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Digital-Health Venture Funding Rises as Sector Starts to Find its Footing
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By Brian Gormley, WSJ Pro
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Good day. Venture funding in digital health is rising this year after sliding for the past three, according to industry investor Rock Health.
U.S. digital-health startups raised $6.4 billion in the first half, up from $6 billion in the same period last year, according to the firm. Though the increase is small, it suggests the industry is starting to regain its footing after retreating following the 2021 boom, when investors pumped $29.3 billion into the sector.
The artificial intelligence gold rush fueled much of the action. Nine of the 11 financing rounds over $100 million in the first half went to AI-enabled startups, according to Rock Health. For example, Abridge, whose technology automates physicians’ note-taking, disclosed a $300 million financing in June and a $250 million round in February.
Investors are being selective. With 245 venture deals in the first half, this year could wind up with the lowest overall deal count since 2020, Rock Health says.
But recent initial public offerings from Hinge Health, which largely automates joint and muscle-health care, and virtual-care company Omada Health have added to investors’ confidence, said Dr. Garheng Kong, founding managing partner of HealthQuest Capital.
“Those have been two data points that are encouraging to the sector,” he added.
And now on to the news...
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The capsule from Varda’s third mission landed in Australia in May. PHOTO: VARDA SPACE INDUSTRIES
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Space medicine. Varda Space Industries, which seeks to use microgravity to improve drug development, has raised $187 million in fresh capital and expanded its ability to process pharmaceutical ingredients in orbit.
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Because active pharmaceutical ingredients behave differently in microgravity, or near-weightlessness, Varda says its approach could enable improved versions of existing drugs and novel treatments not possible on Earth.
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Varda makes unmanned space capsules that are shot into low-Earth-orbit, aboard SpaceX rockets, where they process crystals. These crystals, the building blocks of pharmaceuticals, can be used to manufacture drugs on Earth.
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Gravity affects crystal formation. Removing it causes fluids to mix differently, which can lead to more uniformly sized and structured crystals and novel crystals, according to Varda.
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$10 Billion
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Roughly the amount Merck & Co. agreed to pay to acquire Verona Pharma.
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Merck to Buy Verona Pharma in $10 Billion Deal
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Merck & Co. has struck a roughly $10 billion deal to buy Verona Pharma, bolstering its lineup with the chronic obstructive pulmonary disease treatment Ohtuvayre as it braces for the 2028 loss of patent exclusivity for the blockbuster cancer drug Keytruda, The Wall Street Journal reports. “We’re now well on our way toward transitioning to a portfolio with a far more diversified set of future growth drivers,” Chief Executive Rob Davis said Wednesday. Merck will acquire Verona for $107 per American depository share, a 23% premium to the London-based company’s closing price of $86.86 on Tuesday. The deal is slated to close by the end of the year. Ohtuvayre, which
the U.S. Food and Drug Administration approved last year for the maintenance treatment of COPD in adults, adds to Merck’s growing cardiopulmonary pipeline and portfolio that includes Winrevair, the pulmonary arterial hypertension treatment that was the key drug in its $11.5 billion acquisition of Acceleron Pharma in 2021.
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Private-Markets Tech Provider iCapital Raises $820 Million
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An early mover in the effort to open up private markets to individuals is now reaping the benefits of the industry’s push into the mainstream, WSJ reports. iCapital, a provider of private-markets financial technology for wealth advisers, has raised more than $820 million in a deal that values it at more than $7.5 billion, the company said. It was last valued at about $6 billion in 2022, according to PitchBook. Asset-manager T. Rowe Price and technology-investment firm SurgoCap Partners led the new investment.
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People
Diagonal Therapeutics, a biotechnology company focused on correcting dysregulated signaling with clustering antibodies that address the underlying cause of intractable genetic diseases, said it appointed Dr. John Lee as chief medical officer. Before joining Diagonal, Dr. Lee was chief medical officer at Nuevocor, spearheading the development of a gene-therapy program for genetic cardiomyopathies.
Healthcare-focused investment firm Cressey & Co. in Chicago has promoted Dan Vollman to principal. He joined the firm in 2021.
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European firm EQT AB led a $56 million growth investment in medical device developer Neuros Medical, investing through the firm's life sciences strategy. The Aliso Viejo, Calif.-based company is working on nerve-stimulating devices to treat chronic pain in adult amputees.
Novenda Technologies, a Netherlands-based startup manufacturing dental products using 3D printing, raised a $6.1 million Series A funding round led by Brightlands Venture Partners with participation from investors including KBC Focus Fund, Borski Fund and Limburg Business Development Fund/LIOF.
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ILLUSTRATION: MARK HARRIS, GETTY IMAGES
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