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Traders work on the floor of the New York Stock Exchange.
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There have been zero digital health IPOs so far in 2023, and, as the drought continues, the main focus of many startups is now cash preservation, says Chris Lloyd, managing director of healthcare and life sciences at JPMorgan Chase and Co. Speaking at the Digital Health New York Summit last week, Lloyd described the pre-profit company survival guide as “reducing cash burn, trimming fat and focusing on where they can achieve growth.”
It also means a reckoning when it comes to valuations. As a result, some companies are seeking bridge funding for “unlabeled” raises, where they don’t have to take a haircut. Others may have to exit at a lower valuation. There’s been an average of 12 acquisitions a month so far this year. In describing the M&A market as musical chairs, Lloyd notes “there just aren’t enough chairs for everyone.” The more attractive acquisitions will be those assets that are approaching breakeven.
Expect to continue seeing lots of debt on the balance sheet, he says, as venture debt has gone from a niche to mainstream. And say goodbye to the heyday of consumer health, as investors are moving away from direct-to-consumer and towards the employer market. It is not all doom and gloom, though, says Lloyd: “One of the truisms is – in good markets and bad, companies are always getting funded and are able to generate successful outcomes.”
This Surprising Obsession Drives Vivek Ramaswamy And His Presidential Campaign
Vivek Ramaswamy
Jamel Toppin for Forbes
Vivek Ramaswamy’s fixation on maximizing his own ROI made him a billionaire at 38 thanks to his healthcare holding company, Roivant. Today it’s fueling his meteoric rise as Trump 2.0. Win or lose in 2024, the biotech tycoon will emerge richer and more influential than ever–exactly how he planned it.
Read more here.
Pipeline & Deal Updates
Ambient AI: Augmedix announced the early access release of its fully automated ambient medical documentation software called Augmedix Go on Wednesday. Microsoft’s Nuance Communications announced the general availability of its competing ambient AI medical scribe software the Dragon Ambient eXperience Copilot the same day. Around half of doctors in the U.S. already use Nuance’s Dragon dictation software giving the company a strong foothold in the market, but ceding control of note-taking to machines will be a harder sell, as Katie reported earlier this year. Augmedix, which went public in 2021, has a partnership with HCA Healthcare, one of the largest health systems in the country.
Mental Health: Cartwheel, a startup that partners with schools to provide virtual mental health services to kids and teens, raised a $20 million Series A round led by Menlo Ventures. The company works with 50 school systems across five states, including Massachusetts and New York.
Women’s Health: Evvy, a startup that offers an at-home vaginal microbiome test, has raised a $14 million Series A round led by Left Lane Capital as it expands into offering STI and antibiotic resistance testing.
Cash Pay: Retail giant Costco is partnering with healthcare marketplace startup Sesame to offer its members virtual primary care visits for $29 and mental health visits for $79. Sesame does not accept health insurance – virtual and in-person providers on its platform charge cash pay rates.
Acquisition: Healthcare software and analytics startup Tendo is acquiring MDsave, a marketplace for healthcare services. Tendo has raised $70 million and the deal is valued at $150 million. The company declined to comment on how it’s financing the acquisition.
Reformulation: Roivant subsidiary Immunovant announced positive phase 1 data for IMVT-1402, an antibody geared towards treating autoimmune disorders. The drug is a reformulation of IMVT-1401, which had shown issues in patients that led to a voluntary pause of its clinical trials.
Kidney Disease: The FDA has approved empagliflozin, marketed by Lilly and Boehringer Ingelheim as Jardiance, for treatment of adults with chronic kidney disease.
T-Cell Receptor Discovery: Jura Bio, which is developing a T-cell receptor discovery platform to help identify potential therapeutics, announced that it has raised $16.1 million in financing, and also announced a development partnership with cell therapy company Syena.
New Drug Combo Shows Promising Results Against Early Stages Of Colorectal Cancer
Pathologist Erika Hissong (L) and Oncologist Pashtoon Kasi (R) were two of the scientists involved in a new study demonstrating efficacy of a new immunotherapy against colorectal cancer.
WEILL-CORNELL MEDICINE
Colorectal cancer is one of the most diagnosed cancers in the United States – over 150,000 new cases will be diagnosed and over over 52,000 Americans will die from the disease this year, according to the American Cancer Society. A combination immunotherapy developed by biotech company Agenus administered before surgery destroyed over 80% of a tumor before it was removed in a small scale study.
Read more here.
Other Healthcare News
Centene is laying off 2,000 employees, approximately 3% of the health insurer’s workforce, as it looks to cut costs.
Elevance Health is delaying its $2.5 billion purchase of Blue Cross and Blue Shield of Louisiana.
Liquid amoxicillin, a popular antibiotic prescribed for children, is still in short supply.
HHS said last week that nearly 500,000 children and families were wrongly disenrolled from Medicaid because of a “systems issue” and will have their coverage reinstated, though the timing is unclear.
A new study suggests Pfizer’s Covid drug Paxlovid is less effective than in earlier trials but still significantly decreases the risk of death.
Researchers have developed an algorithm to help predict if someone will get long Covid, according to a paper published in Nature.
A CDC panel has recommended Pfizer’s new RSV vaccine for pregnant people that helps protect infants from the virus.
Across Forbes
Exclusive: Mark Zuckerberg On Meta’s Two Big Risky Bets–And Getting Punched In The Face
How TikTok Has Exposed Celebrities And Politicians’ Closest Personal Contacts
How Staff Cuts Are Undermining Petco’s Strategy Of Pushing Store Visits Instead Of The Internet
What Else We are Reading
How Many Microbes Does It Take to Make You Sick? (Quanta)
California workers who cut countertops are dying of an incurable disease (Los Angeles Times)