Asthmatx IPO pullout no failure

VC-backed health care IPOs have been a disappointing breed this year, with most pricing either below forecast or not pricing at all. Among those in that latter bucket seemed to be Asthmatx Inc., a Mountain View, Calif., maker of catheter-based medical devices to help people breathe easier.

The company had filed for a $74.25 million IPO in July, slightly reduced its projections to $65 million and then last month said that it would forego an IPO in favor of an “alternative strategic option.”

From the outside, this looked like Asthmatx was providing amorphous excuses for not being able to price its IPO. It even used the time-tested “in light of current market conditions” in its official withdrawal notice last week.

But Asthmatx CEO Glen French says that there is indeed a lucrative deal in place, and that the “market conditions” line is inaccurate boilerplate.

“Regarding our IPO, our roadshow went great,” French tells PE Week. “We had an oversubscribed deal in the range, with great interest from top-tier investors, and we very simply were presented with a more attractive alternative 90 minutes before pricing.”

French apologetically adds that he is not permitted to disclose specifics of the transaction, except to reiterated that it was a “no-brainer.”

Asthmatx raised about $42.5 million in VC funding from such firms as Boston Scientific Corp., HBM Partners, MedVenture Associates, Menlo Ventures, Montreux Equity Partners, Polaris Venture Partners and Vanguard Ventures.

A positive outcome to Asthmatx would be particularly welcome news for Vanguard, which is trying to salvage its portfolio before heading back to market in 2008. It recently tried raising a $125 million fund, but LPs balked at a noticeable lack of positive exits and substantial write-downs. Vanguard VII was 68% drawn down at the end of Q1 2005, but had lost more than 50% of its portfolio carrying value, according to a public document from Private Equity Investor PLC. The situation worsened one year later, with 73% called down and a carrying value that was off 57.2 percent.

Besides Asthmatx, other life science companies awaiting an IPO include Obagi Medical Products Inc., a Long Beach, Calif.-based pharma company focused on the aesthetic and therapeutic skin health markets. Last week, it set its proposed IPO terms to 5.35 million common shares being offered at between $13 and $15 per share. It plans to trade on the Nasdaq under ticker symbol OMPI, with JPMorgan serving as lead underwriter. Stonginton Partners is the company’s majority shareholder.

Also, Artes Medical Inc., a San Diego-based developer of injectable aesthetic products for the dermatology and plastic surgery markets, set its proposed IPO terms to 4.6 million common shares being offered at between $12 and $14 per share. It plans to trade on the Nasdaq under ticker symbol ARTE, with Cowan & Co. and Lazard Capital Markets serving as co-lead underwriters. The company has raised about $61 million in total VC funding from such backers as National Securities Corp., Empire Asset Management, Baltimore Business Leaders, NGN Capital, and individual investors Peter and Georgia Angelos and Lon Otembra. —Dan Primack