SleepApneaDisorder/[Press Release i]/ June 27, 2011/ Safeguard Scientifics, Inc. (NYSE: SFE), a holding company that builds value in growth-stage life sciences and technology companies, today announced that it led a $35 million Series D financing for Baltimore, MD-based NovaSom, a diagnostics company enabling home diagnosis and treatment of obstructive sleep apnea (OSA). Safeguard provided $20 million of financing; the additional $15 million was provided by existing investors, including TPG Biotechnology II Fund and Quaker BioVentures, among others. Proceeds from the financing will be used to fund growth, expand its leadership position in payer and provider markets, and develop additional innovations within the company’s proprietary NovaSom® diagnostic medical device and cloud-based MediTrack® Patient Management Portals.

The NovaSom Home Sleep Test is a portable, FDA-approved instrument that can detect OSA at home for patient convenience and enhanced accuracy. To date, the test has been conducted on more than 70,000 patients. NovaSom’s innovative home service delivery model, combined with a pioneering cloud-based portal technology, connects NovaSom with physicians, therapy providers and payers to achieve alignment in patient preference, cost and quality objectives.

“Over the past six months, we’ve realized significant value through four well-timed exits, and are now redeploying that capital into new, high-potential businesses,” said Peter J. Boni, President and CEO of Safeguard Scientifics. “NovaSom is the first and largest provider of an FDA-approved, full-service home sleep apnea test. With this financing, we are proud to support a life sciences company that is ultimately reducing healthcare costs, improving diagnostic outcomes and addressing a significant unmet need.”

According to Marketdata Enterprises, 18 million people in the United States suffer from OSA today, but only 3 million are diagnosed. In addition, Marketdata Enterprises reported that the OSA diagnostic market in the U.S is valued at over $4 billion, and is growing more than 17 percent each year, fueled by obesity, diabetes, hypertension and an aging population.

Obstructive sleep apnea (OSA ) is caused by obstruction of the upper airway and characterized by repetitive pauses in breathing (known as apneas) during sleep, despite the effort to breathe. It is usually associated with a reduction in blood oxygen saturation and commonly accompanied by snoring. If untreated, those who suffer from Obstructive sleep apnea (OSA ) experience a high risk of co-morbid disease, and are seven times more likely to be in a car accident, five times more likely to experience a cardiac event, and two times more likely to have a stroke.

“Untreated Obstructive sleep apnea (OSA )is a major problem for our health system. It can cause or worsen numerous chronic and costly health disorders,” said James A. Datin, Executive Vice President and Managing Director of the Life Sciences Group at Safeguard. “With diagnoses hindered by patients avoiding sleep labs, the NovaSom home sleep test provides a welcome solution for patients, addressing the capacity, cost and comfort issues that may be negatively associated with these labs. This is what drew us to NovaSom. Led by a strong and proven management team with a less intrusive and more accurate test, there is a substantial market opportunity here.” Datin will join NovaSom’s Board of Directors.

Traditionally, patients who are suspected of having Obstructive sleep apnea (OSA ) are seen by a primary care physician and then referred to a local Sleep Medicine specialist, who will recommend an in-lab sleep study where patients must spend one night away from home. The inconvenience and expense deter approximately 30 percent of patients from being tested. Over 3.5 million sleep tests are conducted annually in the United States, with less than 5 percent done in the home setting. Within the next five years, home testing is expected to increase to 40 to 50 percent.

“A new alternative solution needs to be made available to efficiently reach, test and treat those who are living with undiagnosed OSA,” said Richard M. Hassett, MD, President and Chief Executive Officer of NovaSom. “By giving patients the option to conduct tests for OSA in their homes, we hope to identify and treat more of the 15 million undiagnosed sufferers. This Series D financing will augment our traction to date, expand our market penetration and impact our patients’ quality of life.”

NovaSom is a privately held diagnostic-service provider for home testing and evaluation of sleep-disordered breathing, which includes the diagnosis of obstructive sleep apnea (OSA). Based in Glen Burnie, Maryland, the company was incorporated in 1992. NovaSom is a Medicare-approved Independent Diagnostic Testing Facility (IDTF) and is fully accredited as both an Ambulatory Care Sleep Diagnostic Center and as a Telehealth provider by The Joint Commission. The home testing system manufactured and distributed by NovaSom has FDA clearance for the diagnostic evaluation of OSA in adults. NovaSom has integrated their home sleep testing system into a cloud based, collaborative patient management platform for physicians and payers.

Safeguard Scientifics , Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative life sciences and technology companies. Safeguard targets life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices, Regenerative Medicine, Specialty Pharmaceuticals and selected healthcare services, and technology companies in Internet / New Media, Financial Services IT, Healthcare IT and selected business services with capital requirements of up to $25 million.

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