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Health care VC hits new Indiana low in 2011

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Well, that was a dud.

Last year turned out to be one of the worst in recent Indiana history for health care venture capital investment, according to data compiled by BioEnterprises, a life sciences business development group based in Cleveland.

Nine Hoosier companies landed money last year, the same as in 2010. But the total amount landed was just $14.1 million, the lowest amount of venture capital flowing to Indiana’s health care sector since BioEnterprises began tracking such deals in 2005.

In 2010, Indiana companies attracted $25.1 million and, in 2007—the peak year for the entire region—the state pulled in a whopping $135.6 million.

“Midwest biotechs are suffering from the national venture industry's shift away from early-stage biotech investing,” said Baiju Shah, CEO of BioEnterprise, in a prepared statement. But investors are putting more money into health information technology companies, along with the Midwest’s typical staple: medical-device makers.

“Venture investors are drawn by both providers and payers searching for health IT applications that can improve effectiveness and efficiency of their enterprises," Shah said.

Across all 11 states BioEnterprises tracks, life sciences venture investing rose 10 percent last year, to nearly $810 million. A total of 178 companies raised money, up from 161 the year before.

Indiana wasn’t the only area feeling pain . Michigan and western Pennsylvania both suffered big declines in life sciences venture funding, with Michigan posting its lowest total since 2005 and western Pennsylvania posting its lowest total since 2007.

Minnesota led all states with $223 million in venture investments, flowing mainly to the state’s bevy of medical-device firms. Missouri also saw a big increase last year in venture investing.

Indiana’s totals may be dampened because one of the nine companies receiving money, BioCritica Inc., did not disclose the amount it received. However, the point may be somewhat moot. BioCritica’s business plan—to reinvigorate Eli Lilly and Co.’s sepsis drug Xigris—fell flat when a new clinical trial of the drug caused Lilly to pull it from the market.

BioCritica CEO David Broecker has since joined Indianapolis-based Harlan Laboratories Inc.

The other Indiana companies that received money last year included:

— Indianapolis-based Wellfount Corp., $6 million from Michigan-based Arboretum Ventures

— Fort Wayne-based BioPoly LLC, a subsidiary of Schwartz Biomedical, $2.5 million from undisclosed investors

— Indianapolis-based FAST Diagnostics, $2.25 million from angel investors

— Carmel-based Dormir Inc., $2 million from undisclosed investors

— Brownsburg-based Biologics Modular, $750,000 from undisclosed investors

— Indianapolis-based Symbios Holdings, $300,000 from undisclosed investors

— West Lafayette-based BioSciences Vaccines, $150,000 from Purdue University’s Emerging Innovations Fund

— Indianapolis-based Aarden Pharmaceuticals, $100,000 from the Indiana Seed Fund, overseen by Indianapolis-based BioCrossroads

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