Good day. Digital-health venture investment shows no signs of reprising the pandemic-era rush, but some well-established companies are commanding significant investor attention.

U.S. digital-health startups raised $8.2 billion in venture capital through three quarters, putting this year on track to be similar to 2023, when companies collected $10.8 billion for the full year, according to Rock Health, an investor in the sector. Digital-health funding peaked at $29.2 billion in 2021, according to the firm.

Today, investors are searching for businesses on a clear upward trajectory, said Mike Alvarez, chief executive of Glooko, which has just raised a $100 million Series F financing to expand a digital platform designed to improve management of diabetes and other conditions.

“Companies that have really good growth strategies are getting funding,” Alvarez added.

Palo Alto, Calif.-based Glooko says more than 4.4 million patients globally have used its platform, which gathers data from various diabetes devices, such as glucose monitors and insulin pumps.

Those data sync to the cloud, enabling doctors to discern and act on trends, Alvarez said. Patients, for their part, can use a Glooko app to track their data and log their meals and activity.  

Glooko’s connected-care business has centered on diabetes, but the company plans to grow by also using its platform to track data from devices used to manage other conditions, Alvarez said.

The company also plans early next year to add another offering, one designed to help researchers gather device data as they conduct clinical trials across diseases, Alvarez said.

He declined to disclose Glooko’s revenue but said he expects the company to turn profitable in 2025. “With the size of this investment, we’re looking for a significant return,” he added.

And now on to the news...

Telehealth startups brace for DEA decision. Telemedicine startups that offer treatment for opioid abuse have benefited from a pandemic-era regulatory waiver that helped them greatly extend their reach. Now that exemption is set to end. 

• Under a 2008 federal law, patients must be evaluated in person before they receive a prescription for a controlled medication, among them buprenorphine, which treats opioid-use disorder. The Ryan Haight Online Pharmacy Consumer Protection Act was named for a California teenager who died of an overdose of Vicodin he got from an online pharmacy, prescribed by a doctor he never met.
   
• But in 2020, in response to the Covid-19 pandemic, regulators waived the in-person requirement. The shift allowed telehealth companies that prescribe medication for opioid dependence to serve many more patients and encouraged venture investment in the industry. Companies typically prescribe Suboxone, a combination of buprenorphine, which reduces cravings and withdrawal symptoms, and naloxone to lower the risk the combined drug will be misused.
   
• That grace period will expire at year-end unless the Drug Enforcement Administration extends it. The DEA also is working on final regulations for telemedicine prescriptions of controlled substances, but with less than three months to go in 2024, there is no chance they will be promulgated this year.

The company picked to run eight hospitals managed by bankrupt Steward Health Care has struggled with some facilities it already owns, The Wall Street Journal reports. American Healthcare Systems, the Glendale, Calif.-based hospital operator, is behind on a debt payment at one of its facilities, hasn’t paid some bills to vendors across three others, and was found by regulators to have inadequate staffing and supplies to treat trauma patients at one hospital, according to court records, government filings and officials. Landlord Medical Properties Trust is counting on AHS to turn around facilities it had leased to Steward Health Care System, the largest hospital operator to file for bankruptcy in decades. Steward and MPT cut ties reaching a settlement in bankruptcy that gave MPT the right to reclaim 15 facilities and find new operators to run them.

People

Healthcare data platform OMNY Health appointed Ivy Weng as chief commercial officer. She was previously group vice president of life sciences at Komodo Health.

Flagship Pioneering said Paul Parker was named managing partner, capital solutions and value realization. He previously held positions at Thermo Fisher, Goldman Sachs and Barclays.

City Therapeutics, an RNA interference-based medicine startup headquartered in Cambridge, Mass., closed a $135 million Series A round led by ARCH Venture Partners.

Maven Clinic, a New York-based virtual clinic for women's and family health, raised $125 million in Series F funding. StepStone Group led the round, which included participation from General Catalyst, Oak HC/FT and others.

Orasis Pharmaceuticals, an ophthalmic pharmaceutical startup, scored $68 million in Series D equity financing from Johnson & Johnson Innovation – JJDC and others. The company has offices in Ponte Vedra, Fla. and Israel.

Suki, a Redwood City, Calif.-based provider of artificial intelligence technology for healthcare, landed $70 million in Series D funding from investors including Venrock.

ShiraTronics, a Minneapolis-based startup developing neurostimulation therapies for chronic migraine patients, completed a $66 million Series B round led by Norwest Venture Partners.

Arda Therapeutics, a San Carlos, Calif.-based developer of targeted cell depletion therapies for chronic diseases, picked up $43 million in Series A funding led by Andreessen Horowitz.

Eleanor Health, a Waltham, Mass.-based substance use disorder care provider, closed a $30 million Series D round led by General Catalyst.

SPRY Therapeutics, an AI-driven physical therapy practice management platform, secured a $15 million investment led by Flourish Ventures.

MiLaboratories, a San Francisco-based genomic research startup, closed a Series A round led by Kfund, bringing the total amount raised by the company to $10 million.

Generare, a Paris-based cloning and biosynthetics platform being used to find new medicines and antibiotics in soil bacteria, grabbed a €5 million investment from Teampact Ventures and others.

Clock.bio, a U.K.-based startup developing novel treatments for age-related diseases, collected $5.3 million in seed funding led by LocalGlobe.

Stream, a San Francisco-based processing platform for workers’ compensation medical documents, was seeded with a $5.3 million investment led by Spark Capital.

• Old drug repurposed for schizophrenia could reap Alzheimer’s windfall
   
• CVS, Cigna seek to disqualify FTC officials in insulin case over alleged bias
   
• MicroRNA pioneers win Nobel Prize in medicine
   
• Healthcare premiums are soaring even as inflation eases, in charts
   
• Why Pfizer will find it hard to appease its activist investor
   
• Abortion pill maker is seeking to expand its use to miscarriage

• Small San Diego biotech wants to change how Parkinson’s disease is diagnosed (Endpoints News)
   
• As U.S. efforts stall, China pushes ahead with Crispr treatments for muscular dystrophy (STAT)
   
• What if you can’t pick winners in R&D? (Timmerman Report)
   
• Employers haven’t a clue how their drug benefits are managed (KFF Health News)

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, Angus Loten and Marc Vartabedian.

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