Despite recent lag, health-care sector ahead of '05 total

The health-care sector in Washington just had its worst quarter for venture financing in the last six years, with just $5 million invested in young companies in the three months ended Sept. 30, according to the Dow Jones VentureOne survey.

Still, even with the paltry financing in the third quarter, the health-care sector has raised $279 million year-to-date, more than was invested in Washington health-care companies in all of 2005.

The latest quarterly amount is extraordinarily low for the state's biotech, medical-device and medical-software companies.

About $44 million was sunk into health care in the same quarter a year ago.

The last two quarters in Washington were much fatter times, with local medical-technology companies attracting $134 million and $140 million, respectively.

The last time the sector came close to such a lean quarter was when it received $8 million in the fourth quarter of 2004.

Robert Nelsen, managing director at Arch Venture Partners in Seattle, dismissed the figures as a "statistical anomaly."

A big drop


Third-quarter health-care investments in Washington state:

2006

$5.05 million

2005

$44.35 million

He said it shouldn't be interpreted as a downward trend in the industry, and that he knows of two or three "really big" financings expected to close in the fourth quarter or the first quarter of 2007.

Nelsen said he also believes Eli Lilly's takeover of Bothell-based Icos, and the subsequent layoffs to come, will free up scientific talent to start new companies.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com