funding to scale up manufacturing, sales and customer service in the U.S. and to launch a study of the device in in-home settings.
Two diabetes technology companies were the recipients of mega-rounds in the latest quarter: Fractyl Health, with a $100 million Series F deal and CeQur with $115 million in Series C funding. Fractyl's Revita device is used in a minimally invasive procedure to address thickening of the duodenal lining to improve metabolic signaling. The funding round will support late-stage clinical studies of the device in Type 2 diabetes.
CeQur's three-day wearable insulin patch has received FDA clearance and CE mark approval, and the company plans to use its new financing to scale up high-volume manufacturing and support the device's commercial launch.
Software as a medical device startup PathAI attracted $165 million in its Series C round from investors including LabCorp, Merck and Bristol-Myers Squibb. The company's machine learning platform aims to help pathologists make diagnoses and identify patients who may benefit from new therapies.
