Increases are going into medical tools and devices.

As life sciences IPOs have come to a standstill with only two offerings completed in the United States in the past three months and four others withdrawn due to market conditions, venture investment has picked up. Venture, angel, and private investors poured more than $1 billion globally into privately held life sciences companies in May, up 23.4 percent from the amount invested in April and up 29.6 percent year-to-date compared to 2011.

In the United States, which accounts for about three quarters of all investments, life sciences companies raised $778 million in the month in 70 transactions, 9.4 percent more than the $711 million raised during April in 66 transactions.

While these numbers are a positive trend, much of the increase in investment has been going into medical device and technology companies rather than to traditional healthcare biotechs—therapeutics, diagnostics, and tools/technology companies. The medical device segment accounted for 41.3 percent of the venture capital raised in the United States in May, with healthcare biotech’s share at 30 percent and industrial biotech companies raising 8.4 percent of the total.

Digital health and healthcare IT companies raised $164 million, or 20.3 percent of the total, which was mostly attributable to the $100 million series D round closed by Castlight Health, a company that provides health plan solutions to employers and patients.

Venture investment in U.S. drug developers is flat year-to-date compared to 2011, at $990 million, while U.S. medical device and technology developers have raised $1,086 million during the same five month period, an increase of 35.6 percent compared to the first five months of 2011.

Among traditional healthcare biotechs—therapeutics, diagnostics, and tools/technology companies—the diagnostics segment has seen the biggest increase in funding year to date compared to 2011, up 86 percent, while companies that supply tools and technology to biotech and pharma companies have seen funding drop by 51.4 percent compared to the same period in 2011.

Investments in U.S. industrial biotech companies, up 56.9 percent, are also up sharply compared to last year. The sector with the most momentum is digital health/healthcare IT. Funding for these companies is up almost 400 percent year to date compared to 2011, with almost all of it being invested in the United States.

Dutch molecular cancer diagnostics developer Agendia, which was set to IPO in 2011 but pulled its offering in June of that year due to poor market conditions, raised $65 million in a series F capital round led by Debiopharm Group with participation of all its current investors and new investors.

Based in the Netherlands and Irvine, California, Agendia develops and markets genomic-based diagnostic products. The company markets the Symphony suite of breast cancer tests that analyze a person’s genome to help physicians determine a patient’s individual risk for metastasis, which patients will benefit from chemo, hormonal, or combination therapy, and which patients do not require these treatments and can instead be treated with other less arduous and less costly methods.

Besides the breast cancer assays, Agendia’s pipeline includes a test for stage 2 colon cancer prognosis and prediction, and other genomic products in development. Agendia also collaborates with drugmakers, cancer centers, and academic groups to develop companion diagnostic tests in the area of oncology.

Deals for the Week Ending June 1, 2012 : Sheet1

By MARIE DAGHLIAN