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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Spectrum Science, a founder-led life sciences communications business, is exploring strategic alternatives in response to inbound interest, sources tell Sarah. 

Why it matters: Many scale assets in this space have come to market and transacted over the last 18 months. Spectrum, while smaller, is fast-growing — presenting an opportunity for PE groups that have gotten educated on med comms (and chased other assets) but have yet to score an entry point.  

Driving the news: The Washington, D.C.-headquartered company has engaged Houlihan Lokey for financial advice to weigh options, sources say. 

Spectrum — which recently inked three bolt-ons supported by a senior credit facility from Monroe Capital — is producing in the mid-$20 million range of EBITDA, they add.

What they're saying: "We have enough in that debt facility to fund several more deals as they make sense for the business," CEO Jonathan Wilson wrote in an email to Axios. 

He adds: "In addition, over the past three years we have a number of different financial institutions express interest in Spectrum. We are always looking at options, but have no intentions of selling the agency. However, we will continue to evaluate our capital structure on an ongoing basis."

Of note: The med comms agency world is known for attracting minority strategic growth investments big funds like...

TPG, which invested into BGB Group in October 2021 at a $760 million value. 

Ares Management's October 2021 strategic investment into The Lockwood Group, which valued it in the mid-$300-million range, per Sarah's previous report.  

How it works: Spectrum has diversified from a traditional pharmaceutical media agency to what it describes as a one-stop shop for paid media, advertising, marketing, clinical trial recruitment, and med comms. 

Led by Wilson, Spectrum employs more than 250 team members with four U.S.-based offices and a presence in London.

In recent months, Spectrum has acquired SONIC Health, The Seismic Collaborative, and the U.K.'s Aurora Healthcare Communications.

Be smart: A number of drivers are drawing attention to the market — from both private equity and strategics like AmerisourceBergen that want to bring more value-add offerings to their pharma clients. Tailwinds include: 

The increasing volume and complexity of therapeutics.

Increasingly targeted drug marketing spend as complex therapies focus on niche populations. 

Demand for digitization strategics that support engagement with both HCPs and consumers.

State of play: Despite uneven market conditions, the outsourced pharma commercialization and communications industry has seen deals done at healthy valuations this summer. 

Just this week, AmerisourceBergen bought PharmaLex for $1.29 billion in cash, after private equity dropped from the process. 

Astorg in June bought Open Health from Amulet Capital in a nearly $1 billion deal 

WindRose Health Investors in July recapitalized RevHealth. 

What we're watching: The return to market for those assets like Real Chemistry (formerly W2O), whose backer New Mountain Capital surpassed a three-year hold this summer. 

1 big thing: Spectrum Science explores options

Illustration of a line of doors with hundred dollar overlays 

Gameto, a biotech startup focused on ovarian longevity and related reproductive issues, has raked in $17 million in funding led by Insight Partners, Sarah writes. 

Why it's the BFD: Menopause, despite being linked to many health problems, has historically lacked attention and investment. Gameto is one of a few upstarts tackling the health and fertility consequences of ovarian aging, as well as realities like the long, pricey IVF and egg freezing process.  

Details: Investors in the Insight-led round include Future Ventures, Arcadia Investment Partners, Bold Capital Partners, Plum Alley, Myelin VC, TA Ventures, Gaingels, Korify Capital, and other existing investors. 

The capital infusion brings Gameto's total funding to date to $40 million. 

Flashback: Gameto collected $23 million in Series A funding in January, led by Future Ventures.

Zoom in: Gameto, with headquarters in New York and Madrid, has a few programs in the works...

Fertilo, a biologic for egg maturation, is currently in preclinical development. It aims to improve the safety and efficacy of IVF and egg freezing via a reduction in hormonal injections. 

Upcoming programs include Deovo, focused on drug discovery for ovarian aging; and Ameno, which aims to address the health consequences of primary ovarian insufficiency and menopause. 

Be smart: Loss of ovarian function and menopause heighten the risk of various conditions, including heart disease, loss of bone density, immune dysfunction, along with declines in neurocognitive health.

State of play: A small crop of biotechs have garnered VC investment in recent years to support drug development around a long-overlooked source of many other women's health issues. 

Oviva Therapeutics, a biotech startup focused on preventing menopause, scored $11.5 million in seed funding in May from Cambrian Biopharma. 

Celmatix, of a similar vein, has collected $83 million to date, per PitchBook, last raising $6.5 million in Series A funding in 2019 from Evotec, Topspin Venture and Life Science Innovation Fund.

Other women's health- or fertility-focused biotech startups include Ivy Natal, Conception and JumpStart Fertility.

2. The BFD: Gameto gets another $17M for ovarian longevity

Illustration of a female symbol and a red cross merged together.

Health care startups Violet and Health in Her Hue collaborated this month to create a simple tool that helps clinicians better identify monkeypox (MPV) in people with dark skin tones, Erin writes.

Why it matters: Medical dermatology textbooks are replete with images of white or light skin, but dermatologic conditions can appear dramatically different on people with dark skin tones, leading to potentially missed diagnoses. That's a particular concern with MPV, which manifests on the skin. 

A recent analysis of textbooks found that only 4% to 18% of images in major dermatology resources showed images of dark skin.

"That’s a missed opportunity," Violet content marketing manager Mariah Katz, who helped create the tool, tells Erin.

How it works: The tool lets clinicians click on a series of 10 skin tones and view illustrations — based on photos from the Centers for Disease Control and Prevention — of how MPV appears on that tone as it progresses.

"We always ask ourselves: 'What are medical students not typically learning in school?' And we try and bridge the gaps to help deliver more inclusive care," adds Katz.

Context: Violet develops culturally inclusive medical resources for caregivers, while Health in Her Hue links Black women with culturally competent providers. 

The two New York-based startups collaborated to develop the guide.

Flashback: Violet in August debuted with $4.1 million in seed funding in a round led by SemperVirens, bringing total funding to $5.3 million.

What they're saying: Jenna Lester, an assistant professor of dermatology at UCSF and the founding director of its Skin of Color Clinic, tells Erin the guide is an encouraging step toward more inclusive care.

"I think it’s important for us to develop any tools we can to help clinicians identify skin disease in patients of all skin tones," says Lester. 

"I’m encouraged to see specific products designed to address the people who are traditionally left out or excluded from care," she adds.

3. Startups' tool helps doctors spot MPV in people of color

Enzee Health (FKA ZapIT! Medical), a Columbus, Ohio-based developer of health care compliance and quality tools, raised $1.5m in seed funding led by Rev1 Ventures and joined by Tamarind Hill, Harbor Street Ventures, M7 NEO, Redgrave Investments and Service Provider Capital. https://www.enzeehealth.com 

4. Deals o' the day

Lightyear Capital named former Five Arrows Capital partner Michael Langer managing director, with a focus on healthcare financial services investments. 

Wheel named former Autodesk VP Sameer Merchant CTO and former Autodesk senior director of product management Steve Manning SVP of product.

Amwell named former Optum SVP Vaughn Paunovich EVP of enterprise platforms and former Amazon director of product, engineering and UX design Matthew McAllister chief product officer.

Thirty Madison named former Sanofi SVP Quan Zhang CFO and promoted former Cove GM Caroline Hofmann to head of emerging businesses and former platform GM Julia Bernstein to head of operations.

Getlabs named former Cleerly SVP of finance Scott Albrecht VP of finance, former Fair.com head of people Amanda Souders VP of people, and former Pivot Health Solutions general counsel Karen Maher general counsel.

Welldoc named former Podimetrics VP of enterprise health services Simon Salgado chief revenue officer.

VSS Capital named Brad Corbin principal, from BBH Capital Partners. 

Bain Capital named former Bank of America head of EMEA health care investment banking Christina Dix managing director and co-lead of its European health care vertical.

5. It's Personnel

💊 Situational awareness: The DEA is investigating ADHD-focused digital pharmacy Done, per the WSJ, just months after rival Cerebral said it would stop prescribing most controlled substances after receiving a subpoena from the Justice Department.

✈️ Erin is on her way to upstate New York for the latest Climate Ride.

✅ Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your friends and colleagues to sign up.

September 15, 2022

1 big thing: Spectrum Science explores options