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Peak Surgical Inc. has raised $21 million in a third round of venture funding led by Signet Healthcare Partners, as the medical device maker prepares to introduce a new disposable radio-frequency cutting tool later this year that it believes causes less tissue damage than existing electro-surgical implements. The deal brings total investment in the three-year-old company to about $29 million and is expected to take the company to profitability in 2010. The new investment includes previous investors Lehman Brothers Inc. and Venrock Associates, both of New York, which backed both of the company's previous rounds. Peak CEO John Tighe said the company filed for final approval for its products with the U.S. Food and Drug Administration in the fourth quarter of 2007 and plans to launch its PlasmaBlade product by mid-year. Tighe said the product physically resembles electro-surgical devices manufactured by market leaders including Johnson & Johnson of New Brunswick, N.J., Covidien Ltd. of Bermuda and Kalamazoo, Mich.-based Stryker Corp. It requires no additional training, and the company expects to begin marketing the product immediately to hospitals and surgery centers, he added. Peak was formed by Mark Blumenkranz, chairman of the Department of Ophthalmology at Stanford University, after he licensed radio-frequency technology from Stanford's physics department. Tighe, who joined the company in June 2006, said Peak took the proprietary technology for applying pulsed, low-power radio signals for cutting tissue and engineered the product to replicate existing tools that use electronic signals, but that produce greater heat. He said Peak's tool produces less bleeding than existing electro-surgical devices or traditional scalpels, leading to faster wound healing and less scarring. Tighe said the technology is appropriate for use in roughly 2 million procedures performed each year in the U.S., particularly in the areas of general, cardiac, gynecologic, plastic and neuro surgery. Signet Healthcare managing partner Joyce Erony said she was attracted to the deal by the company's speed in bringing a product to market and by its ability to begin selling the product upon getting government approval. "It is a very interesting tool that has the look and feel of other tools, but that causes less collateral tissue damage," Erony said. "It is not dramatically changing the practice of medicine, where it is going to require three or four years of training to implement, and it is a little unusual in that it is applicable in a broad number of applications." Tighe said Peak's business model is based on repeat sales of the company's PlasmaBlade disposable hand piece, which is designed for one-time use and which will sell for about $300. The company also will sell $20,000 generator appliances for use with cutting tools, and Tighe said prices were set to be competitive with existing products. Tighe would not disclose a valuation for the new investment, but he said it came at an increase to the company's previous round and that Signet and Erony came into the deal having invested in a previous startup founded by Blumenkranz. Peak did not use an outside adviser in putting the round together and had legal work on the deal from Anthony McCusker of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP in Menlo Park, Calif. Investors were represented by Shon Glusky of Heller Ehrman LLP in New York.  Deal Video
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