Revival of healthcare venture capital financing?

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IThere is light at the end of the tunnel for healthcare startups looking to raise money venture capital? That is what Rock Health’s half year financing report suggests. It has found the US digital health startups In the first half of 2024, $5.7 billion was raised through 266 deals. And if these trends continue, this year could be on track to meet or exceed 2019 and 2023 funding levels – and return to “normal” after the pandemic-induced peak.

This week HLTH hosted a discussion in New York (moderated by yours truly) with insights into the healthcare financing landscape, including Laura Silman by Left lane Capital, Parth Desai by Flare main characterme and Vig Chandramouli by Oak HC/FT. Here are some key insights:

What is hot: AI, duh! But how do you separate reality from hype? First things first, don’t lead your pitch with “we’re an AI company.” Better said, what is the problem you are trying to solve? Be prepared for a longer due diligence process where investors focus on ‘quality’. For the time being, the financing party is concerned with back office and workflow applications. Think of billing, coding and automated notes.

Who pays: When it comes to AI applications, startups are competing with older players, such as Epic Systems and Oracle Health (formerly Cerner), who are building their own products. But healthcare systems are not tied to the incumbents and are even willing to double the price if a new product can deliver triple returns – a combination of revenue generation and cost savings.

Where is the exit: A looming presidential election means market uncertainty. We’ve seen a handful of healthcare IPOs, including Waystar and Tempus, but who knows when the IPO market will reopen. Your best exit option? Strategic mergers and acquisitions.

With $277 million in new funding, this startup hopes to unlock the secrets of biology

Over the past twenty years, genome sequencing – unraveling the building blocks of DNA that form our genetic code – has become an essential tool in medicine. It has accelerated the development of Covid-19 vaccines and led to new ways to treat cancer. It’s also a crucial part of precision medicine: tailoring disease treatment to each patient’s unique biology.

With its DNA sequencing platform Aviti, San Diego-based startup Element Biosciences is among the many players in this R&D sandbox. On Thursday, the company announced that it has raised a $277 million Series D investment at a valuation of $1.03 billion. It’s a well-timed boon for Element.

Read more here.

Pipeline and deal updates

AI: Regard, which uses AI to give doctors insights based on patient data, has made an announcement $61 million Series B round led by Oak HC/FT.

Implantable devices: Neuspera Medical, which has developed an implantable device that gives incontinence patients better bladder control, announced a $23 million Series D round led by Vertex Ventures HC and Treo Ventures.

Cancer care: Thyme Care, a startup that helps patients navigate their cancer care journey while entering into value-based payment contracts, has increased $55 million in equity and $40 million in debt financing.

Cancer Therapy: Scorpion Therapeutics, which develops new precision cancer therapies, increased a $150 million Series C round co-led by Frazier Life Sciences and Lightspeed Venture Partners.

Blood test: Truvian Health, a startup developing a laboratory device for blood testing, has done just that increased $74 million, co-led by Wittington Ventures and Great Point Ventures. The funding will go toward clinical trials as the company seeks FDA approval for the device.

Privacy: Freshpaint, a software startup bridging the gap between healthcare marketing and patient privacy, has done just that increased a $30.7 million Series B round led by Threshold.

VA Scribe Pilot: The Department of Veterans Affairs has selected Abridge and Microsoft’s Nuance as the two winners of the AI ​​tech sprint challenge, meaning the two companies will now enter into pilot program contracts to deploy their automated AI medical writing software “for testing and evaluation in live VA environments,” according to federal notice.

This startup has raised $5.2 million to develop blood tests for cancer

More than 35,000 Americans are diagnosed with a blood cancer called multiple myeloma each year, but doctors rely on invasive and painful decades-old tests such as bone marrow biopsies to make the diagnosis. Precision oncology company Predicta Biosciences hopes to change that by offering patients non-invasive, diagnostic tests based on a simple blood draw.

Read more here.

Other healthcare news

UnitedHealth Group says the total impact of the cyberattack on its Change Healthcare unit will cost the company between $2.3 billion and $2.45 billion by 2024.

Elevance Health Second-quarter profit was $2.3 billion, despite the health insurer’s decline in Medicaid enrollment.

Manufacturers of the successful obesity and diabetes drugs GLP-1 agonists, including Lily And Novo Nordiskare investigating the use of the drugs to treat other conditions ranging from sleep apnea to fatty liver disease.

Here’s a look at the companies working on competing weight loss drugs, including: Boehringer Ingelheim And Viking therapies.

Pfizer is moving forward with a once-daily weight-loss pill, danugliprone, after getting promising data from an early-stage study. And shares of the Swiss pharmaceutical giant Roche rose this week after reporting promising results for an experimental weight-loss pill.

Women diagnosed with endometriosis may have a “significantly increased” risk of development ovarian canceraccording to a new study.

Elon Musk said his brain-computer interface company Neuralink is preparing to surgically implant his brain chip in a second patient.

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What else we read

The nation’s 911 system is on the brink of its own emergency (KFF Health News)

As sales of GLP-1 rise, insulin users fear Novo Nordisk and Eli Lilly will continue without them (STAT)

These children’s brain cancer is incurable – but immunotherapy shows promise (Nature)