Former Lumiata COO leads pharma-backed investment firm targeting digital health startups

DigiTx Partners CEO Dr. David Kim talks strategy, targets and the firm’s backing from Astellas Pharma and MPM Capital.

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The convergence between digital health and pharmaceutical companies has been an interesting trend to witness in the past few years. Increasingly, pharma companies want to move from being customers of digital health companies to having a role in steering their future as investors. So it shouldn’t be surprising that drug developers based in Japan — the second largest market for pharmaceuticals — are also getting involved. Tokyo-based Astellas Pharma has partnered with early stage life sciences venture investing firm MPM Capital to launch DigiTx Partners in San Francisco.

For Dr. David Kim, the former COO of predictive analytics company Lumiata, his role as DigiTx Partners CEO marks his return to the investment world. In addition to Lumiata, he had previously worked for MPM Capital and Pinnacle Ventures. In response to emailed questions, he talked about the investment firm’s strategy. He noted that DigiTx Partners expects to make two to three investments in digital health startups over the next 12 months ranging from $2 million to $6 million.

Would you liken your firm to SR One but focused on digital health?

Unlike SR One, we are not a corporate arm of a pharma company but an independent financing company that has been funded by pharma and MPM Capital. Moreover, we will not be asking for any kind of “rights” for the pharma company. Similar to GE Ventures and Intel Capital, in which they offer up connection to the business units, we will have close relationship with the pharma entity to facilitate “beta sites” and “proof of concept” projects for the startups or access to individuals with domain knowledge.

We want to avoid being pegged to a specific pharma entity, a situation in which some good companies may avoid approaching us. We want to cast widest net possible. Also in contrast to GE Ventures and Intel Capital, we are not solely funded by the parent company. DigiTx is an independent investment company funded by both the pharma and MPM Capital (board representation from each entity). We are probably closer to dRx in that we have two sources of capital and is independent to make its investment in the digital health space. The difference is that we are not a venture fund, but a pseudo-fund (an LLC). DigiTx is already has capital in the bank to make investments. We do not need to “call” capital for each deal. Our process will be much more efficient like a venture fund not requiring the need to present to “investment executive committees” at the parent companies for approval.

Will you make strategic investments for Astellas along the lines of remote monitoring, medication adherence, etc?

Correct. We will be looking broadly but will focus on those technologies and solutions that would in one or another touch pharma. Those areas of investments you listed would definitely be areas of interest.

Will your firm invest in companies that are not aligned to Astellas and other pharma companies? Yes, our charter allows us to invest in those companies that are not directly aligned to the pharma sector, however, these would be of higher hurdle. We are not a corporate [development] or [business] [development] vehicle for this particular pharma. However, there are no restrictions in the future acquisitions of companies in our portfolio. This pharma definitely wants greater exposure to digital health. This investment company is at least one way of achieving its strategic goal.

David, considering you come from a predictive analytics company, will this area also be an investment priority? Absolutely. I have found that people have a lot of data that they just don’t know what to do with. It has been also clear to me that many (but definitely not all) do not have the internal capabilities to do these analyses – especially at the pace that is required to be competitive.

Photo: Getty Images, Chung Sung-Jun