Good day. A bill in Congress could help developers of prescription digital therapeutics overcome one of their biggest challenges: securing Medicare and Medicaid payment for their treatments.

Venture capitalists have invested billions of dollars in startups that have created software-based disease treatments. Because these therapies are relatively new, the Centers for Medicare and Medicaid Services lacks a benefit category for covering them. That makes gaining Medicare and Medicaid payment difficult for many companies.

A bill introduced in Congress, the Access to Prescription Digital Therapeutics Act of 2022, would nudge CMS toward reimbursement of prescription digital therapies, providing a framework for Medicare and Medicaid coverage. This includes establishment of product-specific billing codes.

This could be implemented through codes covering digital therapies in various categories, such as diabetes or depression, said Debra Reisenthel, who was chief executive of venture-backed digital-therapeutics company Freespira Inc. from 2013 to 2018 and remains on its board.

Ms. Reisenthel, also vice chair of the Digital Therapeutics Alliance, a trade group that supports this bill, said the group also wants CMS to establish payments for these digital-therapeutic codes.

U.S. Rep. Mike Thompson (D-Calif.), said he is optimistic about the bill’s prospects because it has broad bipartisan support.

And now on to the news...

Software-based treatments. Startups have raised billions of dollars in venture capital to develop software-based digital therapeutics for a range of diseases. Now, many are wrestling with the challenge of bringing these treatments to patients, WSJ Pro’s Brian Gormley reports.

• Digital therapeutics are designed to treat a disease or manage its symptoms. Globally, venture capitalists invested $3.41 billion in the sector last year, up from $1.46 billion in 2020, according to market tracker CB Insights.
   
• Covid-19 has accelerated investor and patient interest in digital alternatives to conventional care, including digital thearpeutics.
   
• Developers of these treatments find that getting the attention of busy physicians, and persuading them to prescribe their therapy, can be difficult. Startups are testing strategies to clear hurdles to commercial success, such as marketing treatments directly to consumers.

Nektar Therapeutics was one of biotech’s highfliers, enjoying a generous, multibillion-dollar partnership with cancer powerhouse Bristol-Myers Squibb Co., The Wall Street Journal reports. Then Nektar’s promise cratered. After a series of disappointing study results, Bristol and Nektar terminated their partnership, Nektar’s market value is down 96% from its peak in 2018 and the biotech was forced last month to slash $120 million in spending and 70% of its workforce. The company is also shedding office and lab space. The company’s ups and, now, downs are an example of how investor enthusiasm for biotechnology has soured in recent months, spurred in part by a series of setbacks such as Nektar’s cancer-drug failure.

Drug prices remain out of reach for many Americans, who pay among the highest prices in the world. In an interview, billionaire investor Mark Cuban explains how his low-cost, online drug company works and the challenges it faces in a consolidated industry. (WSJ Video)

Instacart Inc. said it filed confidentially to go public, a long-awaited move that comes after the company recently cut its valuation by 40%, WSJ reports. The San Francisco-based grocery delivery company said late Wednesday that it submitted a draft registration statement with the Securities and Exchange Commission. The company had no additional comment. The filing comes as Instacart’s growth slows following a pandemic-fueled boom, when people turned to the company’s app to order groceries online rather than going to physical stores.

People

Podimetrics Inc., a provider of technology and care management for diabetic foot complications, appointed Matthew Scalo as chief financial officer and Kyle Bray as chief operating officer. Mr. Scalo was most recently senior vice president of finance at Cancer Treatment Centers of America. Mr. Bray was previously COO at ConsumerMedical. In March, Somerville, Mass.-based Podimetrics said it landed a $45 million Series C round from D1 Capital Partners, Medtech Convergence Fund, Polaris Partners and Scientific Health Development.

Apollo Neuroscience hired Alan Cannistraro as chief technology officer. He previously founded Rheo and held positions at Facebook and Apple. Pittsburgh-based Apollo Neuroscience recently raised $15 million in Series A funding led by Noetic Fund. The company develops wearable technology that promotes stress resilience, sleep, focus, recovery and more.

Exits

VeriSIM Life, a startup leveraging artificial intelligence to improve drug discovery and development, acquired peer company Molomics Biotech for an undisclosed amount. In January, San Francisco-based VeriSIM Life said it raised a $15 million Series A round from investors including Morpheus Ventures, OCA Ventures, Intel Capital, Serra Ventures and Susa Ventures.

Monument Inc., a telemedicine platform for alcohol use disorder, agreed to acquire Tempest, a digital alcohol recovery program provider. Terms weren’t disclosed. VMG Catalyst led Monument’s Series A round last year. Tempest is backed by Maveron Capital, Slow Ventures, Female Founders Fund and AlleyCorp. Both companies are based in New York.

Aspen Neuroscience Inc., a San Diego-based startup developing a treatment for Parkinson’s disease, closed a $147.5 million Series B round co-led by GV, LYFE Capital and Revelation Partners. Additional new investors including Newton Investment Management, EDBI, Lifeforce Capital, Medical Excellence Capital, Mirae Asset Capital and NS Investment also contributed to the funding, along with previous backers OrbiMed, ARCH Venture Partners, Frazier Life Sciences, Section 32 and Alexandria Venture Investments. Doug Fisher of Revelation Partners will join the Aspen Neuroscience board.

Brightseed, a South San Francisco, Calif.-based startup seeking to identify and bring to market hidden compounds in plants that can impact human health, scored a $68 million Series B round led by Temasek. New investors Reference Capital and Rethink Capital Partners also participated in the funding, along with existing backers S2G Ventures, Continental Grain, Germin8 Ventures and AgFunder.

Invetx, a Boston-headquartered developer of protein-based therapeutics for animal health, landed $60.5 in Series B financing. F-Prime Capital, Novo Holdings, GV and Eight Roads led the round, which saw participation from Anterra Capital, Casdin Capital and funds managed by Tekla Capital Management.

Osmind Inc., a San Francisco–based startup working on treatments for moderate to severe mental health conditions, secured a $40 million Series B round. DFJ Growth led the investment, with Partner Justin Kao joining the board. Susa Ventures, General Catalyst, Future Ventures, Tiger Global Management, Pear VC, Lachy Groom and others also participated in the round.

AcuityMD Inc., a medtech software and data platform that helps companies bring products to market, raised $31 million in Series A funding. Redpoint Venture Partners led the round, which included participation from Benchmark, Ajax Health and Artisanal Ventures.

Turquoise Health, a San Diego-based healthcare pricing platform, grabbed $20 million in Series A funding. Andreessen Horowitz led the round, with General Partner Julie Yoo joining the board. Bessemer Venture Partners, BoxGroup and Tiger Global Management also invested.

Ness Well Inc., a New York-based startup whose Ness Rewards App allows consumers to earn points for health spending, was seeded with a $15 million investment. Will Ventures led the round, which included additional support from Core Innovation Capital, Accomplice, Digitalis Ventures, Portage Ventures, Global Founders Capital, Refactor Capital, RiverPark Ventures and Atypical Ventures.

Handspring, a Newark, N.J.-based behavioral health provider for children and families, completed a $6.2 million seed round. Newark Venture Partners and NextView Ventures co-led the investment, which saw participation from 25madison, Arkitekt Ventures and Quantum Angels.

SimpliFed, an Ithaca, N.Y.-based provider of virtual breastfeeding and baby feeding support, closed a $6 million seed round led by Morningside Ventures and The Venture Collective.

evolvedMD, a Scottsdale, Ariz.-based behavioral health services provider, raised $5.4 million in Series A funding led by Waterline Ventures and Conductive Ventures.

Hannah Life Technologies, a provider of home-based fertility services, secured $5.2 million in pre-Series A funding led by Monk’s Hill Ventures.

OURS, a couples and premarital counseling provider, launched with about $5 million in seed funding from investors including TMV, Serena, Lakehouse Ventures and Collaborative Fund.

Anja Health, a startup that freezes umbilical cord and placenta stem cells for future disease treatment purposes, nabbed $4.5 million in seed funding led by Seven Seven Six.

• Drug-overdose deaths reached a record in 2021, fueled by fentanyl
   
• Moderna ousts finance chief Jorge Gomez in first week on the job
   
• Abbott could restart baby formula production within two weeks
   
• Pfizer to buy rest of Biohaven for $11.6 billion
   
• J&J names executives of planned Tylenol, Band-Aid company
   
• Taking a mental-health day? There’s a right way to do it.

• Reflections on Alnylam. (Nature)
   
• Study suggests inflammation wards off chronic pain instead of causing it. (STAT News)
   
• Forecasting the future of Covid. (New England Journal of Medicine)

This newsletter was compiled by Matthew Strozier, Zachary Cole and Brian Gormley.

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, Yuliya Chernova, Brian Gormley and Marc Vartabedian.

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