Next Phase Newsletter

By Karen Deyo, Investor Research Analyst, LSN

The number of consumer digital health apps has been growing at an enormous rate over the past few years. A study done in November of 2017 by IQVIA found over 300,000 apps available, with hundreds more added every day¹. These apps can be tied to wearable sensors, related to wellness areas such as mental health or weight loss or related to chronic disease management, to name a few possibilities. What with more people turning to their smartphones to complement their medical care, and the number of apps flooding the marketplace, how can a new consumer health app catch the attention of investors?

Gyan Kapur, Managing Director of Bayes Ventures and Digital Health CT, a new digital health focused incubator, stressed that to stand out, companies need to have a special premise and team, as well as the ability to demonstrate actual traction. While formal clinical data is not a necessity, if a company has no clinical data that makes it crucial to have other evidence of market traction, such as retention, a good viral coefficient etc. However, Gyan stressed that ‘while not all companies have this data, those that do are much more likely to get funded.’

Sarah Sossong, Principal at Flare Capital Partners, highlighted the importance for potential investors and customers to see early demonstration of market traction and preliminary evidence of your app’s impact on clinical outcomes and costs. For example, some apps have opted for a freemium model out of the gate to get broad consumer adoption. Significant engagement is a great proxy for value, impact, and need, and can be a great starting place for negotiating B2B contracts with payer, employers, or health systems. In today’s highly cost-constrained environment, these same payers, employers, and health systems will also be under pressure to show impact, or risk budget cuts, so it’s also essential for entrepreneurs to be thoughtful about quantifying impact and pick early partners equally dedicated and resourced to demonstrate the app’s efficacy on clinical outcomes and cost reduction. Together, market traction and demonstrable impact can provide evidence of a good underlying business model that will enable a larger path forward and long-term success.

However, entrepreneurs must have a good business plan in mind, and one that does not rely solely on a consumer app – to be successful in the long run, there needs to be a larger path forward, whether that involves partnerships with healthcare providers, a B2B aspect or a larger platform that will be in play. Dr. Sohaib Siddiqui, Managing Partner at Kettlebeck Ventures, agrees that an app is not sufficient for a complete business model, but should only be a first generation product. He highlighted, ‘there are so many consumer digital health apps in the app store, with many more added every day, that it’s easy to get lost.’ Sohaib said that for him to be interested in investing, the app should be a tool, but not the only product, for a company to be able to scale and remain relevant to the market. However, in addition to market traction, Sohaib stressed the importance of proving the benefit to the patient, and how the app can improve care, and to be able to prove value, not just claim it.

Finally, evidence of market traction, a good business model for future product development and proof of the efficacy of your app for the consumer are not all – it is also important to remember that, as potential investors, they all want to see what the return on investment will be. Finding investors for a consumer app can be an uphill battle, and the startups that succeed will be those that provide a needed service in a unique manner that cannot be easily duplicated.

1. https://www.iqvia.com/institute/reports/the-growing-value-of-digital-health

By Lucy Parkinson, VP of Investor Research, LSN

Corporate venture capital represents a significant source of early stage funding for life science companies, but many entrepreneurs have questions about how to engage with these investment arms of major companies and what happens after investment. When approaching a corporate venture fund, it is crucial to know their strategy – do their investments align solely with the strategy of the parent company, or are they a vehicle to invest in other areas of interest? Does partnering with a corporate venture fund lead to a future partnership with the parent company? At RESI, our Corporate Venture Capital panel will give the audience an overview of how corporate venture funds invest, and what a startup might get out of a relationship with a corporate VC, in addition to potential capital.

While a lot of attention is given to the corporate venture investing of major pharma firms in early-stage companies, this panel features corporate VCs from multiple sectors of healthcare technology. These investors are looking at early-stage opportunities across the life science technology sectors of drugs, devices, diagnostics and digital health, and will explain to RESI’s audience how they execute their strategic mandates.

The panelists are:

Michael Baran (Executive Director, WRD and Principal, Pfizer Ventures)

Michael Baran, MBA, PHD, is Executive Director, WRD and Principal at Pfizer Ventures. Mike is responsible for identifying, evaluating, making and managing equity investments aligned with the future directions of Pfizer. He currently has responsibility for Pfizer’s investments in Accelerator NYC, AnTolRx, Biodesy, eFFECTOR, and MISSION Therapeutics.

Prior to his current role, Mike held responsibilities in R&D portfolio strategy as well as managing scientific affairs for the R&D President’s office at Pfizer. Mike joined Pfizer from Nexomics Biosciences, a structural biology biotech company which he co-founded in 2006. Prior to his involvement at Nexomics he worked within the NIH Protein Structure Initiative’s Northeast Structural Genomics Consortium coordinating protein structure production efforts, including bioinformatics, protein expression/purification and 3D protein structure determination.

Mike received his BA in Biochemistry from Syracuse University, holds a MBA from Rutgers Business School, and a PhD in Biochemistry from Robert Wood Johnson Medical School / Rutgers, the State University of New Jersey.

Dave Neustaedter (Vice President, Medtronic Ventures)

As Vice President of Venture Capital at Covidien and now Medtronic, Dave has led 10 minority investments to-date, with top tier financial returns and resulting in multiple portfolio companies acquired by Covidien and Medtronic. Dave works closely with Medtronic’s leadership and business development teams regarding new minority investments and was also a primary architect of Covidien’s white space growth strategy. He currently serves as a Director for SetPoint Medical, PQ Bypass and MD Revolution and is a Board Observer for several other companies.

Prior to Medtronic, Dave was responsible for business development, strategy and finance for a small division of Stryker focused on white spaces and new technology platforms. Earlier in his career, he was a healthcare-focused strategy consultant, supporting numerous clients with key decisions regarding internal product development and acquisition opportunities across the medical device, diagnostic and biopharmaceutical industries.

Dave received an MBA from Yale and a Ph.D. in molecular biology from the University of British Columbia and completed his post-doctoral fellowship at the Mount Sinai School of Medicine.

Sean Cheng (Senior Investment Manager, Philips Health Technology Ventures)

Sean is currently an Investment Manager at Philips Ventures, a portfolio of promising health tech companies including Babyscripts, Xealth, Mytonomy, as well as a fund-of-funds to fulfill the Philips Healthtech strategy. He is interested in early-stage investment opportunities in digital health, medical devices and therapeutics.

Previously, Sean held positions at the Boston Consulting Group, the U.S. FDA, and NASA. Sean also serves on the Board of Directors of The Professional Center for Child Development, Board of Advisors at the Johns Hopkins University, and the Advisory Council of the World Economic Forum’s Global Shapers Community. Sean holds a PhD in Engineering Design from the University of Cambridge in England, where he developed expertise in medical device design and optimization algorithms.

Claire Leurent (Bio Sector Investment Director, Samsung Ventures)

Claire Leurent is a biologist by training. She joined the pharmaceutical industry to work on drug development in several capacities over the past 13 years. Initially on late phase development with Wyeth Pharmaceutical (Paris office) as a Senior Clinical Scientist contributing to global phase 3 registration trials, NDA dossier submission and new product launch. Then on early stages with Pfizer Neuroscience out of its R&D headquarters in Groton CT, and later from Pfizer’s Kendall Square campus in Cambridge MA, where she led teams in designing and conducting clinical plans from First in Human to Proof of Concept studies for small molecules, biologics and digital biomarker technologies.

Jeffrey Moore (President, MP Healthcare Venture Management)

Jeff Moore joined MPH in 2008. Previously, Dr. Moore was a Kauffman Fellow with the early stage healthcare venture capital firm Research Corporation Technologies (RCT). He has held various business and scientific roles at Millennium Pharmaceuticals and Scriptgen. He received his DPhil from Oxford and postdoctoral training at Harvard Medical School, studying biochemistry, infectious disease and immunology. He received his MBA as a Sloan Fellow at MIT.