Minnetonka-based Osprey Medical has raised about $26 million to bolster its U.S. sales force and ramp up efforts to sell medical devices that reduce the amount of chemical agents used during millions of live-motion X-rays to treat vascular problems.
Earlier this year, the U.S. Food and Drug Administration cleared a new product from Osprey called the DyeTect automated contrast monitoring system, which increased Osprey's potential global market to $1.8 billion, according to a recent presentation from the company.
"The development of our new product, DyeTect, is a direct response to customer requests for the benefits of DyeVert Plus contrast monitoring for non-chronic kidney disease patients," Osprey CEO Mike McCormick said in a July news release. The FDA clearance "increases our addressable market and further supports our long-term company vision: to lower kidney damage in all heart imaging procedures."
Contrast dye is used in millions of procedures per year to place stents in coronary arteries following a heart attack. The dye is used to make certain blood vessels stand out on live-motion X-rays to help physicians precisely place stents, but the dye itself leaves some patients with kidney damage that can impact their health over the long term — a condition called "contrast-induced nephropathy."
Osprey's older products like the DyeVert Plus are marketed mainly for patients who have compromised kidneys that are more likely to be damaged by the dye because they can't process it out of the body quickly enough. The DyeTect system, in contrast, is being marketed for use with heart-procedure patients even if they don't have compromised kidneys.
Osprey said it is the only company that has an FDA cleared product that can claim to reduce the amount of dye used during a procedure without impacting the quality of the X-ray image.
The DyeVert Plus is a single-use disposable product that costs $355 per patient, creating a market opportunity of more than $1 billion per year, McCormick said via e-mail, while the DyeTect system costs $149 per patient, adding $522 million to the total available market.
The $26 million fundraising round fits with a pattern of strong Minnesota med-tech funding in 2017 so far. Despite an overall perception among smaller med-tech companies that fundraising is more difficult today than in recent years, the Minnesota trade group Medical Alley Association reported that health care technology companies in the state collectively raised more than $300 million in the first half of the year, which was the highest tally in eight years.
Medical Alley CEO Shaye Mandle said Osprey's recent fundraising "highlights the value investors are placing on the innovations happening in this booming ecosystem."
Osprey Medical's roots are in Australia, and the company's shares are traded on the Australian Securities Exchange. However, all of the company's employees are in the U.S., and its headquarters is in Minnetonka.
Listing a U.S.-based company on an Australia exchange adds a bit of complexity to the company's fundraising, which involved Chess Depository Interests, or CDIs — a type of security used by the Australian exchange. The CDIs were offered in two groups, including a $17 million private-placement round for "institutional and sophisticated" investors and an $8 million round for existing shareholders. McCormick said both rounds met their goals, and the total amount raised is about $26 million.
The money raised will go to expanding the U.S. sales force, starting a pilot sales program in Germany, supporting additional clinical trial work and future research and development. Osprey had sales of $585,000 in 2016, translating into a net operating loss of $11.7 million for the year. The company had a market capitalization of about $118 million as of Wednesday afternoon.
"We are rapidly growing U.S. sales with a direct sales force; in Q2 2017 sales were up 240 percent over the prior corresponding period," McCormick said.