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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Food-as-medicine is being embraced as a new appetizer on the menu of holistic care, but investors and execs say hurdles remain before the concept can be served up as an entrée.

Why it matters: Although most agree that social factors like housing and food should be accounted for in health care, measuring data and getting insurers on board are the most immediate obstacles, Erin and Claire write.

Driving the news: Six states — New Mexico, Washington, New York, New Jersey, Delaware and Maine — have pending waiver requests to tap Medicaid funds for food in pilot programs.

If approved, they'll join Arkansas, Oregon and Massachusetts, which were already green-lit by the Biden administration to roll out Medicaid-for-groceries pilots.

What they're saying: "Diabetics get admitted with hypoglycemia at the end of the month because they’re taking the same dose of insulin, but their food stamps ran out," says Rajaie Batniji, CEO of public benefit company Waymark.

"It’s an obvious yes that food is medicine."

State of play: Companies like Cityblock have already made social determinants of health central to their business strategies.

Cityblock, which provides a caregiving team for Medicaid populations specifically, has community care partners that help patients access fresh food, childcare and housing.

Meanwhile, new entrants like Andreessen Horowitz-backed Season Health are making food-as-medicine their primary focus. (Season is also backed by Cityblock CEO Toyin Ajayi.)

"What’s making [food-as-medicine] stickier these days is codifying the payment rails, since payers were doing it discretionarily to attract members and it was sitting in supplemental benefits outside of medical rails," says Andreessen Horowitz general partner Julie Yoo.

Between the lines: Season's approach mitigates a scenario in which patients use benefits to buy unhealthful or non-nutritious food, codifying its network of food vendors.

Medicaid's food-as-medicine program, as it stands, doesn't have guardrails on what food can be bought with the money, several industry sources say.

Nor is data being collected on what people are buying, says LexisNexis risk solutions government group CEO Haywood Talcove.

Zoom in: Within digital health, Yoo sees food-as-medicine being executed in three ways currently:

Some companies are aggregating a network of nutritionists and dietitians, contracting with employers to get optimal rates, like NourishedRx.

Not to be confused with NourishRx, focused on patients with eating disorders.

Others, like Soda Health, are tackling the issue via payments, which  matches people with personalized benefits (including food) and provides them with a single prepaid debit card to use at participating retailers.

Finally, she notes retail has a role to play, citing Instacart's initiative to expand access to nutritious food for underserved communities.

"We need to take infrastructure like Instacart and make those compatible with health care payment rails," Yoo says.

Context: Retail's penetration into health care has been a long journey, with groceries, pharmacies and e-commerce all taking their respective shares of the pie.

Some grocers have already incorporated food-as-medicine, like Kroger's OptUp program that helps consumers make more healthful food choices.

Albertsons — set to be acquired by Kroger for $25 billion if regulators allow it — launched its digital health platform Sincerely Health in February, which helps users make choices about food, physical activity, sleep and mindfulness.

"This seems like an obvious place for consumer-facing retailers to be doing something," Yoo says, noting that food-as-medicine is an easy way for retailers to claim health market share when competing with pharmacies and Big Tech.

What's next: "The payer is the 900-pound gorilla in the room with power they can exert on policymakers," Yoo says. "We need to see commitment from insurers to see this work."

1 big thing: Food-as-medicine is next frontier

Illustration of a red cross made of fruits, vegetables, nuts and seafood.

Apprentice.io, a cloud-based platform for pharmaceutical manufacturing, raised $65 million, the company tells Claire exclusively.

Why it's the BFD: The advent of new drug classes — as well as increased outsourcing — has spiked demand for a tech update in pharmaceutical manufacturing.

Details: New investor Iconiq Growth led the fundraise, with participation from existing investors Alkeon Capital Management and Insight Partners.

The funding follows a $100 million Series C round raised in January 2022, bringing Apprentice’s total funding to $207 million.

Apprentice's pre-money valuation last year was $450 million and has grown with this raise, CEO Angelo Stracquatanio says, declining to disclose exact figures.

Proceeds will finance product development as Apprentice targets breakeven in the back half of this year.

What they're saying: "There's been this big accelerant towards biologics, and even now towards cell and gene therapy," Stracquatanio says, noting these drugs are not made for a large patient population, but for one individual.

"That manufacturing process has changed quite dramatically, as you can imagine," he says. "You go from really big pill making like Tylenol, all the way down to one batch for one patient."

"This manufacturing process really hasn't coincided with a change in the technology," he adds. "In our space, there were legacy systems that were designed 15 to 20 years ago for pill-making that haven't really evolved to meet the needs of this new modern manufacturing."

How it works: Apprentice uses artificial intelligence and augmented reality to streamline the drug manufacturing process.

Its Tempo Manufacturing Cloud supports the underlying manufacturing process and interconnects various contract manufacturing sites and teams.

The company works with pharmaceutical players like Bristol Myers Squibb and Synthego, with other unnamed clients in its pipeline, according to Stracquatanio.

State of play: Pharma manufacturing has been largely paper-based — a slow and costly process, with millions of dollars lost to drug batches with quality deviations.

The advent of contract manufacturing organizations (CMOs) and contract development and manufacturing company (CDMOs) has made the landscape more fragmented, increasing the need for digital transparency.

The COVID-19 pandemic unveiled major vulnerabilities in the pharmaceutical and life sciences supply chain, but without visibility, those pressures are harder to pinpoint, Stracquatanio says.

What's next: "Our specific goal and intent is to be a public company," Stracquatanio says.

"We believe that there is kind of a renaissance moment happening in life sciences," he says. "And we feel that we're at the early innings of all this — and that digital, especially on the manufacturing end, is going to be the kind of baseline support."

Eventually, Stracquatanio says, Apprentice could comp to NYSE-traded life sciences tech player Veeva Systems, which has a roughly $27 billion market cap — though he cautions Apprentice has to grow before reaching that point.

What we're watching: The public markets continue to be an unpredictable exit vehicle, but there's plenty of private equity money and appetite for pharma services technology like Apprentice's.

2. The BFD: Apprentice.io raises $65M

Illustration of falling pills surrounded by abstract shapes and sections of dollars.

Maribel Health, a Santa Monica, Calif.-based startup assisting health systems in building home and community services, raised $25m in Series A funds led by General Catalyst. https://axios.link/3JRu91z 

Zus Health, a Boston-based developer of infrastructure tools for digital health startups, raised $40m from Jazz Venture Partners, F-Prime Capital, Maverick Ventures and Andreessen Horowitz. https://axios.link/3JRYPQt 

Graham Partners acquired Rhythmlink, a Columbia, S.C.-based maker of single-use brain health and neurodiagnostic electrodes, from New Heritage Capital. www.rhythmlink.com

Pear Therapeutics (Nasdaq: PEAR), a Boston-based developer of prescription apps for addiction and insomnia, says it’s exploring a sale. The company went public via a SPAC in 2021 at a $1.6b equity value after having raised $270m in VC funding, but its market cap has shrunk to just $54m. https://axios.link/3JPMAUy

3. Deals o' the day

Opio Connect named former Eleanor Health community relations team lead Mark Sullivan head of business development. https://www.opioconnect.com/

Primary Venture Partners promoted former principal Sam Toole to partner. https://www.primary.vc/

Patient Square Capital named former PHC Holdings CEO John Marotta executive-in-residence. https://patientsquarecapital.com/

Heyday Health named former Sitka product director Rob Martin head of product. https://www.heydayhealth.com/

BeiGene named former Flatiron Health medical director Erlene Seymour medical director. https://www.beigene.com/

Alongside named former Little Otter senior clinical manager Richard (Clarke) Heyes clinical content manager. https://www.alongside.care/

TrustWorks Collective named former Amazon government health care segment lead Kirk Gillis principal. https://trustworksco.com/

4. It's Personnel

Wyoming becomes first state to ban abortion pills — Axios

Florida Bill Could Ban Elementary Schools From Talking About Menstrual Periods — Forbes

5. Your daily dose

1 networking thing: Join us in Chicago on Wednesday, March 22, for a subscriber-exclusive happy hour featuring Emily Wildes, managing director at Lincoln International, and Health Tech Deals editor Claire Rychlewski. RSVP here.

🛩️ Erin returned from Iceland, where she witnessed the dance of the northern lights, crossed a partially frozen waterfall and entered the shell of a small jet that crashed — without a single death! — on the tundra in 1973.

💙 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Brad Bonhall. Please ask your friends, family, colleagues and travel buddies to sign up.

March 20, 2023

1 big thing: Food-as-medicine is next frontier