With the advent and adoption of digital technologies, lines have long blurred among the world of devices, pharma and purely software-driven products. And now, one European venture capital firm has decided to bet on the future of this convergence in biopharma — specifically in startups at the intersection of biology, data and computation – with a dedicated fund.
Paris-based Sofinnova Partners announced last week that it has launched a new strategy aimed at this new breed of startups. In a video interview, Edward Kliphuis, a partner at the firm, explained that the fund has already invested in three startups though he was coy about its actual size.
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“We’ve led one series A of €13.8 million. We led one series A of €12 million and we led a seed round €5 million,” he declared. “The other key data point there is, you know is we see most people in this particular domain with triple digit fund sizes,”
In other words, the fund appears to be at least 100 million euros.
“This is as far as I can go,” he demurred, declining to clarify whether the math was correct.
He explained that 70% of the fund will be invested in European companies that fit the bill.
The three startup that have won investment from this new strategic fund are – Munich, Germany-based deepc that drives greater adoption of AI tools by helping them integrate within radiology workflows. The company raised €12 million in a Series A round led by Sofinnova Partners.
Radiology is an area that has actually seen early success with the use of AI in improving detection and efficiency but still adoption is not widespread. So the obvious question is why not?
“Turns out the answer is, it is very cumbersome to have 10 different agreements with 10 different startups on the [U.S.] West coast with 10 different payment terms with 10 different data compliance regulations,” Kliphuis said.
And so what deepc does is to be the platform through which hospital radiology departments can adopt AI.
“Deepc is an aggregator; it’s the app store of radiology,” Kliphuis explained. “They have agreements with 10 to 20 radiology providers. They embed themselves into the hospital, and therefore they’re the only sort of counterpart that the hospital has to deal with. They are the operating system for radiology.”
The second firm that Sofinnova has sunk its money in as lead investor is Paris-based Kiro, which raised €13.8 million to leverage AI both in clinical decision-making and in patient engagement — specifically as it pertains to lab results. Kiro aids the communication of lab test reports among clinical laboratories, health professionals and patients.
“Now, what these guys do is they basically have a simple natural language processing tool and they test that information and, and interpret it. And thereby provide enormous value to patients and physicians,” he said.
The third company Sofinnova invested in is London-based BioCorteX, which raised a 5 million seed round last week. The company enables precision by using simulation and modeling to understand the interaction between drugs and bacteria in the body with the aim of improving a patient’s response to treatments.
“Now, these guys have built for the first time a tool called, Carbon Mirror, which is basically a simulation engine that allows you to simulate the way bacteria and human health interact,” Kliphuis explained. “They basically commit themselves at this point to actually understanding the response and non-response in therapies. And this was the prime example of being able to use computation and data to understand something that we simply haven’t been able to comprehend before.”
For Kliphuis, the strategy that Sofinnova is pursuing goes beyond investing in digital therapeutics, which has struggled to gain traction in healthcare. Pear Therapeutics, one of the early and promising crop of digital therapeutics companies recently announced another round of layoffs and is considering “strategic alternatives” – in other words, a sale. Better Therapeutics is also laying off workers. And Proteus Digital Health filed for bankruptcy in 2020 despite raising millions of dollars and having a FDA-cleared product on the market. Otsuka, Japanese pharma maker with which it had a partnership bought it for scraps in August 2020. Large pharma like Novartis have also stepped back from their embrace of digital therapeutics. Though the sector is a smaller subset of the data+biology umbrella that Sofinnova is investing it, does the history of pharma+digital combinations give Kliphuis pause?
It actually doesn’t given the experience he has in the space, he said. Kliphuis sits on the board of Akili Labs, which has won distinction as the world’s first FDA-cleared prescription digital therapy – a video game treatment for ADHD. Now Akili has not been immune to layoffs and its stock price has plummeted but there appear to be no signs (yet) of a financial meltdown.
He attributed the failure of digital therapeutics as a category and the fits and starts that these startups have had in commercialization to the idea that “new technology” was forced to work within an existing model for commercialization.
“I think the big challenge and perhaps the mistake that we have made as a society is that we thought, we presumed that digital therapies would behave the same way,” like for instance, Moderna, a new breed of biotech company that delivered a new technology of mRNA drug through pharma partners and channels. “It turns out there’s no channel because pharma cannot push code and it’s a different product. I think also in the Venn diagram of products, we need to rethink what a digital therapeutic is.”
But in clearly articulating and chasing the data/tech+biology sector is where Kliphuis claimed an advantage for Sofinnova.
“This is not just looking at biology, not just looking at tech. We have knowledge of both sides of the coin. We’re building on 50 years of understanding the healthcare market, understanding the science and we, we like to think that we understand technologies and therefore can marry those two worlds” he declared.
Photo: bob_bosewell, Getty Images
