Issue 076
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Digital health research from Brian Dolan.
Welcome to E&O.
Last week I wrote about how this newsletter will change starting next month (which is next week!). I also dug back into pricing strategies for DTx and shared a few thoughts on the rise of CGMs for wellness.
Earlier this week I sent out the first version of the new (free) funding newsletter, E&O Mondays. Appreciate all the thoughtful feedback on Issue 000. So far, to my great surprise, one reader managed to correctly answer the health tech trivia question. I’ll share the answer Monday.
Here’s what’s happening this week:
- Following news that a few former Livongo execs had created a SPAC, I put together a list of SPACs created in 2020 that have indicated an interest in acquiring private digital health companies to take them public. Scroll down for the full write-up with excerpts from the SPACs’ regulatory filings.
- Livongo shareholders and Teladoc shareholders voted this week to go through with the merger, while Fitbit and Google disclosed they were pushing the deadline to get their deal done. It was supposed to be all set by this month, but the companies now have until February 2021 to make it happen.
- The Digital Therapeutics Alliance has published a worthwhile white paper focused on how DTx can help underserved populations. This is an important factor for future reimbursement of the category. The DTA calls on legislators to tell CMS to formally definite DTx, codify DTx coverage, and expand clinician coding and payment.
- FDA Commissioner Dr. Stephen Hahn gave a shout out to Akili in his remarks to the MDUFA public meeting a few days ago, but he didn’t mention them by name: “We also granted marketing authorization (through the de novo pathway) to the first game-based digital therapeutic device to improve attention function in children ages 8 to 12 years old with attention deficit hyperactivity disorder. This was the first digital therapeutic intended to improve symptoms associated with ADHD, as well as the first game-based therapeutic granted marketing authorization by the FDA for any type of condition.”
- Mymee published results from its randomized controlled pilot study in JMIR. The study included 50 adults with Systemic lupus erythematosus (SLE) who were assigned to either a 16-week digital therapeutic intervention plus usual care or usual care alone. Topline results: “The intervention group achieved significantly greater improvement than the control group in 9 of 11 domains.”
- North Shore Therapeutics, which is led by Joe Powers, former head of DTx at Headspace and ex-CSO at AppliedVR, revealed a bit about its pipeline and its first digital therapeutic. NST-SSD will use virtual reality to deliver a digital therapeutic to people with schizophrenia. The company is also working on digital therapeutics focused on bipolar disorder and peripartum psychiatry.
- ResAppDx, a smartphone app used by clinicians to diagnose lower respiratory tract disease, croup, pneumonia, asthma/reactive airway disease exacerbation, COPD exacerbation and bronchiolitis is now available for some Android users in Europe (CE Mark) and Australia (TGA approved).
- One more thing… Under Armour finally announced a buyer for MyFitnessPal. Francisco Partners has agreed to acquire the asset for $345 million. That’s less than the $475 million UA paid to buy MFP almost six years ago. It’s also shutting down its other fitness tracking app, Endomondo, to focus on its core business of selling tight-fitting clothing.
18 digital health SPACs you should know (they may accelerate digital health exits in 2020)
In recent weeks, digital health companies Augmedix and Hims each went public via a merger with a so-called “blank check” company.
At the end of September, well before shareholders consummated the Teladoc-Livongo merger, most of Livongo’s top executives formed a SPAC of their own (more on that below) as their next big thing.
(If you’re not familiar with these Special Purpose Acquisition Companies, here’s a good primer from The Startup. SPACs have been around for a long time but have become a popular way to take a company public in 2020.)
After trawling through SEC documents all week, I found about 16 SPACs with designs on digital health. Counting the two linked above that took Hims and Augmedix public, there have been 18 SPACs making moves in 2020.
Most of the ones listed below mention a handful of markets that they may enter — these aren’t all exclusively focused on health tech. So, there’s a good chance many of these go in other directions. Still, even if the SPAC class of 2020 only takes half a dozen more digital health companies public, these trendy IPO vehicles will leave their mark this year.
Here’s my list of 16 SPACs to keep an eye on… take the dollar amounts with a grain of salt since they’re often just placeholders:
The Livongo Mafia SPAC
Health Assurance Acquisition Corp. Plans to raise $500 million. Targeting:
“Persona-driven consumer experiences that leverage AI feedback loops. Virtual healthcare services that increase access and affordability. New economic models for managing risk and paying for care. Cloud infrastructure that helps generate data and enables the development of many health assurance companies. Modern workflows for health systems and providers. Full-stack, tech-enabled providers.”
The team includes names from Livongo and General Catalyst: Hemant Taneja, Glen Tullman, Stephen Klasko MD, MBA, Quentin Clark, Jennifer Schneider, MD, and Anita V. Pramoda. Filing
Another SPAC that includes the original founder of Livongo
Petra Acquisition, Inc. Plans to raise $75 million. Targeting:
“We intend to focus our investment effort broadly across the entire healthcare industry, which encompasses services, therapeutics, devices, diagnostics and animal health and services. We intend to seek initial business combination targets with smaller enterprise values and to particularly focus on the life sciences, medical technology, digital health and technology-enabled services sectors.”
The team includes Kimon Angelides, who founded EOS Health, the company that Tullman and Taneja acquired and renamed as Livongo. Filing
SPAC from the crew that sold Auris to J&J
Lux Health Tech Acquisition Corp. Plans to raise $300 million. Targeting:
“Our focus will be on the intersection of the healthcare and technology industries. We believe these industries are attractive for a number of reasons … Convergence of technology with healthcare. The marriage between healthcare and technology has the potential to impact everything from how patients interact with care providers, to how diagnostic data is obtained and analyzed, to how intervention is recommended and executed, to how outcomes are measured and quantified. Technologies ranging from teleoperated devices, to wearable sensors, to machine learning and artificial intelligence are arming patients and healthcare providers with tools to make better and quicker clinical decisions.”
Most of the team had some part in selling robotic surgery company Auris to J&J. Filing
Casper Sleep CEO’s SPAC eyes telehealth, digital health
Tailwind Acquisition Corp. Plans to raise $300 million. Targeting:
“Key sub-sectors within the technology ecosystem that we believe are poised to experience rapid growth and could benefit from the experiences of our management team, board of directors and Advisors include, but are not limited to, telehealth, eSports and digital gaming/betting, digital health and wellness, agriculture and food technology, education technology, financial and insurance technology, real estate technology, space technology and enterprise software companies, among others. The success or failure of companies that operate in these markets is largely driven by their ability to harness the power of data-driven marketing in an efficient manner.” Filing
Tommy Hilfiger’s advising a SPAC with potential digital health focus
Sandbridge Acquisition Corporation. Plans to raise $200 million. Targeting:
“The coronavirus pandemic has continued to accelerate the shift in consumers’ demand for health and wellness, as consumers are increasingly undertaking basic preventative measures, adopting healthy lifestyles and seeking products and services that support overall wellbeing. The home has become the wellness hub for consumers during the pandemic, and demand for digital health and remote healthcare is expected to rise. Furthermore, consumers are increasingly focused on the ‘clean’ and ‘conscious’ attributes of wellness products, and brands with more transparent narratives and those that align with intrinsic personal values are better poised to resonate strongly…”
This goes on a bit. Yes, it does name-check digital health and remote healthcare, but c’mon, the advisors are Tommy Hilfiger and a former CEO of Gucci. This has to be some kind of luxury e-commerce play. Filing
Advisor to the Care Innovations-PRA deal SPAC
Montes Archimedes Acquisition Corp. Plans to raise $500 million. Targeting:
“Digital and Consumer Health. High-growth market driven by the increasing adoption of services and technology that expand care delivery and improve health outcomes, combined with improved visibility into reimbursements, a direct result of COVID-19 related legislation. In addition, health care consumers have become more focused on consumer-driven health care applications that provide a greater emphasis on patient experience, information and decision making. During Mr. Momtazee’s tenure on the Board of Directors of PRA Health, the company entered into a global partnership with, and subsequently acquired, Care Innovations, a provider of digital remote patient management services.” Filing
Quick round-up of the rest:
- SCP & CO Healthcare Acquisition Company. $200 million. Targeting: “Our emphasis will be on opportunities within the digital care journey, virtual care/telehealth, and personalized medicine market segments, where the need for innovative technology, data and information solutions, stakeholder collaboration and consumer engagement are highest, and where the competitive landscapes are most fragmented.” Filing
- Blue Water Acquisition Corp. $50 million. “Recent years have seen great advances in electronic healthcare services (e.g. electronic medical records, telehealth, awareness of mental health on social media, etc.). Combined with shifts in the methods of healthcare delivery in the US (e.g. value-based care), there are attractive opportunities for development and flagship products or services.” Filing
- LifeSci Acquisition Corp. $50 million. “We believe that lower-value segments of healthcare will be burdened by the pressures of cost-cutting, while companies or segments that deliver superior products and services, with better clinical and non-clinical outcomes, will thrive. Successful companies will be data-driven, consumer-focused, operationally efficient and transfer best-in-class standards globally.” Filing
- Deerfield Healthcare Technology Acquisitions Corp. $125 million. “We intend to seek initial business combination targets with smaller enterprise values and to particularly focus on the life sciences, medical technology, digital health and technology-enabled services sectors.” Filing
- Chardan Healthcare Acquisition 2 Corp. $85 million. “Our ideal company will be institutionally backed, with a high-quality management team and a demonstrated ability to raise money from the private capital markets. The segments we will target include biotechnology, medical technology and digital health.” Filing
- Aequi Acquisition Corp. $300 million. “Opportunities for telehealth and virtual care are bright spots in the health technology sector… Virtual health care has also gained momentum and is becoming a core component on helping consumers improve or maintain their well-being, as well as playing an important role in the diagnosis and treatment of illness. According to Deloitte research, by 2040, the health care system as we know will be transformed and a major portion of care, prevention, and well-being services will shift to virtual settings.” Advisors include the founder of Birchbox. Filing
- Eucrates Biomedical Acquisition Corp. $100 million. “The healthcare industry is primed for new technologies and business models… We believe that successful companies in this environment will be data-driven, operationally efficient, focused on preventative care and will be able to transfer best-in-class practices and standards across the entirety of the healthcare value chain. We see opportunities for companies that can provide disruptive innovation by benefiting from scientific and technological advances in areas including biopharmaceutical development, digital health, wellness, healthcare services and medical technology.” Filing
- Edoc Acquisition Corp. $100 million. “Health system capacity may be subject to possible increased volatility due to the pandemic from time to time. However, we believe that these challenges may also lead to meaningful acquisition opportunities. In addition, we see long-term catalyst in accelerating the broader adoption of telemedicine… Possible targets may include hospitals or hospital networks, specialty clinics chain, chronic disease health care service providers, telemedicine/digital health providers and/or associated technology/platform enablers, or artificial intelligence/big data enabled diagnostic providers.” Filing
- Supernova Partners Acquisition Company, Inc. $300 million. “We believe that there are significant opportunities to invest in advantaged growth companies that are well-positioned to benefit from thematic shifts and tech-enabled trends and are valued between approximately $1 billion and $5 billion. Given our team’s extensive and complementary experience, we will seek to partner with a company in the broader technology sector.” Accolade CEO Rajeev Singh is a director. Filing
- Northern Star Acquisition Corp. $300 million. “We believe the use of technology to drive adoption of emerging brands online, together with the ongoing seismic shift in retail sales from physical stores to e-commerce and online activities, makes the beauty, wellness, self-care, fashion, e-commerce, subscription and digital-media sectors even more ripe for attractive business combination opportunities.” This one is super thin with one mention of wellness, but the CFO is also a former Audax Health exec. Filing
Quick links: E&O research reports and databases
The links below aim to make it easier for paying subscribers to find the long-form research reports and databases on the E&O site:
The Virgin Pulse Report (Subscribers-only Link)
The Evidation Health Report (Subscribers-only Link)
Database: Rx-only Digital Therapeutics Pipeline of Pipelines (Subscribers-only Link)
Database: Online Diabetes Prevention Program Companies (Subscribers-only Link)
Database: Digital Health PPP Loans (Open Access)
The Proteus Digital Health Report (Subscribers-only Link)
The Hinge Health Report (Subscribers-only Link)
The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)
That’s a wrap on Issue 076 of E&O.
