Good day. A recent analysis by EY should be heartening to biotechnology venture capitalists. It argues that top pharmaceutical companies should be even more aggressive in buying access to smaller companies’ drugs than they already are.

From 2014 to 2018, the entire biopharmaceutical industry spent nearly $800 billion on research and development, according to EY. During that span, the U.S. Food and Drug Administration approved 217 new medications. On average, that’s roughly $3 billion to $4 billion per FDA-approved drug. Looking at just the top 20 biopharma companies by revenue, drug-development costs jumped to $5 billion to $6 billion on average, meaning that the industry’s largest players spend nearly 50% more per drug approval than the industry average, according to EY.

Top drugmakers should limit their internal research to the areas where they are truly superior and source innovation in other areas externally, EY argues.

There are some mitigating factors. Large drug companies, for example, often develop drugs in fields such as cardiology that require large clinical trials, which drives up R&D costs. Still, it is clear smaller biopharma companies are more efficient, said Peter Behner, EY’s global health sciences and wellness transactions leader.

And now on to the news...

Specialized medical venture funds. A growing number of health-care venture-capital firms are taking specialization to an extreme, WSJ Pro’s Brian Gormley reports.

• At a time when health-care venture-capital funding is plentiful, some new venture firms aim to stand out by positioning themselves as the go-to experts in specific fields. That is leading venture firms to raise funds devoted to sectors such as cancer, cardiovascular disease, neuroscience and ophthalmology.
   
• Some investors say this strategy is risky because it could lead firms to deploy capital into a sector even when valuations are running high in it, or when that market faces significant headwinds.
   
• Proponents of disease-specific funds, such as Swiss cancer specialist Nextech Invest, say their expertise helps them see more of the best deals and enables them to evaluate these opportunities efficiently.

AI monitoring. Startup Circadia Health has received FDA approval for its device that remotely monitors breathing using artificial intelligence and has been shown to help detect Covid-19 symptoms such as breathlessness, WSJ Pro’s Tomio Geron reports. Circadia's device is designed for rooms in skilled nursing facilities as well as post-acute care, and can work up to eight feet away. The devices use radar and sound to monitor a person's breathing and chest movement when asleep or awake, said Fares Siddiqui, chief executive at Village Global-backed Circadia. Algorithms detect changes in a patient's condition as well as a patient falling, prompting alerts to caregivers. With the coronavirus, Circadia can reduce the risk of infection for caregivers, since they don't have to constantly assess a patient in the room, Mr. Siddiqui said. In addition, monitoring respiration could enable earlier intervention and treatment for Covid-19, he said.

Funds

European biopharma investor BioGeneration Ventures closed its fourth fund above its original target with €105 million ($119 million). BGV IV LP’s limited partners include Bristol Myers Squibb, Schroder Adveq, European Investment Fund, Industriens Pension and KfW Capital. BioGeneration, based in the Netherlands, earlier this year participated in funding rounds for rare metabolic disease treatment developer Azafaros BV and NorthSea Therapeutics BV, which is developing an oral treatment for nonalcoholic steatohepatitis.

Upfront Ventures is raising $280 million for its seventh core fund, according to a regulatory filing. Earlier this month, the Santa Monica, Calif.-based firm contributed to funding rounds raised by cloud data security platform Open Raven and aerial data analytics provider DroneBase Inc. Upfront closed Upfront VI LP with $400 million in 2017.

People

Martin Witt was named vice president and head of Sweden-based Volvo Group Venture Capital. He was previously managing director at Accenture Strategy.

LOUD Capital promoted Nishad Parmar to senior partner and chief investment officer based in the Chicago office. He previously led the Columbus, Ohio-based firm’s cash advance and asset-based financing division.

Exits

Century Therapeutics LLC, a developer of cell therapy products for the treatment of cancer, acquired Empirica Therapeutics, which is developing cell therapies against glioblastoma, for an undisclosed amount. Last June, Philadelphia-based Century raised a $250 million funding round led by Bayer AG’s Leaps by Bayer venture arm, with participation from Versant Ventures and Fujifilm Cellular Dynamics Inc.

Sana Biotechnology Inc., which creates and delivers engineered cells as medicines, scored more than $700 million in its initial funding round. The company’s investors include ARCH Venture Partners, Flagship Pioneering, Canada Pension Plan Investment Board, Baillie Gifford, F-Prime Capital, Alaska Permanent Fund, Public Sector Pension Investment Board, Bezos Expeditions, GV, Omega Funds and Altitude Life Science Ventures. Sana has operations in Seattle; Cambridge, Mass.; and South San Francisco, Calif.

DispatchHealth, a Denver-based provider of on-demand medical services to patients in their homes, raised $135.8 million in a Series C round led by Optum Ventures. New investors including Oak HC/FT and Humana Inc. also joined the funding, along with existing backers Alta Partners, Questa Capital and Echo Health Ventures.

Cedar, a New York-based health-care financial engagement platform, closed more than $102 million in Series C equity and debt funding. Andreessen Horowitz led the $77 million equity portion, which included participation from Kaiser Permanente, Kinnevik, Thrive Capital, Lakestar, Founders Fund and others. JP Morgan provided the debt. Andreessen Horowitz Managing Partner Scott Kupor will join the company’s board.

Somatus, a McLean, Va.-based provider of care and management of chronic kidney disease and end-stage renal disease, completed a $64 million Series C round. Longitude Capital, Optum Ventures and Deerfield Management Company led the investment, with support from Blue Venture Fund, Flare Capital and Town Hall Ventures.

BrightInsight Inc., a San Jose, Calif.- and Switzerland-based Internet of Things platform for biopharma and medtech, picked up $40 million in Series B funding. Insight Partners led the investment, which included contributions from New Leaf Venture Partners and Eclipse Ventures. Peter Sobiloff, managing director at Insight Partners, will join the board.

AsclepiX Therapeutics, Inc., a Baltimore-based startup developing treatments for ocular diseases, secured $35 million in Series A funding. Perceptive Advisors’ Perceptive Xontogeny Venture Fund led the round, with participation from Perceptive Life Sciences Fund, Rapha Capital Management and Barer & Son Capital. PXV Fund’s Chris Garabedian and Xontogeny’s Ben Askew will join the board.

Foldax, a Salt Lake City-based heart valve startup, closed a $20 million Series D round. MemorialCare Innovation Fund led the investment, with Managing Director Brant Heise joining the board. Previous backers BioStar Capital and Kairos Ventures also participated in the funding, in addition to new investors Angel Physicians Fund and Sayan Bioventures.

Cyclica, a Toronto-based drug discovery startup, landed a 23 million-Canadian-dollar ($16.9 million) Series B investment round. Drive Capital led the funding, with Chiesi Farmaceutici, GreenSky Capital and members of Cyclica's management team also participating.

Calibrate, a New York-based one-year telemedicine program that combines prescribed medicine with personalized coaching to help patients lose weight and reset their metabolic health, was seeded with a $5.1 million investment led by Forerunner Ventures.

Tatch, a New York-based maker of a patch that detects sleep disorders, secured $4.3 million in seed financing. Spark Capital led the round, with participation from Abstract Ventures, Correlation Ventures and others.

Carlsmed Inc., a San Diego-based startup whose technology personalizes the treatment of complex adult spinal deformities, fetched a $2.5 million seed round. Cove Fund II led the funding, and was joined by investors including Wavemaker Three-Sixty Health and Device of Tomorrow Capital. The company also appointed Alexander Arrow as chief financial officer and Shariq Hussain as chief information officer.

• Covid-19’s spread is picking up steam in a larger swath of the U.S. as cases have increased at a faster rate nationwide for nearly two weeks, an acceleration that isn’t attributable solely to increased testing, a Wall Street Journal analysis shows. 
   
• The governors of New York, New Jersey and Connecticut told visitors coming from states with high rates of Covid-19 cases to self-quarantine for 14 days. (WSJ)
   
• An independent report found major leadership problems inside a western Massachusetts veterans’ home where at least 76 residents died from a Covid-19 outbreak. (WSJ)
   
• The U.S. Justice Department sued Regeneron Pharmaceuticals Inc., accusing the drugmaker of paying kickbacks to a charitable foundation to boost sales of its eye-disease treatment Eylea. A Regeneron spokeswoman said the company doesn’t believe there is any merit to the lawsuit, and it will defend itself in the case. (WSJ)
   
• GNC Holdings Inc., the vitamin-and-supplement seller, filed for chapter 11 bankruptcy protection Tuesday with plans to sell itself and close up to a sixth of its 7,300 stores world-wide. (WSJ Pro)

• Women, babies at risk as Covid-19 disrupts health services, World Bank warns (Reuters)
   
• Yumanity Therapeutics, Merck strike deal aimed at developing new medicines for neurodegenerative disease (Stat)
   
• Billionaires, startups team up to fix broken Indian health care (Bloomberg)

This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Tomio Geron, Yuliya Chernova, Brian Gormley and Marc Vartabedian.

Follow us on Twitter: @wsjvc, @tomiogeron, @ychernova, @BrianPGormley, @marcvarta.