Good day. The global trade war has jolted financing markets, forcing many startups to consider alternatives to venture capital and initial public offerings. Haim Zaltzman, global vice chair of the emerging companies and growth practice of law firm Latham & Watkins, has been advising entrepreneurs as they navigate the turbulence. We spoke about financing alternatives with Zaltzman, whose practice includes work with biotech and medical-device startups, and venture and debt investors in these sectors. Here are excerpts from the conversation, edited for length and clarity.

WSJ Pro: How is the trade war affecting startups' ability to fundraise?

Zaltzman: It’s hard to tell what the impact will be long-term. The immediate impact has been on companies’ ability to raise equity, because it’s really hard to tell the go-forward impact of the tariffs, and whether there will be an impact.

WSJ Pro: What are a couple of creative financing options companies are exploring?

Zaltzman: Royalty monetizations, where you have an investor that buys a percentage of the revenue a company will generate from a drug product, we’ve been very active in that area. The other is structured debt, where debt is based on achieving milestones such as regulatory approval. 

WSJ Pro: What are you telling entrepreneurs not to do right now?

Zaltzman: What we’re saying is, don’t panic. The best advice is: whatever transactions they enter into now should work for them in the short term and long term. You have to have that perspective.

And now on to the news...

Obesity pill. Pfizer is halting development of its experimental weight-loss pill, as the booming obesity drug market remains out of reach for the drug giant, The Wall Street Journal reports.

• The company said Monday the stoppage comes after it reviewed clinical data and a study subject developed a liver injury that might have been caused by the drug, called danuglipron.
   
• Halting the drug’s development means Pfizer still is unable to get a cut, for now, of the white-hot obesity market, which analysts say could reach $100 billion by the end of the decade.
   
• Investors, who have been cool on Pfizer’s pipeline, have been waiting on results from Pfizer about the study.

An obscure set of state taxes on hospitals and other health providers is in the crosshairs of congressional budget cutters because the levies can lead to higher federal spending on Medicaid, WSJ reports. Known as provider taxes because states impose them on hospitals, nursing homes and other facilities that provide healthcare, the taxes boost a state’s budget for funding Medicaid. That in turn attracts more matching federal dollars to fund the program—money that is ultimately directed back to the hospitals and clinics. If Congress were to restrict the taxes’ use to finance state Medicaid contributions entirely, it could save more than $600 billion over a decade, according to estimates by the Congressional Budget Office. That would go a long way toward achieving House Republicans’ plans to reduce federal spending by as much as $2 trillion to help offset the impact of extending President Trump’s income-tax cuts.

Funds

Sprig Equity, a growth equity and late-stage venture capital firm investing in medical technologies, closed its inaugural fund with $50 million in assets under management.

People

Sift Healthcare, a healthcare payments intelligence provider, appointed Ralph Perfetto as chief operating officer. He was most recently at Zelis.

Ezra, a provider of full-body MRI screening for early cancer detection, appointed Danna Chung as chief medical officer and medical director. She was most recently the virtual medical director at Crossover Health.

Glycomine, a San Carlos, Calif.-based biotechnology company developing a therapy for a rare genetic disorder, scored $115 million in Series C funding from investors including CTI Life Sciences Fund and Advent Life Sciences. CTI’s Youssef Bennani and Advent Life Sciences’ Dominic Schmidt will join the company’s board.

Attovia Therapeutics, a San Carlos, Calif.-based startup developing treatments for chronic pruritus and atopic dermatitis, closed a $90 million Series C round. Deep Track Capital led the investment, with Managing Director Rebecca Luse joining the board.

Chapter, a New York-based Medicare navigation platform, picked up $75 million in Series D funding. Stripes led the round, with Partner Ron Shah joining the board.

Assort Health, a San Francisco-based specialty-specific AI platform for managing patient phone calls, landed $22 million in Series A funding co-led by First Round Capital and Chemistry.

Skin Analytics, a London-based autonomous skin cancer detection provider, secured £15 million in Series B financing led by Intrepid Growth Partners.

Phantom Neuro, an Austin, Texas-headquartered startup developing a minimally invasive interface enabling intuitive control of prosthetic limbs and robotic exoskeletons, grabbed $19 million in Series A funding from Breakout Ventures and others.

Youlify, a San Francisco-based AI startup that automates revenue cycle management for healthcare providers, was seeded with a $4.3 million investment led by Bonfire Ventures.

RISA Labs, a Palo Alto, Calif.-based AI startup providing complex oncology prior authorizations, collected $3.5 million in seed funding from investors including Oncology Ventures and General Catalyst.

Trellis Health, a San Francisco-based digital health platform providing women with proactive care, emerged from stealth with $1.8 million in pre-seed funding from investors including Swizzle Ventures and Nextblue.

• Autism rates ticked up in 2022
   
• Is Covid rewriting the rules of aging? Brain decline alarms doctors
   
• When is the right time to tell people you have Alzheimer’s?
   
• The latest in hernia repair: new techniques, new research
   
• Mom and dad are in their 80s. Their son is the one with dementia.

• Biotech in the transition zone (Life Sci VC)
   
• Countries agree on treaty aimed at preventing global health crises (New York Times)
   
• States push Medicaid work rules, but few programs help enrollees find jobs (KFF Health News)
   
• New research kindles excitement around stem-cell therapies for Parkinson’s (BioPharma Dive)

This newsletter was compiled by 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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