Michael Esquivel

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In our 2018 year-end review of life sciences and tech IPOs (co-authored by my colleagues James Evans and Rob Freedman), we noted that life sciences offerings totaled 67 raising an average of $133 million while there were 45 technology deals raising an average of more than $380 million, not including Spotify, whose unique direct listing process did not raise capital. We were curious to see if those trends would continue in 2019, so we took a look at the numbers year to date.

2019 Deal Size

Through the end of May 2019, there were 27 life sciences offerings that raised $2.3 billion. On average, life sciences IPOs grossed $86 million. The largest deal so far was Gossamer Bio’s initial public offering that garnered $276 million. The smallest offering was $5 million raised by Guardion Health Services.

On the technology side, there have been 11 IPOs through May raising an impressive $14 billion. However, that total includes the outsized offerings from Uber and Lyft which took in $8.1 billion and $2.34 billion respectively, lifting the average offering to $1.3 billion. Omitting the two rideshare companies, the value of the average tech offering drops to $416.7 million. After Uber and Lyft, the next largest tech offering was Pinterest at $1.4 billion.

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Continue Reading Life Sciences IPOs Haven’t Slowed in 2019

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The business of animal health has traditionally been dominated by the animal health divisions of big pharma companies. But with Pfizer’s 2013 spin-off of its animal health business, now known as Zoetis, the sector has been undergoing fundamental changes that create new opportunities for investors and innovators.

The success of the Zoetis $2.2 billion IPO, at the time the largest since Facebook, helped inspire the spin-off of Eli Lilly’s animal health business, Elanco, last September, which surged 41 percent on its debut. And, late last year, Bayer announced its intention to leave the animal health business.

In addition to the spin-offs, or in part because of them, there has been substantial consolidation in the animal health space. In 2014, the company that became Elanco acquired Novartis Animal Health. Two years ago, Boehringer Ingelheim acquired Merial, Sanofi’s animal health business, making it, at the time, the second-largest animal health company in the world.

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Continue Reading Divestitures and Consolidation in Animal Health Market Present Opportunities to Investors, Innovators

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In its Q1 2019 digital health funding report Rock Health noted that investment in digital health companies leveled off in the first quarter after a record-setting 2018. At $986 million, investment in the first three months of the year was down 21 percent from the fourth quarter of 2018, when it hit $1.2 billion

But the leveling off in funding is more likely linked to an overall decrease in venture investment than to any weakness in the fundamentals of the digital health sector.

The PwC/CB Insights MoneyTree Report Q1 2019 states that global venture funding dropped 22 percent in the first quarter over the last quarter of 2018—from $67 billion in Q4 to $52.2 billion in Q1. U.S. venture investment overall dropped even more in Q1, from $38.7 billion to $24.6, or 36 percent. As a result, digital health venture investment is either even with or outperforming the market as a whole.

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Continue Reading Digital Health Investment Levels Off and Unicorns Emerge

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With 58 U.S. biopharma IPOs in 2018, the biotech industry entered the new year with confidence. By all appearances, the longest and largest biotech IPO window in history was not going to close anytime soon. But it was biotech dealmaking that took center stage at the annual J.P. Morgan Healthcare Conference at the beginning of 2019.

On the opening day of the annual confab in San Francisco, Bristol-Myers Squibb and Eli Lilly and Company both announced blockbuster deals — strengthening the case that M&A would likely be the exit of choice. Many IPO candidates may be reluctant to pursue a public offering, given lingering political and market uncertainty in the first part of the year.

After announcing Lilly’s deal to acquire Loxo Oncology, David Ricks, the company’s chairman and CEO, assured analysts that he expects there will be an increase in M&A activity in the year to come. Lilly’s CFO and SVP Joshua Smiley, added that the company could continue doing deals throughout the year. (Fenwick represented Loxo Oncology in the $8 billion deal)

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Continue Reading Which Way to the Exits for Biotech?

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No matter who is doing the counting, 2018 was an off-the-charts year for venture investment in digital health. Here’s a sampling of the tallies:

  • Our good friends at Rock Health put the total investment at $8.1 billion – an impressive 42 percent increase over 2017’s total of $5.7 billion.
  • The PwC/CB Insights MoneyTree Report posted an even higher total of $8.6 billion up from $7.1 posted in 2017.
  • StartUp Health reported $14.6 billion in global investment in digital health, up nearly 150 percent from 2017’s total of $6 billion (cited by MobiHealthNews).

And it’s not only that more money is going into the sector, it’s going into larger deals. Rock Health reports that the average deal size has grown to $21.9 million. That’s up from $15.9 million in 2017 and $13.6 million in 2016.

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Continue Reading The Year of the Megadeal and a Hot Digital Health Market in China

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The impact of artificial intelligence, or more specifically machine learning, is being felt in every industry sector, but perhaps nowhere more so than in healthcare, where AI funding hit historic highs in 2018, according to CB Insights.

The term AI is commonly used by the media and others to describe a computer-generated solution that is as good, or better than, a solution that could have been produced by a human. That often includes digital health tools that use algorithms programmed by researchers and clinicians. Machine learning is a subset of AI that uses neural networks to simulate or even expand on the level of data analysis that human minds are able to achieve. Deep learning is where software learns to recognize patterns. And these tools are already transforming diagnostic imaging.

The Scope

CB Insights reports that since 2013, $4.3 billion in private equity has been invested in healthcare AI startups across 576 deals. That’s more than AI startups in any other industry have taken in.

In a way, healthcare and AI are almost made for each other. The healthcare sector produces tons of data, but most of it is not being leveraged to provide the kind of insights it potentially could. The hope is that AI will be able to sort through this mountain of information to provide novel insights to improve the treatment or enable the prevention of disease.

In this post, we have rounded up some of the most promising applications for AI/ML in healthcare and examples of companies that are making it happen.

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Continue Reading How AI is Transforming Healthcare: Diagnostics, R&D and Therapeutics

Fenwick & West Digital Health Investor Summit
The Seventh Annual Fenwick & West Digital Health Investor Summit profiled a sector that continues to attract record levels in investment, further matures and consolidates, and that is leveraging the newest technologies in blockchain and artificial intelligence to improve the practice and delivery of health care. Speakers included Rock Health’s Bill Evans and Goldman Sach’s Peter van der Goes, who discussed the possibility of an investment bubble and outlook for 2019, and Ruchita Sinha of Sanofi Ventures, who talked about blockchain in digital health. Fenwick’s Kristine Di Bacco moderated a panel on machine learning and artificial intelligence in healthcare with guest speakers Brandon Ballinger, co-founder of Cardiogram; Alison Darcy, founder and CEO of Woebot Labs; and Christine Lemke, co-founder and president of Evidation Health.

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Continue Reading Takeaways from Fenwick’s 2018 Digital Health Investor Summit

Just over a year ago, we reported about the rise of the mega-round in digital health investments. At that time, we tallied nine investment rounds valued at more than $100 million in the first half of 2017. Deals in H1 2018 surpassed that with a total of 14 such megadeals, as we reported in earlier posts for Q1 and Q2. The surge has continued in Q3, with 11 rounds north of $100 million including five valued at more than $300 million and one hitting $550 million.

But while mega rounds were rare occurrences in 2017,[1] today they are becoming more common. So is it fair to say that $300 million is the new $100 million? Is there another superlative after “mega”?

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Continue Reading Digital Health Megadeals Get Bigger in Q3 2018

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Private investment in digital health continued apace in the second quarter of 2018, based on our latest look at deal flow. As the sector has matured, growth in investment levels quarter-over-quarter and year-over-year appears sustainable for the foreseeable future.

Likewise, the closing of a handful of megadeals each quarter is becoming the rule rather than the exception. The second quarter saw seven megadeals for $100 million or more. That is right in line with the first quarter, when we also recorded seven rounds of $100 million or greater.

The top investees in the second quarter were diverse, ranging from biopharmaceuticals to artificial intelligence to primary care. This diversity may be a sign that investors are looking beyond the low-hanging fruit of infrastructure and patient engagement, or even diagnostic applications, to areas such as primary care where opportunities for digital disruption are less obvious.

It is also interesting to note that over half of the investment rounds of $100 million or more went to companies based in China. We’ve seen a steady increase in investments in Chinese digital health companies over the past few years. But this is the first time that we have seen them account for half of the top deals—including the three largest rounds for $200 million or more.

Here’s a summary of the seven largest deals of the quarter:

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Continue Reading Digital Health Investment Trends Q2 2018: Megadeals Become the Norm, China Rising