VC Daily: Digital Health Is Booming, but VC Doesn’t See a Bubble Forming

Good day. Venture-capital investment in digital health is rising quickly, but don’t call today’s environment a bubble, says Glen Tullman, a managing partner of 7wireVentures.

Digital-health startups raised $14.7 billion in the first half of this year, topping the full-year 2020 total of $14.6 billion, according to Rock Health. Investors hope to repeat the success of companies such as Livongo Health Inc., a 7wireVentures portfolio company that helps patients manage chronic conditions such as diabetes. Livongo, which went public in 2019, was acquired by Teladoc Health Inc. last year for $18.5 billion.

Mr. Tullman founded and previously was executive chairman and chief executive of Livongo. Now he is CEO of a new company, Transcarent, which recently raised a $58 million financing led by 7wireVentures and General Catalyst. Transcarent aims to help self-insured employers lower their healthcare costs and enable their employees to receive better medical care.

Transcarent helps its customer employees get access to second opinions and provides them with information about their treatment options and where they can go to get their care.

Healthcare is undergoing a consumer-directed transformation in which patients are gaining more control of their medical care, powered in part by digital technologies, Mr. Tullman said. Not every digital-health company will succeed in enabling that shift, but that doesn’t mean the investment surge is unwarranted, he said.

“There’s going to be some very big winners, there will also be some companies that don’t work out, but this is not a bubble,” he said.

And now on to the news…

Top News

Life sciences software. Venture capitalists have provided early-stage financing to Colabra, a software startup seeking to enable better collaboration among researchers in the surging life sciences industry.

Scientists are increasingly applying biotechnology tools in sectors such as pharmaceuticals, agriculture, energy and materials. That is spurring investor interest in software designed for life scientists tasked with managing and analyzing growing stores of biological data, as opposed to generalist collaboration tools used across various industries.

San Francisco-based Colabra launched in January and recently raised $1.5 million from investors including Village Global and Builders VC.

Colabra aims to speed scientific discoveries through software designed to help researchers collect and use data more effectively. Other companies in this sector include Benchling Inc., which closed a $200 million venture financing early this year

‘Scientific analysis is only as good as its data.’

— Milad Alucozai, head of bio and deep tech for BoxOne Ventures, an investor in Colabra, whose software helps life scientists share data and collaborate.

Virtual-Care Platform Neuroglee Therapeutics Raises $10 Million

Neuroglee Therapeutics has raised $10 million for its latest funding round as it focuses on building digital therapeutics to help patients with neurodegenerative diseases, WSJ Pro’s Isaac Taylor reports.

As many as 6.2 million are living with Alzheimer’s disease, according to the Alzheimer’s Association. Neuroglee is looking to help patients with early-stage Alzheimer’s and those with mild cognitive impairment with a treatment that can be prescribed by doctors.

The Series A round was led by Singaporean firms EDBI and Openspace Ventures. Neuroglee raised the current Series A round to focus on advancing the product pipeline and build out the virtual-care model with nurses and clinicians who can do remote rehab and assessment.

Perrigo to Buy Héra for $2.1 Billion, Furthering Nonprescription Focus

Perrigo Co. PLC, a pharmaceutical company, has agreed to buy Héra SAS for 1.8 billion euros, or roughly $2.1 billion, in a merger that would help cement Perrigo’s shift to focus on nonprescription drugs, Matt Grossman reports for The Wall Street Journal. The all-cash acquisition of Héra would extend Dublin-based Perrigo’s presence in sales of blister-care, scar-care and women’s-health products. Héra, now co-owned by Astorg Partners, a private-equity firm, and by Goldman Sachs Asset Management, sells skin treatments such as Compeed and Mederma. It also makes ellaOne, an emergency contraceptive.

Battery Makers Tied to Power Grid Attract Big Investors

Big investors are charging into startups touting experimental new battery technologies that would make it possible for renewable energy sources to produce most of the country’s electricity, WSJ reports. Deep-pocketed investment firms such as TPG, Apollo Global Management and Paulson & Co. in recent months have plowed hundreds of millions of dollars into the companies, which make what are called long-duration batteries.

Other VC News

PayPal Holdings Inc. agreed to buy Japanese “buy now, pay later” startup Paidy Inc. for about $2.7 billion, in a move that will boost its business in the world’s third-largest e-commerce market, WSJ reports. The transaction adds to a flurry of activity involving companies that let consumers pay for purchases in installments, as an alternative to traditional forms of credit.

Paidy’s backers include George Soros’s sons Jonathan and Robert. In April, Paidy said it had raised a total of $120 million of so-called Series D funding from the two men’s family offices, JS Capital Management LLC and Soros Capital Management LLC, as well from the investment managers Tybourne Capital Management Ltd. and Wellington Management.

Industry News

Funds

leAD Sports & Health Tech Partners and Tavistock Group launched the Lake Nona Sports & Health Tech Fund. The $30 million vehicle will make seed-stage investments focusing on connected athletes, health and well-being, and fan engagement.

People

Canada-based District Ventures Capital, which invests in the food/beverage and health/ wellness sectors, named Jeremy Daveau as operating partner. He was previously president and general manager of Mars Inc.

Remote patient-monitoring provider Optimize Health appointed Todd Haedrich as the company’s new chief executive. Co-founder and former CEO Jeff LeBrun will become chief strategy officer. Mr. Haedrich joins the company from Covetrus. Last September, Seattle-based Optimize Health said it raised a $15.6 million Series A round led by U.S. Venture Partners.

Immunitas Therapeutics Inc., which is harnessing an emerging technology known as single-cell sequencing to develop cancer treatments, appointed Seng-Lai “Thomas” Tan as chief scientific officer. He previously held the same position at Bicara Therapeutics. Founded in 2019, Waltham, Mass.-based Immunitas has raised $97 million in funding from investors including Agent Capital, Novartis Venture Fund, Alexandria Venture Investments, Leaps by Bayer and M Ventures.

Exits

Medical genetics company Invitae agreed to acquire digital medical-record startup Ciitizen for approximately $325 million in cash and stock. Ciitizen is backed by Andreessen Horowitz, Section 32 and Verily.

Medical technology company Stryker acquired Gauss Surgical, which provides real-time monitoring of blood loss during surgery, for an undisclosed amount. Menlo Park, Calif.-based Gauss Surgical is backed by investors including SoftBank Ventures Asia and Polaris Partners.

Digital health startup Recuro Health purchased epigenetics platform MyLifeIQ for an undisclosed sum. Richardson, Texas-based Recuro recently raised a $15 million Series B round from ARCH Venture Partners, Oklahoma Life Science Fund, Cortado Ventures, 1843 Capital and Sage Venture Partners.

New Money

HilleVax Inc., a Boston-based startup developing a norovirus infection vaccine, scored $135 million in crossover financing. Frazier Healthcare Partners led the round, which included participation from RA Capital Management, Deerfield Management, Abingworth Management, Lightspeed Venture Partners, Perceptive Advisors, Franklin Templeton, Catalys Pacific, Samsara BioCapital, Qiming Venture Partners USA, Greenspring Associates and others. Frazier Healthcare Partners’ Patrick Heron, Deerfield’s Elise Wang and Lightspeed’s Shelley Chu joined the HilleVax board.

InBrace, an Irvine, Calif.-based orthodontic startup, closed a $102 million Series D round co-led by funds affiliated with Farallon Capital Management and Marshall Wace. New investors including funds and accounts managed by BlackRock, Endeavour Vision, MVM Partners, RTW Investments and Soleus Capital also contributed to the funding, along with existing backers including funds affiliated with Vivo Capital, Novo Ventures and venBio. Rob Barmann, a partner at Endeavor Vision, joined the board.

Emulate Inc., a Boston-based organ-on-a-chip technology startup, closed an $82 million Series E round. Northpond Ventures led the round, which saw participation from Perceptive Advisors.

Alamar Biosciences Inc., a Fremont, Calif.-based precision proteomics startup, completed an $80 million Series B round. Sherpa Healthcare Partners led the investment, which included participation from Morningside Ventures, Samsara Biocapital, Qiming Venture Partners and Illumina Ventures.

ADARx Pharmaceuticals Inc., a San Diego-based developer of RNA-targeting therapeutics, secured $75 million in Series B financing. Co-lead investors SR One Capital Management and OrbiMed Advisors were joined by Sirona Capital, OrbiMed Advisors and Lilly Asia Ventures in the round.

Owlstone Medical, a U.K.-based maker of a breathalyzer for early disease detection and precision medicine, picked up a $58 million investment. Horizons Ventures led the round, and Patrick Zhang will join the board.

Replicate Bioscience, a San Diego-based startup using self-replicating RNA to prevent drug resistance in cancer, and treat autoimmune and inflammatory disorders and other diseases, launched with a $40 million Series A investment from ATP.

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September 09, 2021 09:56 ET (13:56 GMT)

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