In an increasingly digitised, mobile and data-driven world, the health and life sciences sector has been subject to various technological shifts. Many innovations are derived from general technological developments and their democratisation and enablement through mobile devices, the internet of things, artificial intelligence (AI) and big data analytics.
Other drivers are the economic and regulatory characteristics of the sector – whether in drug discovery and pharmaceuticals or in care provision. Research and development in both medicinal drugs and medical devices is a notoriously costly, risky and subject to slow development.
According to a study of clinical trial success rates in the US, the probability of a new compound going from phase 1 trials to approval following phase 3 is about 6.9% – only seven in every 100 new developments are approved by US regulator the Food and Drug Administration. According to data from Pharmaceutical Research and Manufacturers of America, it takes at least 10 years on average for a new drug to go from initial discovery to the marketplace. The average costs of a successful drug are estimated at $2.6bn.
Factoring in the low-interest-rate environment, it can be understood why many industry incumbents have been externalising R&D costs and sharing risks with co-investors through licensing, spinouts, mergers and acquisitions, venture investing and joint ventures.
As in other sectors, life sciences faces digital and datafication challenges. Consultancy Deloitte’s 2018 Global Life Sciences Outlook recommends that life sciences companies “focus on aligning the enterprise to deliver an exceptional customer and patient experience, using data to create value, and create a sustainable digital culture with new leadership styles that embrace change.”
The report identifies the technologies with most transformative potential for the life sciences industry, including AI, robotics, the internet of medical things (IoMT), software-as-a-medical-device, blockchain, DIY diagnostics, virtual care, genomics, cloud computing, real-world evidence – data from routine clinical practice rather than controlled trials – and data-driven precision medicine.
The digital transformation of the sector – from care provision to clinical trials, is creating opportunities for startups and new tech entrants, as incumbents are likely to outsource and seek partnerships to drive down costs. Some of these new entrants are established tech companies such as Alphabet or Apple, while others are emerging businesses. The report also notes that new entrants threaten the status quo, and that traditional pharma and medtech companies can take advantage of opportunities and drive innovation, or risk falling behind.
Aside from the disruptive impact of digital technologies at industry level, new technologies are having a significant effect on clinical outcomes. This has much to do with the evolving field of “digital therapeutics”, which employs digital and internet-connected tools to monitor and treat medical and psychological conditions. Mobile applications help patients with medicine dosage and regularity, or monitor vital statistics, while others offer sensorial alternatives to chemical-based medicinal drugs for conditions such as depression or insomnia. According to a McKinsey article – Digital Therapeutics: Preparing for Takeoff – digital therapeutic solutions tend to focus on chronic diseases or neurological disorders that are “poorly addressed by the healthcare system”.
Digitisation is has had a huge impact on medical devices and diagnostics. Medical devices are expected to be smarter. A report by consultancy EY – Medical technology report 2018: Pulse of the industry – asks: “When the human body is the biggest data platform, how will medtech companies capture value?” Such data are becoming the most valuable currency in life sciences.
According to the report, the medtech industry generated a record $379bn in revenues during 2017, the highest since the 2008 recession. However, the report claims the medtech industry is “overinvesting in short-term business activities to the potential detriment of its long-term growth”. It goes on: “Overemphasis on returning cash to shareholders at the expense of R&D spending leaves the industry with a looming innovation gap.” The report claims R&D spending in the industry has declined and much of the growth in recent years has been achieved inorganically through M&A.
According a Deloitte report – Medtech and the Internet of Medical Things – around 48% of medical devices are connected, while respondents expect 68% of them to be connected within five years. The report stresses the importance of turning data into valuable knowledge. “While the IoMT has the potential to help alleviate some of the cost, access and care coordination challenges facing healthcare, the generation of data points through millions of connected medical devices will have little impact unless turned into actionable insight.” The report also points out that some medical device businesses may have to switch business models as a result of the datafication of the IoMT.
The pharmaceutical subsector of the life sciences space remains among the most important. The global outlook for the pharmaceutical industry in the near term appears moderately promising, though riddled with some concerns on pricing issues. On one hand, there is pressure on governments that pay or co-pay for their citizens’ medicines to reduce costs by placing limits on drug pricing. On the other hand, health insurers and care providers are increasingly more demanding, requiring evidence of effectiveness, cost savings and clinical benefits before including a new drug.
More than half of global pharmaceutical producers believe drug pricing and reimbursement constraints will have the greatest negative impact on the pharmaceutical sector this year, according to the Global Data Pharma’s 2019 industry outlook. A price comparison study conducted by the US Department of Health and Human services from 2018 found that “prices charged by drug manufacturers to wholesalers and distributors in the US are 1.8 times higher than in other countries for the top drugs”. The study ran a comparison with prices mostly in other developed economies. On the positive side, respondents to the survey were optimistic about opportunities in China.
Oncology and cancer treatment has undergone significant transformation. The Quintile IMS Institute’s Global Oncology Trends 2018 report notes that “63 cancer drugs, each approved in one or more tumours, have impacted the treatment of 24 different cancer types”. It also mentions the rise of the field of immuno-oncology since 2014, and that more than 700 cancer drugs are currently in late-stage development – up more than 60% from a decade ago. The report forecasts the value of global oncology therapeutics will reach $200bn by 2022. Many biopharmaceutical deals tracked by GCV Analytics are directly related to cancer treatment.
For the period May 2018 to April 2019, we reported 351 venturing rounds involving corporate investors from the health sector. A considerable number of them (247) took place in the US, while 20 were hosted in China, 13 in the UK, nine in Israel and seven in India.
The majority of those commitments (324) went to emerging enterprises from the same sector (mostly pharmaceuticals, medical devices and diagnostics as well as healthcare IT and administration) with the remainder going to companies developing other technologies in synergies with the life sciences sector – eight deals in the industrial sector (mostly robotics and unmanned aerial vehicles as well as agtech), five in the consumer sector (hygiene, beauty, and food and beverages), and five in IT (mostly big data analytics, semiconductors and chips.
The network diagram, illustrating co-investments of health corporates, shows the variety of investment interests among the sector’s incumbents. The commitments range from diabetes treatments (PhaseBio Pharmaceuticals, Omada Health, Semma Therapeutics) through mobile apps for surgeons (Gauss Surgical) and microbiome-based treatments of a variety of conditions (BiomX) to neuroscience enterprises (Magnolia Neurosciences) and oncology diagnostics (Grail).
On a calendar year-on-year basis, total capital raised in corporate-backed rounds soared from $9.45bn in 2017 to $13.99bn in 2018, a 48% increase. The deal count also grew, by 11% from 296 deals in 2017 to the 328 tracked by the end of 2018.
The 10 largest investments by corporate venturers from the health sector were concentrated in the same industry.
The leading corporate investors from the life sciences sector in terms of largest number of deals were pharmaceutical firms Eli Lilly, Johnson & Johnson and Merck & Co. Health corporates committing capital in the largest rounds were led by Eli Lilly and pharmaceutical firms Pfizer and Wuxi App Tec.
The most active corporate venture investors in the emerging health businesses were life sciences real estate investment trust Alexandria, pharmaceutical firm Eli Lilly and diversified internet conglomerate Alphabet.
The emerging life sciences businesses in the portfolios of corporate venturers included treatments for neurodegenerative diseases such as Alzheimer’s disease (Cortexyme, Arrakis, Alector), cancer treatments (NextCure, Relay Therapeutics, Artios, Galera) and plaforms for prescriptions of apps and devices (XHealth).
Overall, corporate investments in emerging health-focused enterprises went up from 440 rounds in 2017 to 473 by the end of 2018, a 7.5% increase. The estimated total value of those rounds, however, rose significantly, by 51% from $13.80bn in 2017 to $20.90bn last year.
Deals
Corporates from the health and life sciences sector invested in large multimillion-dollar rounds raised by enterprises from the same sector. None of the top 10 deals was above $1bn.
US-based biopharmaceutical company Cerevel Therapeutics was launched with $350m from private equity firm Bain Capital to commercialise several neuroscience assets licensed from Pfizer. Bain Capital supplied the money through funds affiliated with Bain Capital Private Equity and Bain Capital Life Sciences. Pfizer took a 25% stake in Cerevel, and two of its executives – Morris Birnbaum, chief scientific officer of internal medicine, and Doug Giordano, senior vice-president of worldwide business development – joined the board. Cerevel is developing treatments for disorders affecting the central nervous system. Pfizer has licensed preclinical and clinical-stage assets to the company, including compounds aimed at Parkinson’s disease, Alzheimer’s disease, epilepsy, schizophrenia, addiction and neuroinflammation. Cerevel’s most advanced drug candidate is expected to enter a phase 3 clinical trial to treat the symptoms of Parkinson’s, with a second asset ready to enter a phase 2 trial for epilepsy.
Pharmaceutical firm GlaxoSmithKline (GSK) invested $300m in US-based DNA services provider 23andme as part of a four-year collaboration involving 23andme becoming GSK’s partner on drug target discovery initiatives, and utilising its data and analytics to discover disease targets. Founded in 2006, 23andme analyses genetic data to identify ancestry or risk of certain diseases. Customers provide a saliva sample at home using the company’s DNA collection kit. 23andme also uses the genetic data to conduct research on inherited disorders in addition to selling it to other researchers.
US-based cancer test developer Grail secured $300m in an oversubscribed series C round co-led by 6 Dimensions Capital, the healthcare investment firm co-founded by WuXi AppTec. The round, co-led by healthcare investment group Ally Bridge and hedge fund manager Hillhouse Capital, also featured WuXi AppTec’s genomic information subsidiary, WuXi NextCode. Blue Pool Capital, China Merchant Securities International, CRF Investment, HuangPu River Capital, ICBC International and Sequoia Capital China also invested. Spun off from genomics technology producer Illumina, Grail uses a combination of high-intensity sequencing, computer and data science technology and large-scale clinical studies to develop a blood test for detect early signs of cancer.
US-based telemedicine technology provider American Well raised $291m from investors including electronics and healthcare equipment maker Philips. A regulatory filing indicated the company had secured $291m of a round expected to reach $315m, and Philips invested in the wake of a strategic partnership, which involves the companies collaborating on health systems worldwide. American Well has created an online video-based platform that enables physicians to conduct consultations with patients remotely using computers or mobile devices. Doctors can use it to access a range of data options, and health systems can integrate the service.
Healthcare technology provider Cerner paid $266m for a minority stake in Essence Group Holdings, a US-based health service provider backed by corporate venturing unit BlueCross BlueShield Venture Partners. Cerner provided the funding as part of a 10-year partnership agreement. Cerner and Lumeris aim to cut inefficiencies from the care system and will form a joint venture called Maestro Advantage to accelerate processes such as claims processing, reimbursement and data sharing in health plans. Essence owns Lumeris, which manages care provision on behalf of healthcare systems, supplying technologies, care processes, data and products intended to promote healthy living.
China-based biopharmaceutical company CStone Pharmaceuticals closed a $260m series B round featuring insurance provider Taikang and WuXi Healthcare Ventures, the strategic investment arm of pharmaceutical research firm WuXi PharmaTech. The round, led by Singaporean sovereign wealth fund GIC, also featured 6 Dimensions Capital, the investment firm formed by WuXi Healthcare Ventures, and venture capital firm Frontline BioVentures. Founded in 2016, CStone is working on a combination of therapies for diseases such as cancer, cardiovascular diseases, rheumatoid arthritis, haematology and autoimmune conditions, with a particular focus on immuno-oncology. The company has more than 10 candidates in its pipeline, four of which have entered the clinical testing stage.
US-based handheld ultrasound device maker Butterfly Network raised $250m in a series D round featuring pharmaceutical company Fosun Pharma. The round was led by financial services and investment group Fidelity and included philanthropic organisation Bill and Melinda Gates Foundation, private investor Jamie Dinan and unnamed existing backers. It valued Butterfly at $1.25bn. It has developed a handheld 3D ultrasound scanner that costs $2,000, considerably less than current alternatives which retail for up to $20,000. Scans taken by the system’s probe are uploaded to an encrypted cloud storage platform and can be shared securely. The company has developed a smartphone app for the scanner that relies on artificial intelligence and computer vision.
Pharmaceutical firm Novartis joined Blackstone Life Sciences, a biopharmaceutical investment arm of private equity firm Blackstone, to launch US-based cardiovascular drug developer Anthos Therapeutics. Blackstone Life Sciences provided $250m, while Novartis licensed an antibody to Anthos. Novartis has secured a minority stake in Anthos as part of the licensing agreement. Anthos Therapeutics will focus on targeted therapies for high-risk people with from cardiovascular disease. The antibody will be developed as a blood clot treatment.
Life sciences investment firm LSP led a $180m series A round for Arvelle Therapeutics, a Switzerland-based epilepsy drug developer spun out from pharmaceutical company Axovant. Andera Partners, BRV Capital Management, NovaQuest and HIG BioHealth Partners also participated in the round. Axovant will retain a 5% stake in the company. Arvelle is developing drug therapies to treat central nervous system disorders and will focus initially on Cenobamate, an investigational-stage small molecule anti-epileptic drug it has licensed from pharmaceutical firm SK Biopharmaceuticals.
Humacyte, a US-based developer of tissue-based medical technology that counts conglomerate Access Industries as an investor, signed a $150m deal with healthcare company Fresenius Medical Care, in which Fresenius received a 19% stake in Humacyte and will become the exclusive distributor of Humacyte’s bioengineered blood vessel, Humacyl, after the product has secured regulatory approval. Founded in 2004, Humacyte is developing regenerative medicine and vascular surgery technology and has products at the preclinical and clinical stage. The company’s platform produces extracellular tissues that mimic human tissues.
Emerging health-focused businesses also received financial backing from corporate investors from other sectors.
China-based online healthcare services platform WeDoctor raised $500m in a round co-led by a subsidiary of insurance group AIA. Infrastructure and services conglomerate NWS Holdings co-led the round, which valued the company at $5.5bn. Also known as Weiyi, WeDoctor runs an online platform that enables users to book medical appointments with more than 220,000 doctors and at some 2,700 hospitals and receive consultations from qualified physicians. The company also offers pharmaceuticals and insurance products. In addition to its investment, AIA will become WeDoctor’s preferred life and health insurance partner, and the proceeds will support domestic expansion.
Relay Therapeutics, a US-based developer of protein-focused medicines, closed a $400m series B round led by the SoftBank Vision Fund, the $98.6bn fund run by telecoms firm SoftBank. GV, an early-stage investment vehicle for Alphabet, also took part in the round, as did Alexandria Venture Investments, the strategic investment division of Alexandria Real Estate Equities. Founded in 2016, Relay is developing medicines that exploit the structural changes in protein molecules to treat cancer and other diseases. The company will spend the proceeds on recruitment, expanding its pipeline and advancing its lead programs into clinical testing.
China-based medical diagnostics technology provider China Diagnostics Medical Corporation has raised almost RMB2bn ($294m) from investors including insurance firm Ping An. Legend Capital, the venture capital firm launched by conglomerate Legend Holdings, invested $100m to co-lead the round with investment bank China Renaissance’s healthcare fund. Chinese Diagnostics develops diagnostic testing reagents to detect conditions such as HIV, cancer, diabetes and syphilis, and runs more than 20 testing centres across China.
US-based oncology drug developer Rakuten Aspyrian completed a $284m series C round featuring e-commerce firm Rakuten and financial services provider SBI Group. The close of the round came through the provision of $134m that was added to a $150m first tranche secured earlier. The first close was led by Rakuten chief executive Hiroshi Mikitani, who is also Rakuten Aspyrian’s chairman. Founded in 2015, Rakuten Aspyrian is working on cancer treatments based on its photoimmunotherapy platform, which adds the molecular targeting of cancer cells to the laser-activation of a biophysical mechanism that causes them to die. The company expects to generate top-line results from a phase 1 and 2 trial for its lead drug candidate, which targets a cancer antigen in solid tumours.
Exits
Corporate venturers from the health sector completed 54 exits between May 2018 and April 2019 – 33 initial public offerings, 17 acquisitions, three mergers and one other transaction.
On a year-on-year basis, the number of IPOs increased drastically in 2014 – 29, up from the nine in the previous year – and then declined in number to 14 by the end of 2017. However, last year there was a surge, as GCV Analytics reported 36 IPOs of businesses backed by life sciences corporates. Going public is a financing tool more frequently used in the life sciences sector than in other sectors, where IPOs account for about a 10th of all exits, according to our data. This is attributable to the complexity, time and capital requirement of developing treatment or medical devices, processes largely unparallelled in other sectors.
Biopharmaceutical company Alexion Pharmaceuticals agreed to acquire Syntimmune, a US-based autoimmune disease therapy developer backed by drug producer Baxalta, for up to $1.2bn. Alexion will pay $400m in cash and up to $800m more dependent on milestones. Founded in 2013, Syntimmune’s drug candidates target a protein that contributes to regular immune responses in healthy individuals but can drive autoimmune disorders when it malfunctions. Its lead asset is undergoing phase 1b and 2a clinical trials in people with warm autoimmune haemolytic anaemia, which causes a premature destruction of red blood cells, and in people with pemphigus vulgaris or pemphigus foliaceus, which cause skin blisters.
Verano, a US-based vertically integrated cannabis group backed by cannabinoid therapy developer Scythian Biosciences, agreed to an $850m acquisition by peer Harvest Health and Recreation. The all-stock transaction assumes a Harvest share price of C$8.79 ($6.57). Verano operates licensed cannabis cultivation and manufacturing facilities, produces a wide range of cannabis products such as edibles, extracts and concentrates, and owns dispensaries under the brand name Zen Leaf.
Moderna, a US-based messenger RNA therapeutics developer backed by pharmaceutical companies AstraZeneca, Merck & Co and Alexion, raised about $604m when it went public on the Nasdaq Global Select Market. The IPO, the largest for a biotech company, consisted of almost 26.3 million shares at $23 each, up from 21.7 million shares when the company set a $22 to $24 range earlier. The offering valued it at about $7.52bn. Moderna is working on drugs and vaccines, and has advanced 21 product candidates into development, 10 of which have gone into clinical studies. The company will put up to $420m of the proceeds into drug discovery, clinical development and the growth of its manufacturing capabilities. Between $90m and $100m will go to developing its platform.
Otsuka Pharmaceutical, the pharmaceutical subsidiary of healthcare and nutrition group Otsuka Holdings, agreed to acquire US-based antibody developer Visterra for $430m, allowing Merck & Co to exit. Visterra had filed for an IPO in 2016 but withdrew its plans in 2017. Visterra is developing precision antibody-based therapeutics designed to modulate disease targets not currently treatable by other antibody-based drugs. Its candidate pipeline includes prospective treatments for kidney diseases, cancer, chronic pain and infectious diseases.
Innovent Biologics, a China-based biopharmaceutical company backed by insurance providers China Life, Ping An and Taikang as well as Eli Lilly and Legend Holdings, raised $421m in an IPO on the Hong Kong Stock Exchange. The company issued 236 million shares at HK$13.98 ($1.78) , near the top of the $1.60 to $1.80 range it had set. A total of 10 cornerstone investors, including Sequoia Capital China, Value Partners Hong Kong and Prime Capital Funds, bought $245m shares. Founded in 2011, Innovent Biologics is working on treatments for cancer, eye conditions, autoimmune disorders and cardiovascular diseases. It has 17 assets in its pipeline, with four candidates in late-stage clinical development. Proceeds from the offering will support clinical trials and go towards commercialisation of several drug candidates.
Ascletis, a China-based hepatitis C drug developer backed by pharmaceutical company Tasly Pharmaceuticals, was valued at $400m in an IPO in Hong Kong. The company sold 224 million shares – 20% of its overall share capital – at HK$14 each, in the middle of the IPO’s HK$12 to HK$16 range. Singaporean sovereign wealth fund GIC bought $75m of shares as a cornerstone investor. Founded in 2011, Ascletis is developing treatments for the hepatitis C virus. It received approval from Chinese regulators for anti-viral treatment Ganovo. The company has also concluded a phase 2 and 3 trial for Ravidasvir, which is intended to be taken orally with Ganovo.
Genomics technology producer Illumina exited US-based genetic screening service Counsyl, after the latter agreed to a $375m acquisition by molecular testing service provider Myriad Genetics. Counsyl’s shareholders are entitled to receive up to 25% of the $375m in Myriad stock, not exceeding 3 million shares. Founded in 2007, Counsyl operates a laboratory that offers low-cost non-invasive prenatal and cancer screening. It has also developed a suite of tools that integrates its tests into existing clinical workflows and electronic medical records.
US-based immuno-oncology drug developer Allogene Therapeutics closed an IPO that scored exits for Pfizer and Gilead Sciences at almost $373m. The company raised an initial $324m when it issued 18 million shares at $18 each on the Nasdaq Global Select Market. Allogene’s shares closed at $25 on the first day. Joint book-running managers Goldman Sachs, JPMorgan Securities, Cowen and Co, and Jefferies subsequently bought a further 2.7 million shares for $48.6m. Founded in 2018, Allogene is developing allogeneic T-cell therapeutics based on intellectual property licensed from Pfizer.
Medical device manufacturer Boston Scientific acquired the rest of the shares in one of its portfolio companies, US-based mitral regurgitation system developer Millipede Medical, for $325m. Millipede will receive an additional $125m payment dependent on a milestone. Founded in 2012, Millipede is developing a medical device to treat people with from severe mitral regurgitation, a condition that causes blood to flow the wrong way in the heart.
Enterprise software provider OpenText agreed to acquire US-based application and data management software developer Liaison Technologies for about $310m, allowing corporates including Merck & Co to exit. Founded in 2001, Liaison produces software that helps a base of more than 4,000 enterprise customers integrate their business applications and manage data. The company’s Alloy platform also includes a cloud-based monitoring and visualisation tool for business and transaction activity, and a data-mapping and translation system which Merck uses in all its clinical trials. OpenText plans to add the company’s technology to its own offering, particularly for customers in life sciences and healthcare.
Global Corporate Venturing also reported several exits of emerging health-related enterprises that involved corporate investors from different sectors.
CStone Pharmaceuticals raised HK$2.2bn ($285m) in an IPO on the Hong Kong Stock Exchange. CStone achieved a valuation of $1.5bn after selling 18.6 million shares to Hong Kong-based investors and more than 167 million shares to international backers at $1.50, in the middle of its range of $1.40 to $1.60. The company allocated 30% of proceeds to clinical trials, registration filings and commercialisation of its lead immuno-oncology asset. Another 40% will drive the development of the company’s investigational new drug pipeline.
Alcon, an eyecare subsidiary of Novartis, agreed to buy US-based eyecare technology developer PowerVision, a Novartis portfolio company, in a $285m transaction. Founded in 2002, PowerVision is developing an intraocular lens implant aimed at improving the sight of elderly people with from cataracts and presbyopia, a condition that gradually reduces the eye’s ability to focus. The implant reacts to the natural contractions of the eye muscles. Alcon intends to develop the product and advance it through clinical trials to prepare it for commercialisation. It will also make additional payments based on the achievement of regulatory and commercial milestones.
Funds
From May 2018 to April 2019, corporate venturers and investing in the life sciences sector secured over $10.22bn in capital via 46 funding initiatives, which included 29 VC funds, 12 new CVC subsidiaries, two accelerators and two other initiatives.
On a calendar year-to-year basis, the number of funding initiatives in the health sector remained stable, with a total of 42 in 2018 compared with 43 in 2017, though significantly down from the peak of 74 initiatives in 2016. The total estimated capital, however, increased to $6.99bn by the end of last year, up 22% from the $5.74bn in 2017. This year’s initiatives raised $6.40bn in the first four months or so.
Germany-based insurance and asset management group Allianz increased the capital available to its venturing subsidiary Allianz X from €430m to €1bn ($1.13bn). Formed in 2013, Allianz X targets growth-stage companies developing digital technologies relevant to its parent’s business, covering areas such as health products, mobility, wealth management, cybersecurity, data analytics and connected property. The firm said it had allocated more capital to Allianz X as a reflection of the unit’s success in its investments and partnerships as well as its importance to Allianz’s digital transformation plan.
Verily, the US-based life sciences subsidiary of Alphabet, expanded its investment activities to include more startups following a $1bn commitment. Verily raised $1bn from private equity firm Silver Lake, Ontario Teachers’ Pension Plan and two undisclosed investment management firms. Partner Space, Verily’s investment and collaboration scheme, is set to increase the number of startups it hosts from between six and eight companies to up to 15 companies. The initiative typically invests in series A or B rounds and offers portfolio companies the opportunity to work in its San Francisco campus in a move to foster collaboration.
Pfizer revealed its plans to invest $600m in biotech and other emerging technologies through new corporate venturing division Pfizer Ventures. Early-stage neuroscience companies will be a key focus, with about $150m allocated to such startups. Initial areas of interest will include neurodegeneration, neuroinflammation and neurometabolic disorders. The $600m came as part of a restructuring effort that combines Pfizer Venture Investments, the company’s existing venturing arm, with research and development equity investment vehicle R&D Innovate. Pfizer Venture Investments, founded in 2004, has grown to a portfolio of more than 40 companies and has invested about $500m to date, bringing the size of Pfizer’s corporate venturing efforts to more than $1bn.
Netherlands-based venture capital firm Forbion Capital Partners closed a €360 fund with commitments from insurance providers ASR Insurances and KLP, beating its original target of $290m. TNO Pension Fund, owned by the Netherlands Organisation for Applied Scientific Research, also contributed capital, as did German state-owned development bank KfW and the EU-owned European Investment Fund. Investors also included wealth management firm Formuesfor-valtning, private equity firm Pantheon Ventures and a range of undisclosed institutional investors based in North America. Forbion IV will focus on the biopharmaceutical sector, seeking significant stakes primarily in EU-based businesses, though it also expects to allocate some cash to North American deals. The fund will look to invest in 15 companies, including five to be co-founded by Forbion and 10 existing growth-stage companies.
US-based growth equity firm Edison Partners closed its ninth fund at $365m having raised capital from limited partners including insurance firm American Family. Other investors were investment manager Hirtle Callaghan, New Mexico Educational Retirement Board, Rutgers University and fund of funds Renaissance Venture Capital Fund. Edison makes investments in growth-stage companies generating $5m to $25m in revenue, targeting developers of enterprise, financial and healthcare software technology. It assesses investments using proprietary software platform Edison Edge. The fund was oversubscribed from a $300m target.
SK China, a local subsidiary of South Korea-based telecoms conglomerate SK Group, invested ₩300m ($266m) in a fund created by Legend Capital. SK China reportedly contributed half the fund’s targeted capital. It will focus on early-stage companies in the IT and healthcare industries based in China and across Asia. SK China runs a group of real estate, energy and rental car businesses in China.
US-based healthcare provider Cigna launched corporate venturing vehicle Cigna Ventures with $250m of capital. Cigna provides both healthcare and health insurance but formed Cigna Ventures to access innovative technology that can improve the effectiveness and efficiency of its services. The fund will target companies focusing on health insights and analytics, digital health and retail technology, and healthcare delivery and management.
France-based venture capital firm Seventure Partners has reached the first close of a €200m healthcare-focused fund with commitments from corporate limited partners including cheese producer Bel and food provider Danone. Pharmaceutical firm Novartis, yeast manufacturer Lesaffre, medical device producer Wright Medical and Unigrains, the investment arm of agricultural products supplier Unicéréales, also backed the fund. Health for Life Capital II has also signed up an unnamed US-based food ingredient provider, undisclosed financial services firms and assorted individual investors. The fund will invest globally, focusing on technologies centred on the human microbiome, but will also conduct opportunistic investments in areas such as digital therapeutics, digital health, digital nutritional advice, personalised diets, precision medicine and food technologies.
Netherlands-based investment firm Gilde Healthcare closed a €200m private equity fund with a contribution from financial services firm Rabobank’s Rabo Corporate Investments unit. Pension fund PGGM/Pensioenfonds Zorg en Welzijn also backed the fund, as did a range of unnamed Netherlands-based institutional investors and international funds of funds. The fund, Gilde Healthcare Services III, closed at its hard cap. It will target healthcare and service providers as well as medical product suppliers, focusing on profitable businesses with earnings before interest, tax, depreciation and amortisation of $2.2m to $16.8m. The vehicle will particularly seek opportunities in Belgium, the Netherlands, Luxembourg, Germany, Austria and Switzerland, operating from offices in the Netherlands and Germany. Apart from capital, it will offer portfolio companies access to its international network and support with growth strategies.
US-based healthcare investment firm Health Enterprise Partners (HEP) closed its oversubscribed third fund at $188m having secured several healthcare organisations and care providers as backers. Although the participating corporates were not officially named, HEP identifies a number of strategic limited partners on its website, including healthcare systems Allina Health, Intermountain Healthcare, Novant Health, Sentara Healthcare and UCHealth. Others were health insurance providers Anthem Blue Cross, BlueCross BlueShield of Tennessee and Usable Corporation. Founded in 2006, HEP generally makes growth equity and small buyout investments of between $5m and $15m in healthcare technology and services providers.
People
Roel Bulthuis, senior vice-president and managing director at M Ventures, the corporate venturing unit of Germany-based drugs group Merck, joined Netherlands-based venture capital fund Inkef Capital as head of healthcare. Dutch pension fund ABP founded Inkef with €500m in 2010. Bulthuis will co-manage the Inkef fund alongside Robert Jan Galema, head of the technology team. At M Ventures he was succeeded by Jasper Bos. Bulthuis originally set up what was then called MS Ventures in 2009 and in 2016 saw the evergreen strategic venture fund double to €300m.
M Ventures also hired Dave Rosenberg as a managing director. Based in Amsterdam, iRosenberg will head M Ventures’ New Business Fund. Rosenberg came from GE Ventures, the corporate venture capital arm of industrial and power technology producer General Electric, where he spent two years as managing director of business creation, having previously headed cloud investments for intellectual property licensing firm Intellectual Ventures. In addition to his VC work, Roseberg was a co-founder and previously CEO of Mulesoft, the integration software provider acquired by Salesforce for $6.5bn. He subsequently founded Nodeable, a data processing platform acquired by Appcelerator in 2012.
Elaine Jones, executive director of Pfizer’s corporate venturing subsidiary, Pfizer Ventures, retired after two decades in venture capital and business development applying pharmaceutical research. Pfizer Ventures hired Jones at the end of 2008 to drive deals and manage the unit’s portfolio at board level. Jones began her career in corporate finance at GlaxoSmithKline’s corporate venturing unit, SR One, in 1999 as a vice-president, after which she spent five years as a general partner at EuclidSR Partners, a joint venture between SR One and venture capital firm Euclid Partners.
Pharmaceutical company Almirall hired Francesca Domenech Wuttke as chief digital officer. Wuttke left US-based pharmaceutical firm Merck & Co’s Merck Global Health Innovation Fund (GHI) subsidiary where she was managing director. Wuttke headed Almirall’s corporate development strategy team for a year before joining Merck GHI in 2016. During her earlier tenure at Almirall, she focused on medical device and pharmaceutical M&A deals. While at Merck GHI, she led Europe-based investments.
Perry Robinson, managing director of investments for insurance firm Guardian Life’s $100m corporate venturing arm, GIS Strategic Venture Capital, rejoined US-based venture capital firm Greenwich BioMedical Digital Health Ventures. Robinson founded Greenwich BioMedical in 2002 and was its managing director until 2016. He returned to the firm as a managing partner and will oversee investments in digital health and artificial intelligence. During Robinson’s four years at GIS Strategic Venture Capital, he funded and advised companies at board level in the fields of biotech, digital health and financial technology.
Alexa von Tobel, previously chief innovation officer for life insurance provider Northwestern Mutual, has formed early-stage technology venture fund Inspired Capital. As managing partner, Von Tobel will join Mark Batsiyan, a colleague from Northwestern Mutual’s corporate venturing arm, NM Future Ventures. Inspired Capital plans to raise $200m for its first fund. At NM Future Ventures, Souheil Badran, formerly president of Americas for e-commerce group Alibaba’s financial services affiliate Ant Financial, has taken over Von Tobel’s duties.
Rasu Shrestha left his position as chief innovation officer at healthcare system University of Pittsburgh Medical Centre (UPMC) to join healthcare provider Atrium Health as chief strategy officer. Having joined UPMC initially in 2007 as medical director of radiology informatics, he spent almost 12 years at the organisation and led its innovation strategy from 2014 as chief innovation officer. He was concurrently an executive vice-president at UPMC’s investment arm, UPMC Enterprises, where he oversaw investments in startups focusing on healthcare intelligence. At Atrium, Shrestha will develop enterprise strategy and lead innovation efforts.
Alphabet’s investment arm GV has hired David Schenkein, former chief executive of biopharmaceutical company Agios Pharmaceuticals, as a general partner. Schenkein joined Agios in 2009, and helped transform the company from a preclinical-stage startup to a business with two US-approved cancer drugs in the market. He will remain chairman. Schenkein will co-lead GV’s life sciences investment team with Blake Byers and Krishna Yeshwant.
GV also hired Rosana Kapeller, former chief scientific officer at biotechnology company Nimbus Therapeutics, as its first entrepreneur-in-residence for life sciences. Kapeller will concentrate on technologies that apply machine learning technology to healthcare and life sciences, with the intention of running a startup developing one of those technologies. She spent eight years as the founding chief scientific officer of Nimbus, having previously co-founded peptide drug developer Aileron Therapeutics as vice-president of research, after 10 years at Millennium Pharmaceuticals, which was acquired by Takeda in 2008. Kapeller has also provided consulting services for venture capital firms Third Rock Ventures and Atlas Venture on their life sciences investments.
Elizabeth Burr, formerly US-based health insurance provider Humana’s chief innovation officer and vice-president of healthcare trend, joined mortgage lender Mr Cooper. Humana hired Burr in 2015 to set up its Silicon Valley office and its corporate venturing subsidiary, Humana Health Ventures. She oversaw its healthcare venturing and innovation activities.
Lisa Suennen left her position as managing director of GE Ventures. The corporate venturing unit hired Suennen from healthcare investment firm Psilos Group in December 2016 to lead its healthcare investment team. Suennen had spent more than 15 years at Psilos where she was managing partner. She is also managing partner of Venture Valkyrie, a media advisory firm and platform.
Eric Steager has left Independence Blue Cross (IBC), a healthcare licensee of health insurance group Blue Cross Blue Shield Association, to join health benefits provider Anthem, where he is vice-president of corporate venture capital at its new corporate venturing unit. He will carry out strategic equity investments in healthtech startups and supervise portfolio development. Steager joined IBC in 2012 as director of corporate development and innovation, and oversaw strategic investments, partnerships and mergers and acquisitions. He also co-managed corporate venture capital arm Strategic Innovation Portfolio, sourcing and leading investments in early-stage healthcare information technology companies. Tom Olenzak, co-manager of Strategic Innovation Portfolio, took over his duties at IBC.
Bayer Growth Ventures, the corporate venturing arm of Germany-headquartered life sciences and agricultural products group Bayer, has hired Derek Norman as vice-president. Norman was formerly head of Syngenta Ventures, Switzerland-based agribusiness Syngenta’s corporate venturing unit. Syngenta Ventures managing director Colin Steen has assumed Norman’s duties. Norman joined Syngenta Ventures in 2009 as a managing director. Bayer Growth Ventures makes seed-stage investments in developers of health and nutrition technologies.
Pivotal BioVenture Partners, a US-based healthcare-focused venture capital firm financed by property development and healthcare group Nan Fung, hired Heather Preston as managing partner. Preston came to Pivotal from TPG Biotech, private equity group TPG’s life sciences venture capital arm, where she was partner and managing director for over a decade. A seasoned biotech investor, Preston received training in gastroenterology and hepatology from University of California San Francisco and was a postdoctoral research fellow in molecular biology at the Dana Farber Cancer Institute. She has a medical degree from University of Oxford.
Brian Gallagher left a partner position at SR One, the venturing arm of GlaxoSmithKline, to take the same position at investment group Abingworth. Gallagher joined SR One in 2010 after two years as director and then senior director of corporate development for Sirtris Pharmaceuticals, a biotech developer acquired by GlaxoSmithKline for $720m. During his time at SR One, Gallagher helped set up the unit’s Boston office.
Tom Luby, former head of JLabs Texas, a regional incubator subsidiary of Johnson & Johnson, joined US-based healthcare provider Texas Medical Centre (TCM) to lead its innovation institute. Luby was appointed director of TCM Innovation, the TCM subsidiary that houses several accelerators and initiatives focused on developing technologies centred on digital health and medical areas such as neurology, oncology and mental health. As site head of Johnson & Johnson’s JLabs@TMC incubator, which is overseen by the corporate’s Johnson & Johnson Innovation–JJDC unit, Luby helped pharmaceutical, medical device and consumer health startups develop technologies and services. Luby was previously senior director of new ventures at Johnson & Johnson for four years from 2013, having moved from biopharmaceutical firm Shire where he was senior director of research ventures.
Jessica Zeaske left her position as director of healthcare investments at GE Ventures to be a partner at Echo Health Ventures, a US-based joint investment venture formed by health services provider Cambia Health and Blue Cross and Blue Shield of North Carolina’s Mosaic Health Solutions unit. Before joining GE Ventures, Zeaske was a principal at healthcare-focused venture capital firm Lemhi Ventures for more than eight years.
Andreas Jurgeit, formerly a director at Germany-based Merck Group’s corporate venturing arm, M Ventures, joined life sciences foundation Lundbeck Foundation’s early-stage investment unit, Lund-beckfonden Emerge. The Denmark-based unit, which hired Jurgeit as a partner, invests in biotech, life sciences, pharmaceutical and healthcare technology developers. Jurgeit has experience in R&D in target discovery and drug development from doctoral and post-doctoral work at University of Zurich from 2006 to 2011, collaborating with 3V Biosciences, an oncology therapeutics developer whose co-founder Urs Greber was his professor. Following his doctorate studies, Jurgeit pursued venture capital investments for five years at VC firm Redalpine Venture Partners, and business development and mergers and acquisitions at biotechnology producer Redbiotec.
Nico Straub, venture director at Siemens Technology Accelerator (STA), a corporate venturing subsidiary of industrial product and appliance producer Siemens, joined venture capital management consulting firm Bioventure as a partner. Founded in 2001, Germany-based Bioventure provides investment management services to life sciences and biotech-focused entrepreneurs and investors. Straub had been at STA since 2013, overseeing startup investments and commercialising and licensing Siemens’ technologies.
Parth Desai left the investment team of NewYork-Presbyterian Ventures, the innovation vehicle for US-based healthcare provider NewYork-Presbyterian, to join venture capital firm Flare Capital Partners as a health-focused senior associate. Desai had been with NewYork-Presbyterian Ventures since 2018. Before standing down, Desai had been promoted from senior associate to manager. He began his career in 2012 as a health policy analyst for the Massachusetts House of Representatives, taking responsibility for preparing reforms to the state’s legal framework for the pharmaceutical industry. He was later appointed to the health and human services committee of the US National Conference of State Legislatures, the non-profit advocate for legislators and staff of all US state assemblies.
Tracy Saxton, an alumna of corporate venturing funds Roche Venture Fund and Pivotal BioVenture Partners, became entrepreneur-in-residence at US-based venture capital firm Frazier Healthcare Partners, which provides VC and growth-stage funding for life sciences technology developers. Saxton is founder and chief executive of Aucupo Biosciences, a stealth-stage Frazier-incubated startup developing treatments for conditions insufficiently addressed by current therapies. In 2017 she co-founded Pivotal BioVenture Partners, a biotech-focused VC firm funded by property and life sciences group Nan Fung. She previously spent two years as an investment director at Roche Venture Fund, the corporate venturing arm of pharmaceutical firm Roche.
Jen McCabe, a US-based director of investments and strategic business development for China-based contract electronics manufacturer Foxconn since 2016, joined fertility startup Future Family as head of business development. Future Family provides fertility services including egg freezing and in vitro fertilisation. During McCabe’s time at Foxconn, the corporate invested in mobility-focused companies. She was previously a director of business development and alliances at supply chain electronics manufacturer Flex’s US-based innovation unit from 2015 to 2016, overseeing investments in robotics.
University backing for health companies
By the end of 2018, there were 336 rounds raised by university spinouts, up 38% from the 244 registered in the previous year. The level of estimated total capital deployed in 2018 stood at $5.91bn, more than double the $2.85m figure in 2017.
Asklepios BioPharmaceutical (AskBio), a US-based gene therapy spinout of University of North Carolina (UNC) at Chapel Hill, raised $235m in funding from investors co-led by TPG Capital and Vida Ventures. TPG and Vida provided a combined $225m, with the remaining $10m supplied by the company’s co-founders and board members. Founded in 2001, AskBio is working on treatments for rare genetic disorders. The spinout’s approach exploits adeno-associated virus gene therapy and a cell line manufacturing process called Pro10. AskBio has developed a large portfolio of clinical programs across more than half a dozen conditions, such as cystic fibrosis, Huntington’s disease, limb girdle muscular dystrophy and myotonic muscular dystrophy. The spinout is based on research led by Jude Samulski, director of the Gene Therapy Center at UNC Chapel Hill. Samulski collaborated with Xiao Xiao, the Fred Eshelman distinguished professor of gene therapy in the Eshelman School of Pharmacy.
US-based biotechnology developer Maze Therapeutics launched with $191m in funding provided by a consortium featuring GV, the corporate venturing subsidiary of Alphabet. Alexandria Venture Investments, the investment arm of life science real estate trust Alexandria Real Estate Equities, also participated in the round co-led by Third Rock Ventures and Arch Venture Partners. Foresite Capital, Casdin Capital and several undisclosed investors filled out the round. Maze Therapeutics will focus on genetic modifiers – genes that affect the severity of a disease – and develop drugs that target such modifiers to treat disorders.
Orchard Therapeutics, a UK-based gene therapy spinout of University College London, closed a $150m oversubscribed series C round featuring medical marketing group Medison and healthcare management services provider Sphera Global Health Care. The round was led by Deerfield Management. Medison participated through its strategic investment vehicle, Medison Ventures. Temasek, the Singaporean state-owned investment firm, also participated, among many other investors. Orchard is working on gene therapies for rare, potentially fatal diseases and the series C proceeds will support work on its most developed drug candidates.
