Early-stage angel investment rises, but early-stage VC funding falls

Venture capital investment is on the wane, but angel investment is increasing, according to a pair of recent reports.

The University of New Hampshire’s Center for Venture Research reports that angel investment rose nearly 5 percent during the first and second quarters, to $8.9 billion, compared with the same period last year. Health care and medical device firms took the lion’s share of the angel cash (25 percent, according to the report), which usually comes from the proverbial "high net worth individuals" or in early-stage funding rounds.

On the VC side, early-stage funding was down 41 percent during the first three quarters of the year, according to Dow Jones LP source. VC funds pumped $2.1 billion into startups during that period, according to the report. And although VC funding was up during the first three-quarters of the year, it slid during the third quarter to $2.2 billion, down 24 percent compared with Q3 2010.

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HeartWare slides, Thoratec gains on FDA panel news

Rival cardiac assist device makers HeartWare International (NSDQ:HTWR) and Thoratec Corp. (NSDQ:THOR) watched their stocks move in opposite directions after an FDA decision not to schedule an advisory panel review of HeartWare’s pre-market approval application for its ventricular assist device.

HTWR shares dropped 3.3 percent yesterday, closing at $62.04 after opening the day at $64.18. The slide continued today, with shares trading at $61.67 as of about 10 a.m.

THOR shares gained 7.1 percent on the news yesterday, rising from a $33.74 opening yesterday to close at $36.13. Thoratec had gained another 1.3 percent as of 10 this morning, trading at $36.60.

"This means HeartWare can’t get onto a panel until 2012, and their entry into the U.S. is delayed a little bit. Every time they are delayed, that means Thoratec gets a little longer time of almost near-exclusive use in the U.S," Piper Jaffray analyst Thomas Gunderson told Bloomberg BusinessWeek.

The news prompted Wunderlich Securities to reiterate its "hold" rating and $80 price target for HTWR shares, saying the delay means FDA approval "will now almost certainly be delayed beyond the prevailing Street consensus of early 2012."

" But we expect the delay could be modest, with a panel meeting possible as soon as either January or February," the analysts wrote. "We reiterate our Hold rating, but we believe an over-reaction to this news could result in an attractive buying opportunity for investors."
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KCI details Apax buyout financing

Kinetic Concepts Inc. (NYSE:KCI) detailed the financing behind a $6.3 billion leveraged buyout by Apax Partners.

Apax, a London-based private equity firm, and its two Canadian pension fund partners, "expect to finance the merger, refinance certain existing debt of KCI and pay related fees and expenses with (i) approximately $4,808 million aggregate principal amount of funded debt financing consisting of borrowings under the new credit facilities, the issuance of the notes offered hereby and $900 million aggregate principal amount of senior unsecured debt and (ii) approximately $1,759 million of equity contribution," according to a regulatory filing.

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EDAP’s Q3 prelims predict top-line boost

EDAP TMS SA (NSDQ:EDAP) says its preliminary third-quarter results indicate a 61 percent top-line increase.

The Lyon, France-based ultrasound device maker said it expects to report sales of $8.5 million for the three months ended Sept. 30, up 14 percent compared with Q3 2010.

“Our third quarter 2011 reflected higher device sales due to the conversion of the previously announced strong backlog of devices into effective sales during the quarter. Interest in our innovative technologies remains strong and we are pleased to enter the fourth quarter 2011 with a replenished device backlog of six lithotripsy machines and two Ablatherm-HIFU machines,” CEO Marc Oczachowski said in prepared remarks. “In line with our strategy to position Ablatherm-HIFU as a ‘must-have’ complement to radical surgery in the focal treatment of prostate cancer, we recently participated for the first time in the European Robotic Urology Symposium in Hamburg, Germany. In light of the growing reluctance by the prostate cancer community for aggressive treatments and the related questioning of screening plans, we see a promising opportunity for minimally invasive and cost-effective techniques. We will continue to actively advance the focal therapy approach for treating prostate cancer with the use EDAP’s fully robotic Ablatherm-HIFU device.”

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Analysts downgrade Natus Medical on missed guidance

Analysts at ThinkEquity and CL King downgraded their ratings on Natus Medical (NSDQ:BABY) from "buy" to "hold" and changed their price targets for the neo-natal care products maker.

The moves were prompted by the company’s announcement that it will likely miss its sales and earnings guidance by wide margins when it announces its third-quarter results later this month. Natus said it’s likely to post $51.5 million in sales, 11 percent under prior estimates, and earnings per share of 15 cents, 25 percent below guidance.

But nobody puts BABY in the corner, at least on The Street, as investors drove share prices up 3.3 percent yesterday to an $8.35 close. The trend continued today, with shares trading at $8.52 as of about 10:20 a.m., up more than 2 percent.

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Sanuwave surges on trial results

Sanuwave (OTC:SNWV) shares are up 12.6 percent since Oct. 7 on positive data from a clinical trial of its dermaPACE extracorporeal shock wave technology in treating diabetic foot ulcers.

The study, "Molecular Changes in Diabetic Foot Ulcers," was published in the online edition of the journal Diabetes Research and Clinical Practice. It compared the Sanuwave treatment with hyperbaric oxygen therapy, showing that the dermaPACE system increased angiogenic and tissue regenerative molecular changes.

SNWV shares closed at $2.14 yesterday and the day before, up from their Oct. 7 close of $1.90.
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