One of the themes we have here in our healthcare group at Highland is: sizzle sells.

What do I mean by sizzle?

I am speaking of companies operating in markets that capture the imagination of the popular press. Companies that break through the noise and scream out “take me public” or “buy me”

Sizzle stories face all of the obstacles that other companies do in becoming successful but we have found that the sizzle stories are the ones where a supersized return is more likely.

In healthcare, our sizzle stories arent nearly as sexy as FourSquare, Twitter, Zynga, Facebook, Quattro, AdMob but they are still great companies and markets.

Sizzle stories are probably 1% of all venture-backed companies – maybe even less.  They only come along once every few years in each sub-sector.

Three recent examples that come to mind:

1) Conor MedSystems – Drug eluting stents. Picture it – 2001, J&J releases data showing 0% restenosis on their stent.  Yet Jeff Shanley and Frank Litvack have this amazingly interesting stent technology at Conor that allows far less drug to be used on the stent than the normal drug eluting stents in trials.

Drug stents are approved, Market doubles overnight from $3B to $6B.  Everyone wants to be in stents.  Can’t pick up the NY Times or WSJ without seeing a story on drug eluting stents. The only credible start-up in the space is Conor. IPO in 2004, Conor sold in 2007 to J&J for $1.4B.

Highland was lucky to be the largest venture investor at Conor and we give all of the credit to Jeff and Frank for persevering when many told them to give up along the way.

2) Sirtris – resveratrol. The anti-aging, anti-diabetes miracle.  Christoph Westphal and his team did an amazing job captivating the popular press with the power of resveratrol.

NY Times and 60 Minutes stories may not have been all that was needed to take the company public and sell it for $720M to GSK, it sure didn’t hurt that Sirtris was in every magazine and newspaper in America for 2 years running. Kudos to Christoph and his team.

3) Generation Health – pharmacogenomic testing. What happens when you take a big idea like pharmacogenomics and genetic testing benefits management and put some incredibly brilliant and experienced people in the management team including Highland’s very own Graham Gardner (CMO)?  What you get is lots of strategic interest in a company that was only founded in November 2008.

There are of course also some cases where there is no steak behind the sizzle: Sequenom and their pre-natal Down’s syndrome fiasco comes to mind.

Timing is everything in start-ups. So is luck.

The best CEOs and teams know how to couple timing, lucky breaks, and macro-event momentum to raise money before it is needed, to capitalize on press coverage and to create press coverage, and to captivate the strategic buyers.  All of which leads to big exits.

For early stage investing in high risk healthcare ideas, I think sizzle is everything.  It must also be coupled with CEOs whose strength is telling the story to anyone who will listen and who can fundraise relentlessly.

Are there other recent examples of sizzle stories in healthcare?