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Correction: Earlier version misspelled Sotera name in title and first line.
Last week, Safeguard Scientifics announced it had acquired a 7.7% stake in San Diego-based Sotera Wireless, a wireless health monitoring venture, for $1.33 million. It was part of an overall financing round of $14.8 million.
Safeguard joined a prestigious cast of existing investors including Sanderling Ventures, Qualcomm Ventures, EDBI, Intel Capital, Cerner Capital and West Health Investment Fund, as well as new investor Delphi Ventures. James A. Datin, Executive Vice President and Managing Director at Safeguard, will join Sotera's board of directors.
Sotera’s ViSi Mobile platform is a comprehensive vital signs monitoring system that is designed to keep clinicians connected to their patients, whether in or out of bed, or in transport. ViSi Mobile is initially targeted for in-patient use; Safeguard says that by some estimates, around 60 percent of the approximately 1,000,000 U.S. hospital beds are not continuously monitored. Last year the FDA granted Sotera Wireless 510(k) clearance for in-patient use, and Safeguard's Datin told me in a phone interview that the economic case for in-patient use is strong with savings in areas such as nursing staff time and liability insurance.
However, the larger potential market could be for out-patient or in-home monitoring, and Sotera does not have a product with FDA clearance for that market yet.
Conshohocken-based CardioNet, which also started out of San Diego before moving here, was an early pioneer in wireless in-home monitoring. In fact, Dr. Eric Topol, the cardiologist and leading healthcare technology pioneer who is now Chief Academic Officer of Scripps Health and serves on Sotera Wireless' board, was the first physician to serve on CardioNet's Medical Advisory Board in 1999. CardioNet, which had an IPO in 2008, has suffered financially more recently, in part due to a Centers for Medicare and Medicaid Services decision to slash its medicare reimbursement rates for CardioNet.
Safeguard's acquisition of a 7.7% stake for $1.33 million implies a current valuation of lass than $20 million, although Safeguard says that the total equity invested in Sotera is $65.5 million, including when it operated under the name Triage Wireless.
Datin says Sotera is going to need to raise more money, and Safeguard may be interested in participating again under the right terms. In fact, as part of this investment Safeguard gains the option to raise its ownership stake to 20 percent under certain scenarios. Datin also envisions part of Sotera's potential value for Safeguard lying in analyzing in the vast amounts of healthcare data its system may eventually collect. He also sees possible synergies with other Safeguard healthcare portfolio companies.
Here Dr. Topol demos ViSi Mobile on the TV show Rock Center: