Investors and healthcare startups are center stage at the annual INVEST conference in Chicago March 28-30, 2022. In the runup to the conference, we’re doing a series of interviews with investors on their approach to startups across the four tracks of the pitch contest, INVEST Pitch Perfect: pharma tech; diagnostics; care coordination and value-based care; and remote patient monitoring and smart devices.
The finalists for each of the tracks will be reviewed by judges who will also ask questions about the startup’s business. The prize for the winner of each track is a profile in MedCity News.
The deadline for Pitch Perfect submissions is January 31. To apply, click here.
To review the agenda, click here. You can register for the conference here.
Blake Wu of NEA
Blake Wu, a partner with venture capital firm NEA, is a judge for the PharmaTech track of the Pitch Perfect contest. At NEA, he focuses on investments in healthcare services, health IT, and biopharmaceuticals. He discussed how NEA’s investment strategy has been informed by the Covid-19 public health crisis and highlighted some investment trends, in response to emailed questions.
What companies/technologies have impressed you in recent years and why?
The past two years have been all about Covid-19 and its ramifications for our healthcare system operating in the midst of a pandemic. While we are not necessarily out of the woods yet, we at NEA have been heavily focused on the post-pandemic environment and what lasting / structural changes to our system will result from our learnings over the past couple of years.
For example, we have been closely observing the speed at which the pharma-tech industry has innovated, largely a result of the fact that trials are growing increasingly more complex and decentralized — trends that have accelerated meaningfully during the pandemic. As we conducted a deep dive within our own portfolio and across a handful of key opinion leaders, we consistently heard from stakeholders that clin-ops (clinical operations) was a major pain point, particularly on the supply chain side. That is why we were so excited to lead Slope.io’s Series A late last year. In our industry deep dive, we were constantly confronted with issues that were unique to a certain stakeholder (e.g., clinical sites struggling with inventory management, sponsors and labs struggling with chain of custody questions, etc.). Slope is addressing this by building a diversified software platform that helps scale and automate complex pharma supply chains in the context of a clinical study. The technology itself is highly impressive and ultimately the mission behind the company—the acceleration of clinical research in an increasingly complex logistical environment, which is critical to our industry and our healthcare system overall.
Additionally, over the course of the pandemic, we have seen an acceleration in the unbundling of healthcare. Digital health, specifically, is unbundling into indication and therapeutic area specific categories, and companies are becoming increasingly specialized in how they define their respective patient populations and market opportunities. As our system migrates to a fee-for-value construct, this unbundling of care outside the four walls of the hospital allows for increased incentive alignment across patients, providers, and payers. We have invested heavily in this trend of specialty verticals migrating out of the hospital walls, be it Radiology Partners in radiology, Vori Health in musculoskeletal, Spiras Health in pulmonary and cardiology, or Strive Health in kidney care. Each of these specialties account for hundreds of billions of dollars in spend, demonstrating the sheer size of the market opportunity.
What are some emerging trends you are seeing in the way VCs invest, the amounts they allocate?
From a healthcare perspective, there’s certainly never been more interest in the category. Venture fundraising in healthcare more than doubled 2020’s figures, and 2020 itself was already a record year. We’ve seen an unprecedented amount of interest across late-stage, private digital health companies, many of which are focused on next-generation care delivery models or have some component of risk-bearing or risk-sharing embedded in their models. In terms of how VCs invest, there were a huge number of larger growth rounds in 2021, more than we’ve ever seen, and there have been numerous new entrants into the healthcare VC and growth markets over the past few years. Interestingly, we’ve seen a continued bifurcation between the late-stage private and public markets as they pertain to digital health companies, many of which have struggled to maintain investor enthusiasm once they’ve gone public. At NEA, we are long-term, fundamentally-driven investors. Given our size, we can and do support our companies through any near-term market volatility (be it private or public). I think VCs with a similar, long-term mindset will succeed in this dynamic market environment.
What regulatory or legislative changes do you see having the biggest impact on companies in one or more of these sectors?
One of the most significant pieces of legislation we see impacting our portfolio is the 21st Century Cures Act. Since its implementation, we’ve seen a real push by the agency and other stakeholders across pharma to accelerate the development of life-saving therapeutics and bring new innovation to populations with significant unmet medical needs. Real world evidence is a wonderful example of that—according to our calculations, over three-quarters of all regulatory submissions in 2020 included real world evidence studies in their submission package. That’s an unprecedented number and one that we expect to grow markedly over the next decade. We’ve been extremely fortunate to witness this growth first-hand at one of our portfolio companies, Aetion, and the industry is well positioned to continue its momentum in a post-pandemic world.
Photo: phive2015, Getty Images
