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)

Continue Reading Which Way to the Exits for Biotech?


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.

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


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.

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.

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”?

Continue Reading Digital Health Megadeals Get Bigger in Q3 2018

LS Insights - FB-2018 - 7.23.2018 post

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:

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

Two trends stood out in our analysis of private digital health investments in the first quarter of 2018: bigger deals and more investment in companies targeting the regulated portion of the health care market.

As the digital health sector matures, Rock Health reports that investors seem more comfortable with larger and later-stage deals. The year 2018 kicked off with seven investments of $100 million or more (megadeals), three of which were valued at $200 million or more. And while investors once shied away from companies subject to regulation by the FDA or other agencies, increased regulatory guidance appears to be boosting confidence. The three largest deals—those for $200 million or more—were all made in the diagnostics arena. In all, of the top 10 investments for the quarter, half were clinical diagnostics.

Diagnostics: The Top Value Proposition

The largest megadeal of the quarter was a $240 million Series E investment in HeartFlow. This diagnostic firm has developed a technology that reduces the need for more invasive diagnostic procedures, such as angiograms, among cardiac patients. Baillie Gifford, Wellington Management and existing investors participated in the round.

Helix, developer of a consumer-facing human genome platform, took in a $200 million Series B round that included DFJ Growth, Illumina, Kleiner Perkins, Mayo Clinic Ventures, Sutter Hill Ventures and Warburg Pincus.

SomaLogic also received a $200 million investment in the first quarter. The company is the developer of a proteomic technology that can identify small protein changes that can provide early diagnosis of disease states. iCarbonX, Madryn Asset Management and Nan Fung Group participated in this private equity round.

Tempus is a precision medicine company that uses a machine learning health care data analytics platform to enable physicians to deliver personalized care to cancer patients. Kinship Trust Company, NEA, Revolution Growth and T. Rowe Price all participated in the Series D Round that raised $80 million and brought the Chicago company to unicorn status.

Genetron Health also develops precision medicine products targeting cancer patients that include risk assessment, early screening, molecular pathology diagnosis, medication guidance and prognosis monitoring. It received a Series C investment for $61 million. Shenshang Xingye Fund, V Star Capital and the Zhongjin Kangrui Medical Industrial Fund participated in the round.

Other Megadeals

Rounding out the megadeals for the quarter was Oscar. The online health insurance network received a late-stage investment for $165 million. 8VC, CapitalG, Fidelity Investments, Founders Fund, General Catalyst Partners, Khosla Ventures, Thrive Capital and Verily Life Sciences participated in the round.

PointClickCare, developer of Saas cloud-based Electronic Health Record software, took in a $146 million private equity investment from Dragoneer Investment Group.

And rounding out the $100-million-plus investment rounds for the first quarter was a Series D investment in Collective Health, provider of a cloud-based self-insurance platform. Founders Fund, GV, Maverick Ventures, Mubadala Development Company, NEA and Sun Life Financial participated in the $110 million round.

As the digital health industry matures, we should expect that large, late-stage investments will become more routine. And as investors and companies gain experience working with clinical, regulated applications, such deals should also become more common as well.

Coming off a year that saw a record number of new drug approvals, significant scientific breakthroughs and a year-end tax reform package that both significantly lowers corporate taxes and provides the long-awaited tax repatriation holiday, it’s not surprising that biotech investors, executives and advisers were in a good mood as they gathered in San Francisco this year for the J.P. Morgan Healthcare Conference.

The skies may have been cloudy, but spirits were high, fueled by expectations for a resurgence in U.S. M&A deals, continued growth in healthcare venture fundraising, and the promise of big data and other technologies.

Good Numbers Fuel Optimism

Three reports shared during the conference bolstered spirits. Silicon Valley Bank reported that healthcare venture fundraising hit an all-time high in 2017 at $9.1 billion. While final venture investment figures aren’t in yet, the bank estimates that the total amount invested in the healthcare sector will also reach a record-breaking $15.5 billion.

The report also notes that IPOs were up as was their pre-money valuation. The only downside according to the report was that M&A activity in the biopharma sector slowed in 2017.

However, EY’s M&A Outlook and Firepower Report strikes an optimistic tone about biopharma M&A in 2018. The report says that thanks to tax reform—particularly incentives to repatriate profits from overseas—M&A activity in the life sciences sector should surge in 2018. According to EY, the top 10 U.S. life sciences companies alone have approximately $160 billion in cash overseas, some of which the accounting firm expects will be used to make acquisitions in the U.S.

On the digital health front, Rock Health characterized 2017 as a record-smashing year in its year-end report. Venture funding totaled nearly $6 billion and there were a record number of mega-deals valued at $100 million or more.

Biotech Matures, but Opportunities Remain

But all the good news did not hide the fact that there is still much to be done. Digital health needs to further integrate into the mainstream of healthcare delivery. In its mid-year report, Rock Health said digital health entered the “middle innings” in 2017. Many believe digital technologies will move into the mainstream of healthcare delivery in 2018—particularly with strong support from both the U.S. Food and Drug Administration and Centers for Medicare and Medicaid Services.

With healthcare artificial intelligence solutions still in their infancy, there’s also plenty of room for development in AI. There have been pilots and trials with impressive results, particularly in the area of diagnostics and decision-support tools. But many investors, including Venrock, believe for the time being that AI is best deployed to improving the administrative side of healthcare.

Meanwhile, tech companies will continue to look for opportunities to leverage the giant datasets being generated in the healthcare sector. Great potential exists in the area of applying analytics to the risky business of drug development. At the same time healthcare incumbents will continue to consolidate vertically, such as the CVS and Aetna deal and the recent announcement that a quartet of healthcare systems are joining together to create their own generic pharmaceutical company.

Biotech Comes of Age

The consensus in and around San Francisco’s Union Square was that 2017 represented a breakout year for the biotechnology industry. With major clinical successes in areas such as CAR-T, gene therapy, immune-oncology, cell therapy and gene editing, many see 2017 as the year that biotech really came of age. As the investors, analysts, executives and consultants headed home at the week’s end, they have every reason to believe the momentum of last year will continue well into 2018.


Fenwick corporate lawyer Julia Forbess discussed biotech investment and financing trends with the BIO Buzz Center at the 2017 BIO Investor Forum.

“For 2018, we’re still expecting to see investment in core areas—oncology, orphan drugs and neurology. One thing that could be new is the number of tech investors interested in diagnostics and other tools,” she noted.

Forbess represents emerging technology companies in a variety of transactional matters with an emphasis on VC financings and exits through mergers, acquisitions and IPOs. She also represents public companies in secondary market financings and regulatory compliance.

At a symposium and webinar presented by Fenwick & West and Mewburn Ellis, we asked U.S. Patent and Trademark Office and European Patent Office examiners to provide perspective on the preparation and prosecution of patent applications in the areas of precision medicine and bioinformatics, disciplines that are at the epicenter of rapidly changing law on patent eligibility of software and medical diagnostic inventions. In this post, we share some of their tips for applicants in both the United States and Europe.

At the September 21, 2017 symposium, Fenwick’s Kevin Kabler moderated the panel. Sharing insights* into patent eligibility and obviousness considerations in the U.S. were speakers Marjorie Moran (USPTO) and Andrew Whitehead (Fenwick). On the European side, our guests were Georg Wimmer (EPO) and Frances Salisbury (Partner, Mewburn Ellis, UK). 

Following are edited highlights from the program.

Q: What is considered a bioinformatics invention by the EPO?

A: Examples of bioinformatics inventions can include a method of determining a genotype, or a method of diagnosing based on the presence of one or more biomarkers. Generally, bioinformatics inventions include at least one step that is carried out on a computer, where the technical purpose of the invention as a whole relates to some sort of biological or health-related aspect. These types of inventions, as long as they comprise at least one so-called technical feature—like a physical step of measuring or an execution by a computer as well as algorithmic mathematical steps—are often called mixed-type inventions.

Q: What type of considerations exist with respect to exclusion to patentability in Europe?

A: In addition to other considerations under novelty and clarity, the two most common hurdles for bioinformatics-based inventions before the EPO are the exclusion from patentability, governed in the European Patent Convention under Article 52, and inventive step, governed under Article 56. Patent applicants trying to address these two hurdles often fall victim to two pitfalls: one is insufficient detail in the claims and the other is insufficient detail in the original application.

Q: In the United States post-Alice, what are the key takeaways when addressing an eligibility challenge?

A: Our approach to addressing eligibility rejections in the U.S. is generally similar regardless of whether the application has an Alice-type rejection or a biological or diagnostic Myriad or Mayo-type of rejection. What helps get claims to patent eligibility is specificity in the claim. It is not so different from the EPO where what matters is your actual “technical purpose” of the invention and how the specificity of your claim helps achieve that technical purpose. Unlike the EPO, however, simply having such specific steps performed by a computer often is not sufficient to achieve eligibility in the U.S.

To get to eligibility, it has proven effective to tell U.S. examiners what the improvement is and provide evidence that the claims achieve that improvement. Examiners look to your specification, so specificity in the disclosure is important as well. If the application illustrates a sufficient improvement relative to the art, then often no further steps are needed. However, we do have a concern for those claims where the end result is merely the acquisition of information alone. Currently, claims along the lines of “data in, perform analysis, information out” are generally going to be difficult to obtain in the U.S. in the face of an eligibility rejection.

Continue Reading USPTO and EPO Examiners Discuss Key Considerations for Filing Effective Precision Medicine and Bioinformatics Applications in the US and Europe