NeuWave Medical, the Madison, WI-based maker of medical devices that use microwave energy to zap tumors, has raised $25.3 million in a Series C round, the company announced today.
The deal is the largest funding round announced by a Wisconsin company so far this year.
The round was led by Versant Ventures, with participation by previous NeuWave investors, including H.I.G. BioVentures, Madison-based Venture Investors, and angel investors. Versant managing director Kirk Nielsen joined the company’s board as part of the deal.
NeuWave says it has raised about $54 million from investors since it was founded in 2004 by three University of Wisconsin-Madison professors—radiologist Fred Lee and engineers Dan van der Weide and Chris Brace.
After getting FDA clearance, NeuWave began selling its devices in 2011. It has been growing sales at a 66 percent compounded annual growth rate, and this year it should exceed $20 million in revenue, CEO Dan Sullivan says. The company isn’t profitable, but it could be if it weren’t spending heavily to expand, he adds.
“We’re growing pretty fast,” Sullivan says. “Now’s the time to increase investment in the company to take advantage of the opportunity that’s in front of us.”
The new money will fund new hires, expanded sales efforts worldwide, and research and development projects, says Sullivan, who joined the company a year ago. During his career, he has led multiple med-tech startups that went public or were acquired by the likes of Boston Scientific and Covidien.
The company currently employs about 80 people, more than half based at the Madison headquarters. It also has a small satellite office in Minneapolis. NeuWave is adding employees in sales and marketing, engineering, production, and administration, Sullivan says.
Much of the sales push will focus on international markets. NeuWave’s devices are currently used in more than half of the top cancer centers in the U.S., but it’s only selling products “in a modest way” overseas, Sullivan says. “We’ve got pretty significant demand to expand that.” The company’s products are approved for sale in Europe, and it’s seeking the green light in other continents, he says.
NeuWave’s products deliver focused heat to “ablate” or destroy tumors, primarily those located in the lungs, liver, kidneys, or bones, Sullivan says. One or more thin antennas are inserted into the targeted soft-tissue lesions, and they discharge microwave energy from the tip, causing the tumor’s water molecules to rapidly move back and forth. That movement results in friction and heat that eliminates the tumor, while avoiding damage to healthy tissue, NeuWave says.
Tumor ablation procedures have become more popular over the past few decades, in part due to advances in minimally invasive surgery—which only requires a small incision—and imaging technology that can better guide the ablation. Ablation is sometimes used as an alternative treatment for patients who aren’t good candidates for traditional surgery that cuts out tumors, according to a radiology industry paper published in 2010.
There are various ablation methods, including those that rely on radio frequency waves, lasers, chemicals, or blasting cold gas. Microwave-based systems emerged in the past decade from companies like NeuWave, Covidien, and AngioDynamics.
Microwave ablation procedures only last about 10 minutes, and patients often are able to return to work the next day, Sullivan says.
One of the differentiators for NeuWave, Sullivan says, is its microwave ablation system uses software to control the energy output, automatically synchronize multiple antennas being used in a single procedure, and run diagnostics on the devices, Sullivan says.
That software could prove key to NeuWave’s long-term plans because it means the company can collect and analyze vast amounts of data about tumor-zapping procedures. The company’s R&D efforts will partly focus on potential software products and apps, Sullivan says. “We anticipate having a data play at some point in the future.” The company is also working on developing additional devices, he says.