US Medical Companies Going Overseas for Investors While We Keep Driving Up Intangible Social Algorithms for Investments
Posted Jun 13 2011 12:41am
It seems like we are so very busy chasing those social algorithms today and I’m not the first one to comment on the over valuation of these algorithms. Sure you have a server farm, which is some hardware now that the companies are growing but prior to that portion of servers, it was all rented space on someone else’s servers and there’s a lot of companies out there who still rent space until they get huge.
I like social networks, especially the efficiency of Twitter, my favorite and there’s no problem with them making money but we know what has been in the news about a couple of others and come on, give me a break on how much that algorithm sitting in the window is worth. In the meantime you can see where healthcare suffers a bit with investor interest as these are long time investments and they don’t take off like a rocket when someone writes a new piece of code. Device companies are looking outside the US when they can’t the interest here from investors. Reva Medical had to go outside and go on an 8 month trip to get what they needed and would have rather done it here, but no interest so they didn’t have a choice.
From the website:
“ReZolve™ Bioresorbable Coronary Stent ReZolve is a bioresorbable drug-eluting stent designed to restore blood flow to the artery which allows the artery to remodel (heal), and then resorb from the body. The stent supports the vessel during the critical 90-day healing process, and then gradually resorbs and is benignly cleared from the body.”
We lost out on this one with their biodegradable stent as clinical trials will take place in Australia, the country where the funding came from and we wonder why we lose clinical trials at times, here’s one more reason why. BD
Reva Medical, a maker of medical devices in San Diego, wanted to go public last year to raise money to satisfy impatient venture capitalists and finance research for its heart stents.
But it found little investor interest in the United States for an early-stage medical device company that had not yet made a profit. Reva Medical did what a small but increasing number of young US companies are doing – it looked abroad for money, in Reva’s case the Australian stock exchange. After an eight-month road show, meeting investors and pitching the prospects of a biodegradable stent, the 12-year-old company sold 25 per cent of its stock for $85 million in an initial public offering in December.
Nearly one in 10 US companies that went public last year did so outside the United States. Besides Australia, they turned to stock markets in Britain, Taiwan, South Korea and Canada, according to data from the consulting firm Grant Thornton and Dealogic.
The Alternative Investment Market, or AIM, a part of the London Stock Exchange intended for small company listings, is a popular destination for some US companies. The cost of an initial public offering there is about 10 per cent to 12 per cent of total capital raised, compared with 13 to 15 per cent on Nasdaq, according to Mark McGowan of AIM Advisers, which helps US companies list on AIM.
One reason Reva Medical chose Australia was that country’s system of research hospitals that it intends to use for its clinical trials. Stockman, the chief executive, also sits on the board of another company, HeartWare International, based in Massachusetts and Florida, that carried out an Australian IPO in 2005, and then listed on Nasdaq in the United States in 2008.