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A report from Silicon Valley Bank suggests the healthtech sector is stabilizing.
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Despite the down rounds and slower pace of venture investment, it’s not all doom and gloom for digital health. 7wireVentures, the team behind Livongo, announced it closed a $217 million fund this week, bringing the firm’s assets under management to over $500 million. The new investment vehicle – dubbed Growth & Opportunity or GO Fund, for short – will allow 7wire, which has focused on seed and Series A investing, to double down on existing portfolio companies and new investments in Series B and C rounds. “The market sentiment today historically feels that people are down on digital health. And what we hope is that this news can bring some light and some tailwinds to the opportunity that we see,” says 7wire partner Alyssa Jaffee. “There is a belief that consumer-directed healthcare can be very successful.”
7wire had capped its first two funds – $100 million and $150 million, respectively – at no more than 10% investment in any company. This led to “missed opportunities,” says 7wire cofounder Lee Shapiro, including with Livongo. In 2019, Livongo went public and a year-and-a-half later was acquired by Teladoc in a deal valued at $18.5 billion during the height of the digital health frenzy. The firm has made three investments out of the new fund so far: existing portfolio company NOCD and new investments in Folx Health and Parsley Health. “Many of our companies, because they’re early stage … they didn’t end up with these billion dollar plus valuations that they had to justify,” says Shapiro. “And we’re in a position where we can follow on at appropriate pricing.”
The optimism from the 7wire team is echoed in a Silicon Valley Bank report released today, which suggests that the healthtech sector is stabilizing – even though flat and down funding rounds are becoming more common. After a big drop in 2022, SVB puts healthtech investment at $8.2 billion year-to-date and flat the last three quarters. “While the current investment environment presents ongoing challenges, the healthtech sector is showing signs of stabilization with improvement in the public market and an increase in M&A volume,” Julie Ebert, SVB managing director for healthtech said in a statement. The bright spots? Value-based care companies and the potential for acquisition by health insurers and retailers.
Over 75,000 Kaiser Permanente Health Workers Begin Striking—Biggest Healthcare Walkout In U.S. History
Kaiser Permanente employees walk the picket line in Los Angeles, California.
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Over 75,000 healthcare workers in California, Colorado, Oregon, Virginia, Washington and Washington, D.C., are expected to head to the picket lines starting Wednesday after contracts with nonprofit Kaiser Permanente—one of the nation’s largest health organizations—expired over the weekend.
Read more here.
Pipeline & Deal Updates
Patient Engagement: Providence announced the fourth digital health startup incubated at the health system this week. Launched internally in 2022, patient engagement platform Praia Health currently supports more than 3 million users, which the health system says has delivered over $20 million in value. Justin Dearborn, who previously served as CEO of IBM’s Merge Healthcare and the Tribune Publishing Company, will serve as executive-in-residence.
Merger: Healthcare AI software startups Commure and Athelas announced plans to merge. General Catalyst is investing $70 million in the combined company at a $6 billion valuation. That’s a 40x revenue multiple as Fierce Healthcare reports the company will have a $150 million run rate post-merger.
Cancer Treatment: Shorla Oncology, which focuses on the development of treatments for pediatric and orphan cancers, announced that it has raised a $35 million series B. The company recently won FDA approval for its nelarabine injection for treatment of patients with T-cell leukemia.
IBD Treatment: Sanofi and Teva have announced a collaboration to co-develop and co-commercialize a novel therapy for irritable bowel syndrome. Under the agreement, Teva gets a $500 million upfront payment and up to $1 billion more in milestone payments, not counting royalties.
Thymus Rejuvenation: Cambridge-based startup Thymmune Therapeutics has been awarded $37 million by ARPA-H for its project to develop a way to restore thymus tissue that has been damaged or otherwise rendered non-functional. This is the first industry project funded by the agency’s Open Broad Agency Announcement.
FDA Authorizes Novavax’s New Covid Vaccine Designed To Protect Against The Latest Strain
Novavax’s authorization follows the full approval of Moderna and Pfizer-BioNTech’s vaccines targeting the new coronavirus variant.
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The Food and Drug Administration gave emergency use authorization on Tuesday to Novavax’s new Covid vaccine designed to target the coronavirus’ dominant XBB sublineage, which is fueling a spike in cases, hospitalizations and deaths across the country.
Read more here.
Other Healthcare News
Rite Aid faces delisting from the New York Stock Exchange as shares are trading under 55 cents.
Eli Lilly plans to acquire cancer therapy firm Point Biopharma for $1.4 billion, or $12.50 a share in cash, 87% higher than Point’s closing price.
Health insurers Cigna, Aetna, Elevance Health, Humana and UnitedHealth Group are launching Medicare Advantage plans in new counties for 2024 open enrollment.
There was a 26% increase in mental healthcare costs for children in the first two-and-a-half years of the Covid-19 pandemic, according to a RAND study.
AstraZeneca has agreed to pay $425 million to settle lawsuits alleging the heartburn drugs Nexium and Prilosec caused chronic kidney disease; the company did not admit wrongdoing.
The World Health Organization is recommending a second malaria vaccine specifically designed to prevent the illness in children, known as the R21/Matrix-M vaccine, in response to growing demand.
Katalin Kariko and Drew Weissman were awarded the 2023 Nobel Prize in Medicine for their role in pioneering the technology to develop mRNA-based Covid-19 vaccines.
Across Forbes
How Panda Express CEO Peggy Cherng Used Her Ph.D. To Get Rich In Fast Food
Zoom’s Founder Turns To AI In Hopes Of Regaining Pandemic Highs
The 2023 Forbes 400 List Of Richest Americans: Facts And Figures