Just when it seemed the go-go zeal of the late ?90s tech scene had finally died down to a dull roar, one company took a gamble with its business model, defied the naysayers and came up with a viable technology that the medical world assured it would never work. That company is OmniSonics Medical Technologies Inc., and its ultra-nouveau ultrasonic energy innovation recently garnered a flurry of attention from the venture capital community, to the tune of $21 million.
The Wilmington, Mass.-based issuer announced last week that it had completed the final tranche of a three-part Series B deal with a $3 million injection from Series A lead backer Prism Venture Partners. Canaan Partners led the latest transaction with additional participation from Domain Associates and JP Morgan Chase H&Q.
The company was last in the private equity market almost exactly a year ago, when it completed a $5.7 million round of financing with Prism and Johnson & Johnson. At the time, its valuation was about $12 million. Following this round, OmniSonics? post-money worth soared to $45 million.
While that lofty number may seem an aberration at a time when valuations are at an historic low, it?s certainly no surprise to Prism, which has followed the company and its management team almost since day one.
“The most interesting thing is that they?re using ultrasonic energy in a way that the experts said it wouldn?t work,” said John Brooks, a general partner at Prism. “With all other energy, the tissue effect takes place at the very tip. OmniSonics has been able to deliver energy along the length of a probe or wire in a controlled way. They didn?t listen to the experts and showed it could be done. We like companies that defy conventional wisdom and find ways to do things people didn?t think you could do.”
Brooks said Prism is also excited because the company has a unique intellectual property position, as no one else has even attempted to mimic its technology.
Essentially, OmniSonics? ultrasonic energy device uses a very small, thin wire at the tip of a catheter to treat cardiovascular diseases by breaking up and removing blood clots and other blockages from the human circulatory system. Specifically, the device enables surgeons to remove damaged tissue from a very isolated site without harming the healthy cells around it.
Currently, the company is on the brink of starting its human clinical trials in Europe, and will use a portion of the proceeds from this round of financing to ante up its research and development groups in preparation for those tests. In addition, plans are in the works to increase its 30-person payroll this year, as it is “very much in growth mode,” said Bob Rabiner, OmniSonics? co-founder and chief executive.
Prism?s Brooks added that much of that growth would come as the company fills out its management team this year. The executive search is expected be completed by the beginning of September, he said.
With profitability not expected until the end of 2003, Rabiner said OmniSonics may consider doing a small Series C round at that time to tide it over.
The company has no immediate plans to make a Wall Street debut, he added.
Robyn Kurdek can be contacted at: Robyn.Kurdek@tfn.com