Anticipating the Food and Drug Administration’s official blessing of its new hand-held blood-testing device within the next few months, HemoSense Inc. recently garnered $17.7 million in a Series C Round of venture capital financing. Pending the necessary approvals, Milpitas, Calif.-based HemoSense plans to use the funding to launch the product in December.
First-time investor MPM Capital of San Francisco led the offering, with additional commitments from repeat investors GC Technology Fund, TGI Fund and Vanguard Venture Partners. Dade Behring, one of the world’s largest clinical diagnostic companies, also participated in the round. Dr. Gregory Ayers, a cardiologist and venture partner with MPM, joined HemoSense’s board of directors.
Ayers declined to divulge MPM’s exact contribution, but he did reveal that the firm took a sizeable stake in the company, which translates to considerably more than 50 %.
With its rapid blood coagulation testing system – named INRatio – HemoSense hopes to corner a market that could potentially grow to $500 million in five years. INRatio is the first product that applies HemoSense’s ground-breaking electrochemical measurement technology to aid healthcare practitioners and patients in monitoring the dosages and effectiveness of blood-thinning medications.
The product will be used primarily to test people over age 65 who’ve had heart attacks, strokes or artificial heart valve replacement operations and are required to take oral anti-coagulants on a regular basis.
The way it works is relatively simple. Using a hand-held meter and single disposable test strip, INRatio analyzes a drop of blood and shows the amount of time it takes for a patient’s blood to clot. The entire testing process takes about three minutes.
“It’s important for patients to know if they’re within a certain range,” said Larry Cohen, chief executive with HemoSense. “If their blood is too thin, they could be at risk for spontaneous internal bleeding. Conversely, if it’s too thick, they could form blood clots. The reading from the INRatio analyzer tells them if they’re in the correct range, and helps them determine whether they need to take more or less medication.”
And the company says it’s easy for patients to use. Unlike many of its competitors that market blood-testing devices with external quality controls, HemoSense’s INRatio features a built-in, automatic quality control system intended to eliminate false or inaccurate readings. If anything goes wrong with the system during the test, INRatio won’t display the results.
Improving Antiquated Techniques
“INRatio was very attractive to us,” Ayers said. “The way medical professionals have been monitoring anti-coagulants is more than 30 years old, and even with the other products on the market, there’s been a large, unmet need for updated testing devices. HemoSense’s product is a monumental improvement over the more antiquated methods.”
Before, most doctors sent blood samples to outside laboratories to be tested. With INRatio, they can conduct the tests right in their offices and provide almost instantaneous, timely results.
Plus, the overall population of patients receiving anti-coagulation therapy is rapidly increasing, and their median age is rising as well. “Given these factors, MPM thought it was a great time to get into the market,” Ayers added.
An exit strategy hasn’t been determined yet, but Ayers said if HemoSense does choose the IPO route, the timing would depend largely on INRatio’s speed to market. Based on the way similar products like glucose testing devices for diabetics were distributed in the past, Ayers noted that medical practitioners would likely be the first to receive INRatio for clinical use. In time, he added, patients may also be able to use the product at home.
“If that ramps up quickly and does well – and given the previous success of blood-glucose monitors, we think it will – HemoSense could have a good shot at an IPO,” Ayers said.
He also noted, however, that HemoSense could potentially be an attractive acquisition candidate.
“Either exit pathway probably won’t require additional private funding based on HemoSense’s budget and expected expenses before going into the market,” Ayers said.
If it receives FDA clearance, HemoSense plans to debut INRatio in the U.S. by the end of the year. An international product launch is slated for early 2001.