Money Watch - OmniSonics Medical Technologies - Company Operations

Industry Standard, The, June 11, 2001 by Paul Bonanos

OmniSonics Medical Technologies

CEO: Robert A. Rabiner

LOCATION: Wilmington, Mass.

FUNDING: $21 million in a second round led by Canaan Partners, following a $5.7 million round last year

THE PITCH: Ultrasound medical devices to remove tissue in minimally invasive surgery

When Internet stocks started to seem like a bad investment last summer, some venture firms revisited the last big thing: health care. Medical companies, which raised more than a quarter of all venture funding in 1997, were left behind during the Net boom. By late 1999, only 6 percent of VC money went into medical technology. But now it accounts for more than 10 percent of venture fundings.

OmniSonics Medical Technologies is among the companies capitalizing on that trend. Its first product, the Resolution Sonolytic System, represents a novel approach to surgery. It uses vascular probes to create tiny bubbles in the soft tissues that block arteries and other passageways. When the bubbles are popped, the shock waves clear circulatory passageways without damaging vessel walls. The potential applications range from urology and neurosurgery to orthopedics. Probes have been tested on animals and are under review by the Food & Drug Administration for human clinical-trial approval in the United States

On the strength of these ultrasonic tissue ablation devices, which dissolve vascular blockages without highly invasive surgery, OmniSonics raised a $21 million second round of funding. CEO Robert Rabiner, who started the company in his Massachusetts home three years ago, says his business was the exception and not the rule. "It was actually quite easy this time. We raised the A round at the height of the dot-com mania. Nobody wanted to listen to us then -- we were old-economy. But we're well down the path now -- papers are being published in medical journals on our preclinical work."

From the way Rabiner tells it, OmniSonics' story begins something like a dot-com's emergence. "My partner and I designed the technology in my basement in North Reading, Mass., which was our office for two years." Then the company benefited as Internet startups folded. "We've been through three office expansions, including taking over a dead dot-com's office space. ... All our office furniture is used -- they left a copier behind ... . And no, we don't have a Foosball table."

DEALS OF THE WEEK
VENTURE CAPITAL
    VALUE [*]     DATE   TARGET
      $93        May 31  Solinet Systems
      $30        May 30  Quake
      $28        May 31  Redfern Photonics
      $25        May 30  Trendium
      $21        May 30  OmniSonics Medical Tech.
      $21        May 31  eCommerce Industries
      $20        May 29  Metastorm
      $20        May 29  Surebridge
      $18        May 31  Element K
      $12        May 30  InfoTalk
      $11        May 28  Esterel Technologies
      $10        May 29  StarCite
      $10        May 29  Internet Pictures
      $10        May 30  Waveset Technologies
       $9        May 31  Rocket Network
         M & A
      VALUE [*]   DATE   TARGET
         $3,280  May 31  MiniMed
         $3,200  May 29  C.R. Bard
           $420  May 31  Medical Research Group
            N/A  May 29  HealthScout
            N/A  May 29  gURLcom
            N/A  May 30  FlipDog.com
            N/A  May 30  Cyberian Outpost
VENTURE CAPITAL
    VALUE [*]    LEAD INVESTORS
      $93        Bessemer, Woridview
      $30        Mitsubishi, Cisco Systems
      $28        Deutsche Bank
      $25        Crossbow, Vertex, Mellon
      $21        Canaan
      $21        Accel, Friedman Billings Ramsey
      $20        UBS Americas
      $20        Compaq, Axxon
      $18        Wasserstein
      $12        HSBC, Walden, Accenture
      $11        Intel, Advanced, CDC Innovation
      $10        Am. Express, Breakaway Solutions,
      $10        ICG Paradigm
      $10        Austin, AV Labs, Lightspeed
       $9        Cisco, Vulcan
         M & A
      VALUE [*]  ACQUIRER
         $3,280  Medtronic
         $3,200  Tyco
           $420  Medtronic
            N/A  MDchoice
            N/A  Primedia
            N/A  TMP Worldwide
            N/A  PC Connection
VENTURE CAPITAL
    VALUE [*]    TARGET COMPANY DESCRIPTION
      $93        Optical-networking services firm
      $30        Semiconductor technology developer
      $28        Optical telecom gearmaker
      $25        Network software firm
      $21        Medical device manufacturer
      $21        Office-products industry
                 e-commerce developer
      $20        Business-management software
                  company
      $20        Application service provider
      $18        Online corporate-training systems
      $12        Hong Kong-based speech recognition
                 firm
      $11        French embedded-systems software
                 firm
      $10        Online meeting and events service
      $10        Image delivery service
      $10        E-business security management ASP
       $9        Audio production networking
         M & A
      VALUE [*]  THE DEAL
         $3,280  Medical device maker acquires
                 insulin-pump manufacturer
         $3,200  Medical manufacturer buys
                 oncology device maker
           $420  Medical device maker buys
            N/A  Consumer health-info site acquires
            N/A  Niche publishing firm acquires
            N/A  Monster.com parent buys career
                 Web site
            N/A  PC reseller acquires online
                 retailer of technology products
(*.)IN MILLIONS.
SOURCE: THE STANDARD FROM PRESS RELEASES AND NEW REPORTS