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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Just weeks after agreeing to buy hybrid primary care company One Medical, Amazon announced yesterday afternoon that it is shuttering Amazon Care — its in-house hybrid primary care offering — at the end of the year, Erin writes. 

Why it matters: Amazon, which has for years been laying the foundation for a massive health care footprint, is closing shop on one of its cornerstone in-house efforts in primary care.

Yes, but: The tech giant isn't backing away from the sector anytime soon. 

Catch up quick: Amazon launched Care as a pilot for its Seattle office workers and their families in 2019 and has steadily expanded the program since.

Last spring, the company announced the service would be available nationwide.

Shortly after that, Amazon said it would start selling Care to employers.

Details: In an email to his division's employees, SVP of Amazon Health Services Neil Lindsay said Care wasn't a sustainable, comprehensive tool for its customers. (Amazon shared a copy of the email with Axios.)

"Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term," Lindsay said. 

He added that the company would end Amazon Care operations after Dec. 31 and that only teams belonging to Amazon Care and Care Medical (the tech giant's clinical partner) would be impacted.

What they're saying: With its pending health care acquisitions (let's not forget the rumors around Signify Health, Amazon is on the verge of becoming a health care "powerhouse," BTIG analyst David Larsen wrote in a Wednesday note.

"Our view is that it makes more sense to buy these platforms than it does to build new ones," Larsen said.

💭 Our thought bubble: Amazon risks duplicative efforts running both Care and One Medical, and with the tech giant's history of shuttering bold health care projects, we can't say we're surprised.

1 big thing: Amazon Care no more

Illustration of an empty doctor's outfit with the Amazon smile logo as the face. 

Senior insurance navigator Fair Square Medicare garnered $15 million in Series A funding, CEO Daniel Petkevich tells Erin exclusively.

Why it's the BFD: Like other forms of public and private health insurance, Medicare is exceedingly complex and opaque — or as Petkevich describes it, "heinous" — making selecting a plan difficult.

Deal details: Define Ventures led the round and was joined by Slow Ventures and YCombinator.

The new capital brings the San Diego company's total funding to $19 million.

Context: Fair Square's clearest rivals include traditional Medicare brokers and Quil, the senior care navigation company created in 2018 as a joint venture between Comcast and Independence Health Care.

Separately, a handful of other elder care-focused startups have raised funds of late including...

Sage, which debuted in July with $9 million in seed funding to replace outdated senior living facility tech.

Companionship startup Papa, which last year raised $150 million in Series D funds.

How it works: Fair Square's website helps seniors shop for Medicare, Medigap and Medicare Advantage using an algorithm that ingests information about their needs and budget.

The company makes money via commissions from payers.

By the numbers: A recent Kaiser Family Foundation analysis concluded that every year, 57% of Medicare enrollees don’t assess their coverage options, in part due to comprehension difficulties.

That percentage is higher among those aged 85+, those with lower incomes, people with lower education levels, and people in fair or poor health, the report found.

What they're saying: Define Ventures partner Chirag Shah sees long-term potential for Fair Square to be a trusted brand for seniors looking for assistance.

The company presents an "opportunity to create a long-term relationship and affect the entirety of the care experience," Shah tells Erin. "This journey starts with the plan you pick and ends a very long time after that."

What's next: Petkevich plans to use the new capital to hire and expand Fair Square's services to include:

Clinical consults for everyday health questions.

💭 Erin's thought bubble: Given the above, I could see Fair Square eventually scooping up a virtual chronic care startup such as Welldoc, or a senior-focused digital pharmacy like PharmScript.

"Right now our expertise is in software," says Petkevich. "In the future, could there be a world where we spin up our own services? Maybe."

2. The BFD: $15M Fair (and) Square

Illustration of a cane forming the center staff of a caduceus.

Avenda Health, an AI startup bringing personalization to prostate cancer care, raised $10 million in Series B funding led by VCapital, the parties tell Sarah exclusively. 

Why it matters: Prostate cancer is the second most common cancer in men, but scientific advancements to treat the disease have dramatically lagged in other areas of oncology. With technology, Culver City's Avenda hopes to preserve diagnosed patients' quality of life. 

An estimated 1 in 8 men is diagnosed with prostate cancer, with an even higher prevalence in Latino and Black men.

What they're saying: "It's been over 40 years since the FDA has passed a new therapy for localized prostate cancer," CEO Shyam Natarajan tells Sarah. "Our goal is to transform prostate cancer care from one-size-fits-all to personalized care."

Prostate cancer is often caught too late, and for those who do catch it early enough, the side effects are devastating, VCapital partner Ryan Kole adds. "It's not getting the attention it deserves," Kole says. 

How it works: Avenda uses AI deep learning (via its iQuest software) to help surgeons identify precisely where the tumor lies within the gland and the extent of the disease to target the cancerous tissue only — leaving everything else untouched. 

While this idea of focal therapy is not new, in prostate cancer, "that is something nobody else does," COO Brittany Berry-Pusey says. 

What's next: Fresh funds will enable Avenda to run additional pilots and accelerate the use of iQuest — with commercialization anticipated in early 2023. 

While its focal laser ablation system is already cleared by the FDA for soft tissue ablation, Avenda anticipates FDA approval for its iQuest software component this fall. 

It has already received an investigational device exemption allowing its products to be used to treat prostate cancer patients in a randomly controlled trial against the standard of care.

Zoom in: The status quo involves either active monitoring of the cancer or removal of the whole prostate, which is far from ideal. 

Besides a lengthy recovery, the traditional MRI mapping method that informs treatment is associated with side effects including incontinence and erectile dysfunction — with either or both impacting 1 in 2 men.

Using a fiber-optic laser device, Avenda's minimally invasive solution aims to enable urologists to treat patients quickly without compromising sexual or urinary functions.

State of play: Prostate cancer has many similarities to the breast cancer space, yet the latter has witnessed much more scientific advancement.

The stigma around the side effects of prostate cancer combined with the fact that it is slow-growing — and therefore takes more time to prove out innovations — has contributed to the slow pace of innovation, Berry-Pusey says. 

More recently, she adds, regulators have recognized the large unmet need and begun pushing for clinical trials to drive innovation. "We are very eagerly putting our hands up."

Between the lines: Natarajan says Avenda is essentially building an operating system for urologists that will help to democratize the market.

"We want to empower your community urologist," Berry-Pusey adds.

Details: The investment brings Avenda's total funding to date to $16 million. 

Joining VCapital in the round are Plug & Play Ventures, Wealthing VC Club, and other undisclosed investors.

When Wealthing led a $6.4m financing in Avenda in February 2022, it valued the business at over $50 million. The company declined to provide an updated valuation.  

Avenda employs 17 people, having grown 3x over the last 12 months. 

Catch up fast: Avenda, a UCLA spinout, was founded more than a decade ago with support from a National Cancer Institute Grant.

Natarajan and Berry-Pusey founded the company alongside Leonard S. Marks, a UCLA professor and pioneer in targeted prostate biopsy, active surveillance and focal therapy.

The bottom line: Avenda, if successful, has a tremendous upside opportunity: "This will change the standard of care for prostate cancer," Kole says. 

3. Freshly-backed Avenda looks to redefine prostate cancer care

Illustration of a light blue ribbon glowing with binary code.

Alma, a New York-based creator of a network aimed at helping independent mental health care providers accept insurance, raised $130m in Series D funding led by Thoma Bravo and joined by Cigna Ventures. Insiders Insight Partners, Optum Ventures, Tusk Venture Partners, Primary Venture Partners and Sound Ventures also participated in the round, bringing Alma's total funding to $220m+. https://helloalma.com 

Alongside, a Seattle-based mental health app for students, raised $5.5m in seed funding led by Trilogy Equity Partners and joined by Pack VC and Madrona Venture Labs. https://axios.link/3QQ7EeJ 

ProPharma Group, an Odyssey Investment Partners-backed provider of life sciences quality and compliance tools, acquired OneSource Regulatory, a McKinney, Tex.-based provider of medical regulatory consulting and technology.  https://www.onesourceregulatory.com/

Prestige Medical Imaging, an Atlantic Street Capital-backed radiology platform, acquired medical imaging providers MedServ Plus of Pennsylvania and XRV Healthcare, based in Springfield, Va. http://www.prestigemedicalimaging.com/

Carestream Health, an Onex-backed medical imaging company, filed for bankruptcy with a lender-backed proposal to trim debt by $470m. https://axios.link/3pJTy2o

4. Deals o' the day

Net Health named former Arrive Health CTO Gabe Hesse its CTO and promoted Tissue Analytics founder Kevin Keenahan to chief product officer.

CareRev named former Amazon head of executive development Patty Bedard chief people officer.

Memora Health named former Microsoft senior counsel and director of U.S. industries and AI Nathan Leong VP of legal.

Primary Venture Partners promoted former senior associate Tobias Citron to partner.

Woebot Health named former IQVIA senior director Robbert Zusterzeel VP of regulatory science and strategy. 

5. It's Personnel

Happy Friday Eve, Health Tech enthusiasts. A lot has happened in the past 24 hours, so let's get to it.

📦 Erin is using the relatively cool mornings and evenings to reorganize the garage, where clear boxes and washable labeling markers have become indispensable.

✔️ Thanks for reading Axios Pro Health Tech! Please ask your friends and colleagues to sign up.

August 25, 2022

1 big thing: Amazon Care no more