The document summarizes a 2015 annual investment report for health technology in Minnesota. Some key findings include: - Minnesota health technology investment reached a record $434.9M in 2015, the second consecutive year over $430M. - 101 companies secured investment in 2015, also a record high. - Medical device investment topped $300M for the third straight year, totaling over $900M for 2013-2015. - Digital health investment increased 59% from 2014, reaching a record $67.1M.

1. ANNUAL
INVESTMENT
REPORT
2015

2. 2015 was a great year for
investment in Minnesota
Sponsored by

3. Key Findings
+ Minnesota health technology investment reaches record $434.9M in 2015, the second consecutive year over
$430M (2014 $430.9M)
+ 101 companies secure investment in 2015, a record high - up from 87 in 2014
+ $189M invested in Q4 2015 surpassing the previous quarter high in Q2 2009 by 35% ($140.3M)
+ Medical device has third consecutive year of investment over $300M ($300.3M, $322.4M, and $302M)
+ Digital health investment reaches $67.1M, up 59% from 2014

4. 2015 Reaches Record Investment High
2015: Strong Q4 brings health technology
investments to $434.9M, up $4M from 2014
+ $865.8M invested in Minnesota health technology
companies in 2014-2015 up 44% from 2012-2013 ($600.5M)
+ Major raises include:
+ NX Thera ($43M)
+ Enteromedics ($41M)
+ Cardionomic ($21.8M)
+ Conventus Orthopaedics ($23.4M)
+ Novu ($20M)
+ Ativa Medical ($15.2M)

5. + $189M invested in Q4 2015 surpasses previous
quarter high by 35% ($140.3M Q2 2009)
+ Q4 2015 up 59% over Q4 2014 ($119M), up 120%
over Q3 2015
Q4 2015 Best Quarter On Record

6. Record Number of Companies Raise Money In 2015

7. 2015 Best Year for Large Deals
+ 18 companies raise $7M+ in 2015, highest on record
+ Deal size composition remains consistent with 2014: 47% of
deals less than $1M
+ On average, 2014-2015 companies raising $7M+ up 59%
from 2011-2013
+ 72% of firms raising $7M+ are medical device: digital health is
second with 17%

8. + 2015 reaches new high in dollars ($91.2M) going to companies
securing first investment
+ Companies receiving first financing in 2015 (44) more than
doubles, up 132% from 2014 (19)
+ 21% of 2015 investment dollars go to companies receiving first
financing, up from 7.6% in 2014, an increase of 177%
+ 39% of companies securing first-raise funds are medical device
followed by digital health (23%), pharmaceuticals (16%), and
diagnostics (7%)
MN Replenishes the Pipeline of NewCos

9. SUBSECTORS

10. Medical Device and Digital Health Lead in Dollars and Companies

11. Investment in life sciences remains robust and it’s very encouraging to see the
increase in the number of companies receiving their first round of funding. It is
this activity that contributed to Square 1 opening a new office in Minneapolis a
year ago, expanding our footprint in the life sciences and venture capital
communities in the Midwest.
“
” - Jay McNeil
Managing Director, Life Sciences
Square 1 Bank
A Division of Pacific Western Bank

12. When it comes to cardiac and neuromodulation therapies, Minnesota is a global leader. Steve Goedeke, CEO and President of
Cardionomic, sees the capabilities of Minnesota’s companies and individuals as important factors of Cardionomic’s success in raising
a $20M A Round.
While Cardionomic’s top-tier backers include NEA, The Cleveland Clinic and Greatbatch Medical, raising funds for the company was
still very challenging. “It’s a difficult funding environment for early stage companies. Industry mergers, evolving VC strategies and the
vagaries of timing can result in a small number of potential funding sources at any given moment. Strong clinical evidence, issued
patents, well respected advisors and most importantly, persistence, were vital to our success," said Goedeke.
2015 Investment Profile: Cardionomic
Steve Goedeke
CEO & President
Virtually everything we need to be successful can be found in the local
ecosystem. The pool of talented people, vendors and partners is among
the best in the world which significantly reduces execution risk.
“
”

13. “Minnesota has a deep medtech bench,” commented Goedeke. “Virtually everything we need to be successful can be found in the local ecosystem. The pool of
talented people, vendors and partners is among the best in the world which significantly reduces execution risk.”
Cardionomic’s neuromodulation technology targets improved cardiac output to treat acute decompensated heart failure. As the President of Denali Medical II, a
venture-backed incubator, Goedeke knew that investors would want to see a compelling market, talented team, reasonable mechanism of action (MOA) and
clinical evidence before funding the program. With that criteria in mind, “We made an early strategic decision to focus on the creation of clinical evidence that
demonstrated the MOA. Towards that end, we created a 19 patient human data set for about $2M. This demonstrated capital efficiency to our current and potential
investors while creating a compelling and fundable story,” said Goedeke.
2015 Investment Profile: Cardionomic

14. Medical Device
Medical Device Investment Tops $300M for Third
Consecutive Year
+ In the last 3 years, medical device firms secure $924.7M in
investment
+ 2013 - 2015 average investment ($308.2M), up 47% over 2011-
2012 ($209.6M)
+ 46 companies secure investment, up from 43 in 2014
+ 2015 medical device median deal size is $1M

15. 2015 Investment Profile: Pursuit Vascular
Doug Killion
President & CEO
Pursuit Vascular closed on $5.1M Series B from Angel Investors: Funds used to complete large scale clinical studies, ramp up
manufacturing 100-fold and launch its first product.
Managing over 30 individual investors is no problem for Pursuit Vascular, a medical device firm developing a family of single-use
products that protect patients from costly and deadly infections associated with long-term catheters.
“Securing initial funding for new ideas has become harder,” commented Doug Killion, President and CEO of Pursuit Vascular. “To
attract investors, target a big clinical problem with a product that provides better quality of care and lowers cost. It also helps if the
technology is easy to understand when working with angel investors.”
“If you do what you say you are going to do and achieve your milestones, then securing follow-on funding is much easier,” said Killion.
As evidence of this, Killion closed on a $5.1M Series B round in March 2015.
…the cost of doing business is a better value in Minnesota. We would
likely have needed substantially more if we were located on the coasts.
“
”

16. 2015 Investment Profile: Pursuit Vascular
The funds were used in part to complete large-scale randomized clinical studies. “The data for the first study is in and the results are outstanding,” commented
Killion. “A study done in collaboration with Fresenius Medical Care found clear and significant reductions in both bloodstream infections and hospitalizations due to
infection with use of ClearGuard HD antimicrobial barrier caps in patients undergoing dialysis treatment.”
The positive clinical data is fueling the need to ramp up manufacturing capacity 100-fold in advance of launch. “The novel ClearGuard HD Antimicrobial Barrier Cap
is a first-of-its-kind device, and has already been cleared for sale in the U.S. Indicative of the clinical need, the approval of the device triggered the creation of a new
Product Code by the FDA,” Killion said.
Being located in Minnesota helped contribute to Pursuit Vascular’s success. “Our angel investors know the medical device space. In terms of talent, everything you
need is here – research & development, regulatory, clinical, quality and manufacturing. Finally, the cost of doing business is a better value in Minnesota. We would
likely have needed substantially more if we were located on the coasts.”
Securing initial funding for new ideas has become harder. To attract investors,
target a big clinical problem with a product that provides better quality of care
and lowers cost.
“
”

17. Medical Device
2015 Sees Highest Number of
$3M+ Investments
+ 20 companies raise $3M+, an 18% increase
over 2014 (17)
+ Notable raises include:
+ NX Thera ($43M)
+ Enteromedics ($41M)
+ Conventus Orthopedics ($23.4M)
+ Zyga Technology ($20M)
+ Skyline Medical ($13.5M)
+ Sunshine Heart ($10.3M)

18. Medical Device
732% Increase in First-Time Financing Dollars for
Medical Device Firms
+ 20% of medical device investment dollars in 2015 are going to initial
raise, up from 4.9%, 3.7% and 2.3% in 2012-2014 respectively
+ 63% of companies in 2015 are securing follow-on funding, down from
88% in 2014
+ Median deal size for first raise is $1M, $1.4M, $0.44M, and $0.31M from
2015 to 2012 respectively

19. Digital Health
Digital Health Investment Continues to Rise, Up 59%
+ Digital health investment reaches record high at $67.1M
+ 2015 up $24.8M over 2014 (59%)
+ 2014 up $13.4M over 2013 (46%)
+ 2013 up $14.2M over 2012 (97%)
+ Second year in a row with 22 companies funded

20. Digital Health
2015 Continues Digital Health Trend to
Larger Deal Size
+ In 2015, 10 companies raise $1M+, up 43% from
2014 and 100% from 2013
+ Notable raises include
+ Novu ($20M)
+ Zipnosis ($17M)
+ Gravie ($12.5M)
+ Oneome ($3.4M)

21. Personalized medicine company, Oneome, secured $3.3M in funding to expand offering to include comprehensive dynamic
pharmacogenomics analysis and clinical decision support at the point of care.
Although this is the company’s first funding round, they have already come a long way. Oneome, a spin out from Invenshure, a digital
health incubator and the Mayo Clinic’s Ventures and Center for Individualized Medicine, is rapidly developing and deploying the
pharmacogenomics platform and clinical decision support.
2015 Investment Profile: Oneome
Troy Kopischke
CEO
Resources in MN tend to be more loyal and committed to seeing
projects through to completion. In fact, there are many examples of
technologies that would have been very difficult to build on either
coast due to the loss of domain knowledge in talent transition.
“
”

22. “The technology is already live at Mayo Clinic through the Center for Individualized Medicine,” said Troy Kopischke, Oneome CEO.
“Our current platform uses patient genetic profiles to determine the safety and metabolic uptake of the top 230 drugs, and by the end
of Q1 2016 we anticipate being able to provide information on the top 350. The second component is dynamic integration of patient
information including existing prescriptions, allergies, and drug-to-drug interactions to deliver timely evidence-based decisions at the
point of care.”
Securing the $3.3M was not difficult. “Within the digital health sector, we’ve been successful securing over $20M from the local angel
community for Oneome and other companies in the Invenshure portfolio,” commented Kopischke. “Although money flows differently
in Minnesota compared to the Bay area, Minnesota has a robust angel network and strategics willing to back good ideas with strong
management teams. Regional funding sources are less likely to get distracted by the next flashy thing.”
Kopischke notes that in Minnesota, both investors and talent have more aligned core values. “Resources in Minnesota tend to be
more loyal and committed to seeing projects through to completion. In fact, there are many examples of technologies that would have
been very difficult to build on either coast due to the loss of domain knowledge in talent transition.”
When it comes to offering advice to other entrepreneurs, Kopischke states, “It’s a lot of what you already know; a well thought out
idea, a management team with a good track record, hiring people smarter than yourself and finding mentors that share your passion
during the various stages of growing companies. There are a lot of great ideas out there but it takes hard work, financial backing and
execution to successfully bring them to market.”
2015 Investment Profile continued: Oneome

23. Digital Health
Digital Health Follow-on Investment Up from 2014
+ Digital health follow-on funding dollars up 65% in 2015
+ Digital health first-raise dollars up 24% however 2015 continues trend
of decreasing percent of total dollars (33.3%, 22.5%, 15.6%, 12.2% in
2012-2015 respectively)
+ Median deal size of first-raise continues to increase ($0.2M, 0.3M,
0.4M, and 0.5M in 2012-2015 respectively)

24. Diagnostics
Diagnostics Investment Reaches High with $27.2M
+ Diagnostics investment up 253% over 2014 and tops previous high
(2012 $25.3M) by 8%
+ Companies securing funds in 2015 up 167% from 2014
+ Increase in dollars driven by raises from Ativa Medical ($15.2M), AUM
Cardiovascular ($5M) and Rapid Diagnostek

25. 2015 Investment Profile: Osprey Medical
Mike McCormick
President & CEO
Osprey Medical, a Minnesota company committed to protecting patients from the harmful effects of contrast dye, raised $14M USD of
development capital in Q1 of 2015 on the Australian Stock Exchange (ASX).
Mike McCormick, President and CEO of Osprey Medical, became acutely aware of the need for technology that would reduce the
amount of dye used in angiographic procedures after he lost his father-in-law to a contrast dye event. These routine procedures can
result in death of up to 20% of patients who develop contrast-induced acute kidney injury.
McCormick is proud to say they have the only FDA-approved system to reduce the amount of contrast media required in heart
procedures without impacting image quality. In March of 2015 they raised $14M USD to generate data to expand marketing claims and
initiate US sales for the device.
First and foremost, focus on patient benefit and generating tier one
scientific evidence that supports those patient benefits. If you do
that, funding will follow.
“
”

26. 2015 Investment Profile: Osprey Medical
“Although our technology came from Australia, we were always headquartered in the US with 19 full-time employees in Minnesota.” commented McCormick.
However, he is quick to acknowledge that both Australia and Minnesota have offered benefits to Osprey.
“In Minnesota we have access to engineering talent, quality suppliers, and a wealth of service providers that allow us to operate virtually. In Australia, we had a
syndicate of VC investors and in 2012 we went public on the ASX which has been a great funding source for Osprey to get through early clinical and early
commercialization efforts.”
In regard to advice for other entrepreneurs, McCormick offers “First and foremost, focus on patient benefit and generating tier one scientific evidence that supports
those patient benefits. If you do that, funding will follow.”

27. Diagnostics
Diagnostic Firms See Boost in
Investment in 2015
+ 167% increase from 2014 in the number
of diagnostic companies receiving
investment
+ 38% of investments $3M+
+ Notable raises include:
+ Ativa Medical ($15.1M)
+ Aum Cardiovascular ($5M)
+ Rapid Diagnostek

28. Pharmaceuticals
Pharmaceutical Investment Second Highest in Seven
Years
+ In 2015, pharmaceutical firms raise $28.2M, second only to 2014
+ Record number of companies raise funds in 2015 (13), up 18% from
previous high in 2014
+ 2014-2015 investment average $38.7M, up 590% over 2011-2013
average $5.6M

29. Pharmaceuticals
Early-Stage Investments Spike in
MN Pharmaceuticals Sector
+ Early-stage investments (<$1M) up 60% from
2014 and 167% from 2013
+ 2015 sees most diversity in deal size
+ Notable raises include
+ Minnesota Medical Solutions ($16.6M)
+ Spine Thera ($3.5M)
+ Aurora Pharmaceuticals ($2.4M)

30. Stemonix has made significant progress in forming a world-class team, scaling manufacturing techniques and meeting key milestones
in less than two years. StemoniX is an early-stage regenerative medicine diagnostic company focused on producing high-volume 2D
and 3D stem cell-derived human tissue for custom drug discovery and personalized medicine applications.
“A critical thing to do as an entrepreneur is to really discover your company's product market fit and lean startup methods are quite
effective at that. By talking to customers early we were able to pivot before expending capital” offered Ping Yeh, the founder and CEO
of StemoniX . Yeh's approach translated to $3M of funding and partnerships to achieve their mission of accelerating the discovery of
new cures.
2015 Investment Profile: Stemonix
Ping Yeh
CEO
A critical thing to do as an entrepreneur is to really discover your
company's product market fit and lean startup methods are quite effective
at that. By talking to customers early we were able to pivot before
expending capital.
“
”

31. “We vaulted Stemonix forward by partnering with the best expertise - regardless of geography” commented Yeh. “We are a Minnesota company with R&D in San
Diego. In the next 6 months, we are going to be scaling our manufacturing and there are few places better to do that than MN.” Yeh continues, “There is great value
in being able to take the knowledge and connections we've established and merge them with the medical manufacturing expertise that exists locally.”
“Minnesota has an underappreciated regenerative medicine ecosystem,” said Yeh, explaining his reasoning for establishing the company in Minnesota. “There is a
strong commitment from the state to invest in building out an ecosystem that supports the diversity of technologies and business models. Additionally, there is talent
coming out of the University of Minnesota and it’s home to leading organizations in transplant medicine such as Be the Match.”
2015 Investment Profile: Stemonix

32. Medical Alley Association’s intelligence and research work is generously
supported by our Foundational and Sustaining Members.

33. FOUNDATIONAL MEMBERS

34. SUSTAINING MEMBERS

35. Medical Alley Association would like to thank Square 1 Bank
for their sponsorship of the 2015 Annual Report

36. Although we monitor a variety of sources for investment activity, we
believe there is more to capture.
Please help us by reporting your company's fundraising events as
they happen.
Anything shared with us is confidential and will be deidentified before
being incorporated into aggregate data for our reports.
To share information, please contact Cheryl Matter, PhD, VP of
Intelligence & Research, at cmatter@medicalalley.org or 952.746.3817
Report Your Investment

37. METHODS
Investment data was collected from a variety of sources including:
• Minnesota Angel Investment Tax Credit program
• SEC filings
• Company press releases
• News publications
• Company Reporting
• Evaluate MedTech
• CB Insights
Duplicate data has been removed to arrive at the investment numbers.
While most data is available in public sources, Medical Alley Association does not
release the list of companies that have raised money unless an individual firm has first
made its own public announcement.
For this report, the health technology is defined as medical device, pharmaceutical,
biotechnology, diagnostic, and digital health technologies.

38. Contact Us
Cheryl Matter, PhD
VP, Intelligence & Research
Medical Alley Association
4150 Olson Memorial Hwy, Suite 430
Golden Valley, MN 55422
Email: cmatter@MedicalAlley.org
Phone: 952.746.3817
MedicalAlley.org