NxStage Gets $29M Infusion

Hoping to change the future of kidney dialysis with its quality-of-life enhancing products, NxStage Medical Inc. recently secured a $29 million Series C infusion from the venture capital community. A spin-out of Vasca Inc., a technology firm focused on refining health care, NxStage makes medical devices for kidney failure patients.

Adam Street Partners led the transaction, investing alongside The Sprout Group, Lightspeed Venture Partners I and Atlas Venture.

Keeping his business plan close the vest, NxStage President and CEO Jeff Burbank declined to reveal what differentiates the Tewksbury, Mass.-based company from its competitors, saying only that its technology is designed to improve the efficacy of dialysis treatment and reduce the limitations of current therapy options.

“A Revolutionary Technology”

With plans to ship its products to hospitals and dialysis centers within the next eight months, NxStage is rocketing toward cash flow positive, said Phillipe Chambon, a general partner with Sprout.

“[The company] has [introduced] a revolutionary technology in a field that has been slow for a long time,” he added.

And there certainly is a need for NxStage’s offerings. More than 20 million Americans at least one out of 12 suffer from diseases of the kidney or urinary tract. And more than 220,000 Americans have chronic kidney disease and need dialysis treatments to stay alive. Dialysis is used most often to remove toxic substances from the blood when the kidneys are unable to.

Having a defined niche market paid off for NxStage in terms of valuation, in its case a post-money worth of almost $80 million, Burbank said.

“The terms of the deal were good, and it was just what we needed at this stage of development,” he added. “[Lead investor] Adam Street has great experience in medical devices and they bring skill to the team.”

Founded in December 1998, NxStage raised $5 million in June 1999, and an additional $6 million in February 2000.

When asked if the company would need to take another dip in the private equity pool, Chambon said, “That’s the $64,000 question. Everything depends on the market. Right now, the company need to focus on executing its plans and keeping its technology under wraps because it is the most advanced.”

NxStage intends to use its newfound money to bring its product to the commercial level. –