Asthmatx Got a Better Deal


VC-backed healthcare IPOs have been a disappointing breed this year, with most pricing either below forecast or not pricing at all. Among those in that latter bucket seemed to be Asthmatx Inc., a Silicon Valley maker of catheter-based medical devices to help people breathe easier. It had filed for a $74.25 million IPO in July, slightly reduced its projections to $65 million and then last month said that it would forego an IPO in favor of an “alternative strategic option.”

From the outside, this looked like Asthmatx was providing amorphous excuses for not being able to price. It even used to time-tested “in light of current market conditions” in its official withdrawal notice earlier this week.

But then I began hearing that the “alternative strategic option” was accurate while the “current market conditions” was left-over boilerplate from someone else’s failed IPO.

So I emailed Asthmatx CEO Glen French, whose interest in replying could be best described as reluctantly eager. Reluctant because he is not allowed to disclose specifics of any deal (which makes me assume it’s somehow related to a public company), and eager because he doesn’t want his company lumped in with the other VC-backed IPO failures. 

“Regarding our IPO, our roadshow went great,” French said. “We had an oversubscribed deal in the range, with great interest from top-tier investors, and we very simply were presented with a more attractive alternative 90 minutes before pricing. I am unable to comment further, other than to say that everyone involved did a great job, and we are very pleased with our outcome.”

French added that we shouldn’t necessarily expect some sort of press release about the alternative to be forthcoming soon, but reiterated that it was a clearly superior opportunity to the proposed IPO. [Note: Other sources have backed up French’s claims, but I’ve not yet been able to confirm all of the specifics].

On a semi-related front, it’s also worth noting that a positive outcome would be particularly welcome news for Asthmatx backer Vanguard Ventures, which is trying to salvage its portfolio before heading back to market in 2008. It recently tried raising a $125 million fund, but LPs balked at a noticeable lack of positive exits and substantial write-downs. Vanguard VII was 68% drawn down at the end of Q1 2005, but had lost more than 50% of its portfolio carrying value, according to a public document from Private Equity Investor PLC. The situation worsened one year later, with 73% called down and a carrying value that was off 57.2 percent.

Other Asthmatx shareholders include Boston Scientific Corp., HBM Partners, MedVenture Associates, Menlo Ventures, Montreux Equity Partners and Polaris Venture Partners. The company had raised over $42 million.