Healthcare Venture Capital Report - 2019 NEW YORK CIT Y
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INTRODUCTION Welcome to the second annual New York City Healthcare Venture Capital Report. For 2019, we have expanded the scope of our report by including insights and expertise from 15 of NYC’s leading investors and entrepreneurs, and for the first time, have added a ranking of the top 25 funded health companies and highlighted NYC’s leading healthcare investors to know. Thanks to all who contributed to this report, and a Healthcare is vital to NYC’s economy in many ways special acknowledgement to our partners at Cooley, including as a major employer. Of the largest NYC who helped gather all of the data for this report, as employers listed in Crain’s New York 2018 list, 30% well as our quarterly updates throughout the year. come from our health systems (Northwell, NYC Health and Hospitals, Mount Sinai, Montefiore, NYU Langone 2018 was a remarkable year for healthcare investing in and NewYork-Presbyterian) representing 217,000 jobs. the United States reaching an all-time high of $30+ billion across multiple sectors (PitchBook-NVCA Venture As Ellie Wheeler, partner at Greycroft, points out: “There is Monitor, December 2018). New York was no different and a vibrant and ever-expanding ecosystem here in New York experienced impressive growth – we saw $1.85 billion City, including access to pharmaceutical companies and invested across 83 healthcare companies. Like the rest big insurers, not to mention a significant percentage of of the industry, we saw larger rounds at all stages. Fortune 500 companies and other big employers that all have increasing incentives to get involved in healthcare. Importantly, we saw several critical exits. Roche’s With major universities here as well, there is a significant acquisition of Flatiron Health for $2.1 billion last February amount of talent and it is only getting better.” was a watershed moment for NYC health start-ups. Ezra Mehlman, Managing Partner of Health Enterprise The New York healthcare market continues to flourish. Partners, commented: “We may just be hitting the apex We’re excited to see what the coming year has in store moment of healthcare venture capital investing: with for NYC. fundraising levels and valuations at all-time highs, the only viable exit for many companies is an IPO or In good health, multi-billion dollar acquisitions.” While Flatiron garnered the lion’s share of attention, NYC had other important exits. Syntimmune, founded in 2013 by Dr. Laurence Blumberg, a serial biopharma entrepreneur, Bunny Ellerin and his brother Dr. Richard Blumberg, was acquired by President Alexion for $400 million. WebMD (which was acquired by New York City Health Business Leaders NYC-based IAC) also added two local healthcare properties to its platform – Vitals and Jobson Healthcare. 2
2018 BY THE NUMBERS 83 $1.85B HEALTH COMPANIES IN FUNDING RECEIVED IN 2018 3% OTHER ($58M) 31% HEALTH INSURANCE 10% ($574M) DATA ANALYTICS 26% ($177M) FUNDING BY 13% SECTOR BIOPHARMA ($488M) PATIENT ENGAGEMENT ($232M) 17% CONSUMER HEALTH ($320M) 7% SEED/ANGEL 27% ($129M) SERIES A ($508.5M) FUNDING BY 16% ROUND VENTURE BOUND ($289M) 27% LATE STAGE* 23% SERIES B ($503.5M) ($419M) * Series C/D/Corporate 3
TOP 25 FUNDED NYC # Company Description Sector $ Raised Key Investors (MM) Health insurance company employing Health Alphabet, Founders Fund, 1 technology, design, and data to $540 Insurance CapitalG, Verily humanize healthcare. Direct-to-consumer healthcare FirstMark Capital, SignalFire, company handling everything from Consumer 2 $88 Initialized Capital, General online diagnosis to convenient Health Catalyst delivery of medication. Lux Capital, The Column Group, Biotechnology company developing a Polaris Partners, Euclidean 3 BioPharma $87 platform to harness the gut-brain axis. Capital, Two Sigma Ventures, Alexandria Ventures, Bill Gates Biotechnology company developing disease-modifying gene therapies 4 BioPharma $75 Orbimed for Parkinson’s disease and other neurodegenerative disorders. Biotechnology company developing Versant Ventures, Forbion, S.R. 5 a novel drug class targeting BioPharma $54 One, Alexandria Ventures RNA-modifying proteins. Technology company rebuilding the pharmacy industry that enables Consumer Thrive Capital, Brook Capital 6 $50 customized outcomes for doctors, Health Partners hospitals, insurers, and manufacturers. Biotechnology company commercializing pharmaceuticals 6 BioPharma $50 C-Bridge Capital for patients in Emerging Markets including Asia Pacific. Biotechnology company pursuing Versant Ventures, Polaris 8 next-generation immuno-oncology BioPharma $48 Partners, LS Polaris Innovation research and drug development. Fund Medical technology company applying 9 artificial intelligence to improve clinical Data Analytics $40 GV, DFJ, Zach Weinberg diagnostics. Real-world data and analytics company using proprietary IQVIA, EW Healthcare Partners, 9 Data Analytics $40 methodology to enable precision Memorial Sloan Kettering medicine at scale. Healthcare technology company F-Prime, Polaris Partners, Oak Patient 9 improving behavioral health delivery $40 HC/FT, GV, Deerfield Engagement for patients, providers, and payers. Management Novo Holdings A/S, Sofinnova Discovery platform revolutionizing Partners, Lepu Medical, 9 cancer treatment through first-in-class BioPharma $40 Alexandria Ventures, therapeutics. Partnership Fund NYC 4
HEALTH COMPANIES IN 2018 # Company Description Sector $ Raised Key Investors (MM) AI-powered health application for Consumer 14W, Comcast Ventures, 13 consumer health education and $37.5 Health Mangrove Capital Partners linkage to primary care. Healthcare technology company that New Enterprise Associates, Flare delivers real-world evidence for life 14 Data Analytics $36.4 Capital Partners, Lakestar, Town sciences companies, payers, and Hall Ventures providers. Patient payment and engagement Kinnevik, Founders Fund, Thrive Patient 15 platform for hospitals, health systems $36 Capital, Lakestar, Sound Engagement and medical groups. Ventures New type of health plan aligning Bain Capital Ventures, F-Prime, employers, employees, and Health 16 $34 Maverick Ventures, Bessemer, providers to ahieve cost-effective, Insurance Ingleside Investor high-quality care. Biotechnology company treating Abbvie Ventures, Alexandria neurodegeneration and neuronal 17 BioPharma $31 Ventures , ARCH, Pfizer injuries through development of Ventures novel therapeutics. Goldman Sachs Investment Subscription-based personalized Consumer Partners, Goodwater Capital, 18 $29 vitamin packs. Health Juxtapose, RRE Ventures, Tusk Ventures Sequoia, Oak HC/FT, Spring Virtual clinic dedicated to women’s Consumer 19 $27 Mountain Capital, 14W, Female and family health. Health Founders Fund Healthcare technology company transforming cancer diagnosis, 20 Data Analytics $25 Breyer Capital treatment and prevention through cutting-edge AI. Episode-based digital care delivery Patient 21 $21 Insight Venture Partners and remote patient monitoring. Engagement Designing personalized health system Maverick Ventures, Thrive for qualifying Medicaid and Medicare Patient 22 $20.8 Capital, Sidewalk Labs, Oxeon, beneficiaries living in underserved city Engagement Town Hall Ventures neighborhoods. Behavioral healthcare company in Behavioral 23 $20 F-Prime Capital Partners psychiatric hospital space. Health Diabetes management platform Patient 24 that harnesses the power of mobile $17.4 Innova Capital Partners, FJ Labs Engagement computing and data science. Healthcare technology company developing and commercializing Digital 25 $17 Sanofi Ventures software as prescription medical Therapeutics treatments.
QA & WITH NYC’S TOP MOVERS & SHAKERS Todd Pietri | Managing Partner, Aran Ron | Partner, FundRx Activate Venture Partners The city has developed an ecosystem of individuals New York has robust technology and healthcare who are really interested in early-stage companies. sectors. What makes New York different is that you As a result, New York is attracting a lot of young, have the life sciences and pharmaceutical corridor, high-energy, smart people with great ideas who which is a big plus and difficult to replicate. There want to start early-stage companies. New York City are multiple generations of good companies that has become the ideal environment and may even have grown up here. be better than, or at least rival, Silicon Valley. Ellie Wheeler Q: What are the benefits of Partner, Greycroft Our firm is in both New being an investor in NYC? York and Los Angeles, and to date, our healthcare investing has been led out of the New York office. It is not just out of interest of our investing partners, but Drew Schiff | Managing Partner, Aisling Capital because New York is For life science ventures, NYC provides access to and consultation with not where we are seeing the only an expert but potentially many experts that are only a subway ride away. companies located and From NewYork–Presbyterian, Rockefeller and Memorial Sloan Kettering up where we are seeing the to Montefiore/Einstein back through Columbia and Mt. Sinai and then down most opportunity. to NYU and out to Brooklyn, there are clinicians and researchers that can provide relevant and important perspective and advice. Ezra Mehlman | General Partner, Health Enterprise Partners NYC has many of the essential building blocks for a vibrant healthcare venture system. The presence of: several large health systems with well-resourced investment and innovation programs; a deep pool of intellectual talent emerging from graduate schools; an accumulation of NYC-based “alumni” from large tech companies who possess dedicated healthcare interests; the proliferation of venture accelerators; and of course a general abundance of financial capital have created a unique healthcare entrepreneurial environment in New York. 6
Florian Otto | CEO, Cedar New York is a hot bed for entrepreneurship - there’s an incredible energy here that I’ve grown to love. The city has so many resources that, when utilized correctly, can really help put you on a path towards success. We Carolyn Magill believe that the engineering talent in NYC is on par with (or perhaps even CEO, Aetion beginning to surpass) Silicon Valley. New York City has been an ideal location for us due to the volume of expertise within the region, across all sectors of healthcare. Not only is the talent pool diverse Q: What are the and full of people who are passionate about improving healthcare, Zachariah Reitano Co-founder and CEO, Ro benefits of being we’re close to many of our current (and potential) partners—from biopharma From hospitals to medical schools to pharmaceutical an entrepreneur to payers and providers, which enables us to build companies, New York City is home to many of the most in NYC? collaborative relationships between them. renowned healthcare institutions in the world. This has enabled Ro to benefit from the unparalleled wealth of knowledge of international thought leaders and to Jean Drouin | CEO, Clarify Health garner the enthusiastic New York’s strength in a broad range of tech fields—from health support of medical experts and advertising and finance to digital media and ecommerce— in every field through each makes it an ideal place for Clarify to plant roots and grow. We’re phase of our growth. thrilled to be part of the constantly evolving New York City tech scene, where we can easily network and exchange learnings with other companies in the community. Wendy Goldstein and Yvan-Claude Pierre | Partners, Cooley Being home to large pharma companies and many life sciences companies makes it a very active, robust and also mature ecosystem, as well as burgeoning market for innovative technologies. In addition, given NYC’s proximity to New Jersey which ranks second in cancer treatment drugs in development, the NYC/New Jersey corridor is the leading differentiated region in the healthcare/life sciences industry. 7
NYC TOP HEALTHCARE H E A LT H C A R E S P E C I F I C I N V E S TO R S Investor Sector Notable NYC Investments Intercept Pharmaceuticals, Synergy Aisling Capital Pharmaceuticals, Loxo Oncology, Bioenvision Apple Tree Partners Syntimmune Casdin Capital Flatiron Health, Clover Health Cureatr, Quartet, Sermo, Schrodinger, Deerfield Management Intra-Cellular Therapies Digitalis CareDox, Somatix FundRx Annum Health, EpiBone, Epicured, Wellth Health Catalyst Capital Risalto Health Management Health Enterprise Partners Vitals LifeSci Venture Partners Attune Pharmaceuticals, Rocket Pharma AiCure, Truveris, NY Digital Health Accelerator, New Leaf Venture Partners Intercept Pharmaceuticals NewYork-Presbyterian WorkFusion Ventures NGN Capital Exosome Diagnostics, Vivaldi Biosciences Prevail Therapeutics, Intercept Pharmaceuticals, OrbiMed Adicet Bio, Loxo Oncology, SmartZyme BioPharma Aetion, Centivo, Pager, Quartet, Risalto Health, Oxeon Partners RubiconMD Magnolia Neurosciences, Petra Pharma, Pfizer Venture Investments Accelerator Corporation, Lodo Therapeutics RTW Investments Roivant Sciences, Rocket Pharma StartUp Health CareDox, Cohero Health, Doctor.com, Zeel Windham Venture Partners Cureatr, Credsimple, Novocure, Blueprint Health
INVESTORS TO KNOW G E N E R A L I N V E S TO R S Investor Sector Notable NYC Investments Activate Venture Partners Cureatr, Healthify, Medidata, Vitals Alma, K Health, Ro, Oscar Health, BoxGroup FlatIron Health Collaborative Fund Zipdrug, Sherpaa BioDigital, Parsley Health, Phosphorous FirstMark Capital Diagnostics, Ro Cylera, Call9, Maven Health, Flatiron Great Oaks Venture Capital Health Eden Health, Health Reveal, Thrive Greycroft Global K Health, Maxwell Health, Oscar, Thrive Lerer Hippeau Ventures Global, Talkspace Kallyope, Zipdrug, Hometeam, Pager, Lux Capital SOLS Cureatr, Petra Pharma, Spring Health, Partnership for New York City Wellth RRE Ventures Care/Of, Nomad Health, Spring Health Capsule, Cedar Health, Cityblock Thrive Capital Health, Oscar Health SECTOR LEGEND BioPharma Health Technology Health Services Medical Devices & Diagnostics & Tools Supplies 9
Q: How has Gil Addo CEO, RubiconMD the NYC venture The tech ecosystem in NYC has been community Michael Aberman | CEO, incredibly supportive of us. The community supported Quentis Therapeutics has put tremendous resources behind The NYC venture community has been your growth? very supportive. NY State participated in our Series A, NYC provided investment to health tech innovation. That is why we moved from fund our NYC headquarters and Boston to NYC to Versant’s NY investment arm – Highline start this business. Therapeutics – funded our Series A. Plus Over the last 5+ our technology is licensed from Cornell! years, we’ve seen the community as both incredibly collaborative and Bronwyn Spira | CEO, Force Therapeutics helpful in supporting and promoting us. StartUp Health has been helpful in creating a community of Healthcare thought leaders. The academic community has supported recruiting efforts, especially places like Columbia’s MPH program, Flatiron School and General Assembly. Joel Wishkovsky | CEO, Simple Contacts New York State has kept an open dialogue with us. They have been very pro-innovation. Through our relationships with the academic community, we get to work with leading Drew Schiff experts in the medical field and see the latest tech coming out of the universities. Managing Partner, Aisling Capital Recruiting early-stage researchers, drug developers and life science innovators to a city with high Ezra Mehlman General Partner, Health Q: What are some operating costs and a high cost of living is almost always a Enterprise Partners of the challenges of consideration that needs to be thought building a business Despite making major through not only at strides towards providing the initial stages but subsidized office space as a company gains and resources for startups in the city, NYC remains a in NYC? traction and grows of several employees to very expensive place to live dozens or hundreds and work. of employees. 10
Aran Ron | Partner, FundRx Florian Otto There are enormous inefficiencies in the CEO, Cedar healthcare system, and we’ve only scratched the There is no denying that there is a surface of addressing those inefficiencies. I’m consumerization trend taking over healthcare. optimistic about companies that can provide Health insurance is an area that can be much better services or IT solutions that can capture more patient friendly. Understanding patient data in a different way. benefits should be easier and insurers could be a more active partner in how patients consume healthcare. Bronwyn Spira | CEO, Q: Which healthcare sectors Force Therapeutics Patient engagement are you excited about? and patient enablement platforms will be key to managing costs and enhancing the patient experience in healthcare. Wendy Goldstein | Yvan-Claude Pierre Partners, Cooley We are most excited about gene therapy and gene editing as healthcare subsectors grow in the next 5 years and beyond. The possibilities of gene therapy and gene editing hold much promise Ellie Wheeler and with careful planning and regulation, gene therapy and gene Partner, Greycroft editing will become an important remedy of the near future. We’re excited about anything that is bringing transparency to healthcare. We’re also excited about analytics that are driving better Todd Pietri | Managing Partner, Activate Venture Partners outcomes and cost efficiencies, and the We’re interested in Health Economics & Outcomes Research (HEOR). startups addressing the We’re also interested in end of life or palliative care and innovation around changing landscape of primary care business models that will have less brick and mortar, and more care, including on-site, telemedicine and virtual care. near-site, and telemedicine. It will be important to approach it with a consumer lens. 11
WHAT TO WATCH FOR IN 2019 2019 is shaping up to be a pivotal year for New York healthcare. We predict the following trends in the year ahead: 1. 2. 3. DTC Health will Biotech will hit its stride. Healthcare delivery continue to flourish. When will NYC catch up to Boston will surprise you. Direct-to-consumer services like and SF? We’re starting to see First came One Medical. Then Ro, Capsule, Simple Contacts and traction. In 2018, $488 million went CityMD. And we realized that the Parachute Health are booming. to local biotech startups like days of the sterile physician office, They offer so much of what Kallyope, Prevail Therapeutics, long wait times, and inability to traditional healthcare doesn’t – Gotham Therapeutics, Quentis connect by anything but phone personalization, ease of use, Therapeutics and Rgenix. Lab were numbered. Now we have seamless customer experience space, once a huge gap, is coming telehealth, in-home visits, concierge and privacy when it matters. online with the expansion of the service - all tech-enabled. Think They also connect directly with West Side’s Hudson Research Maven, Eden Health, Parsley providers and health plans to Center (home to NY Stem Cell Health, Alma, and Heartbeat alleviate customer stress. Foundation) and Alexandria’s Health. No doubt we’ll see more Expect the trend continue. planned third tower on the East models emerge in 2019. Side. JLABS @ NYC opened in June inside the New York Genome Center and ELabNYC announced its 7th cohort in December. The life science vision is finally taking shape. 12
4. 5. 6. Patient engagement Data that informs will New models will disrupt will simplify and transform the market. the PBM industry. improve care. The holy grail is actionable data Will 2019 be the year that PBMs that drives better decision-making, are disrupted? We think so. Lack Navigating healthcare can be hard. changes behavior, leads to better of transparency and misaligned Tools that help patients simplify outcomes. As payment models incentives may be coming to an the complexities of access, shift from volume to value and end. We’ve had discussions with adherence, benefits and payments clinical decisions become more multiple startups looking to break help them take back some control. complex, key stakeholders need the PBM hold on pricing and NYC is home to companies in all advanced analytics to help them distribution. We expect to see categories - Cedar, Force thrive. Medidata was one of the one or more funded in 2019. Therapeutics, AbleTo, Cecilia first to recognize this, followed by Health and Wellthie to name a Crossix, Prognos, Flatiron and few. These services address real others. Today startups like Aetion, gaps for patients and families Cota and Clarify Health are leading which will lead employers and the way to better outcomes. plans to cover them, driving Paige growth in this category. Wa t son “ HELLO my name is... Since Oscar launched in NYC in late health strategy and analytics at It supports the 2012, we’ve noticed a growing trend. RedPeak, to weigh in. “The most It showed up several times during successful health tech companies idea that some 2018 with the launch of Eden have recognized that they need to technologies should Health, Paige.AI, Alma and Ezra.AI. appeal to the human in all of us. It was cemented during JP Morgan Using a name like Watson or Paige be considered a when Fit4D announced its name is one way to humanize technology. partner or ally change to Cecilia Health. What’s the It supports the idea that some deal with first names as company technologies should be considered to care teams names? We asked branding expert John Breen, executive director of a partner or ally to care teams going forward.” going forward.” 13
Carolyn Magill | CEO, Aetion Always keep in mind the mission of healthcare and how your product or service improves the experience of delivering and receiving care. Most importantly, make sure you are building a business you’re truly Michael Aberman passionate about, and stay focused on solving real unmet needs. CEO, Quentis Therapeutics Some of the challenges associated with NYC are diminishing. We used to Zachariah Reitano | Co-founder and CEO, Ro be a smaller biotech community than other Don’t be intimidated by regulation. Healthcare is complex “hubs” but this is changing and this complexity isn’t going anywhere any time soon. rapidly. On the real estate However, this is an opportunity for startups. Own the front, there was not much complexity for patients. Make their lives more simple by developed lab space. This making your life more difficult. has improved greatly and may not be as much of an issue now. MOVERS & SHAKERS FINAL THOUGHTS Jean Drouin | CEO, Clarify Health We continue to be humbled by the depth of talent in Gil Addo the city and inspired by the creativity, vitality and special CEO, RubiconMD capacity of New Yorkers to get things done. The capital, customers and collaborators you need to grow are all in and around NYC. Hop on the subway or train Joel Wishkovsky | CEO, Simple Contacts and go to them. Stay focused. Don’t get distracted by all the opportunities around you. Focus instead on what you are here to build. 14
METHODOLOGY AUTHORS Data used in the creation of this report was obtained from PitchBook and covered the period from 01/01/2018 to 12/31/2018. PitchBook places companies into various healthcare subsectors, which we reviewed and used in our analysis. These include: Zack Caplan is an MBA • Healthcare Devices and Supplies Bunny Ellerin is president student at Columbia • Healthcare Services and co-founder of NYC Business School. Zack’s Health Business Leaders. professional experience • Healthcare Technology Systems She is also Director of includes healthcare • Pharmaceuticals and Biotechnology the Healthcare and technology startup Stellar • Other Healthcare Pharmaceutical Management Health, Boston Children’s Program at Columbia Hospital’s Innovation and Company Analysis: Business School. Bunny Digital Health Accelerator, We included a company on the list if (1) is passionate about driving and Deloitte Consulting’s the company was classified in a healthcare change and transforming healthcare strategy and category above in the PitchBook database; healthcare. operations practice. (2) the company listed NYC as its corporate headquarters; (3) the company received seed, angel, early-stage or late-stage funding during the period 01/01/2018 to 12/31/2018. Investor Analysis: ACKNOWLEDGEMENTS To compile a list of New York City healthcare venture capitalists, we used the One of the factors that differentiates NYC from other markets PitchBook database to identify investors is the entrepreneurs, investors and advisors who are driving within New York City who had done at least innovation within our health ecosystem. Thank you to our one healthcare deal during the period esteemed contributors for providing insights for this report. 01/01/2018 to 12/31/2018. Only seed, Gil Addo | CEO, RubiconMD angel, early-stage and late-stage were considered. We considered an investor to Michael Aberman, MD | CEO, Quentis Therapeutics be in New York City if the fund listed New Jean Drouin, MD | CEO, Clarify Health York City as its headquarters OR if the Wendy Goldstein, Esq. | Partner, Cooley fund had a dedicated office in New York City. The analysis is centered on VC-focused Carolyn Magill | CEO, Aetion investors, however private equity investors Ezra Mehlman | General Partner, Health Enterprise Partners with VC deals in the healthcare sector also Florian Otto, MD | CEO, Cedar were considered. Yvan-Claude Pierre, Esq. | Partner, Cooley Disclaimer This report is provided for informational Todd Pietri | Managing Partner, Activate Venture Partners purposes only. Where possible, we verified Zachariah Reitano | Co-founder and CEO, Ro information obtained from PitchBook Aran Ron, MD | Partner, FundRx through publicly-available sources (e.g. company press releases, news reports) Drew Schiff, MD | Managing Partner, Aisling Capital and made judgment calls based on that. Bronwyn Spira, PT | CEO, Force Therapeutics If you find an error in the report, please Ellie Wheeler | Partner, Greycroft contact us at info@nychbl.com so that we can correct it. Joel Wishkovsky | CEO, Simple Contacts 15
NYC Health Business Leaders is a professional community of 3,000 senior executives who are leading, innovating and driving healthcare forward. For more information visit www.nychbl.com or follow us @nychbl. Thank you to the Cooley team for their support and partnership! 16
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