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Leadoptik CEO Reza Khorasaninejad is attempting no small scientific feat: developing human hair-sized technology to help doctors spot lung cancer early.

Why it matters: The company raised $5 million in seed funding led by MetaVC Partners with support from Sony Innovation Fund, SOSV, and others, Khorasaninejad tells Erin exclusively.

Details: Funds will go toward hiring, product development, clinical studies, and pursuing regulatory approval from the Food and Drug Administration.

Khorasaninejad expects Leadoptik to raise a Series A in the summer of 2024.

How it works: The San Jose, California-based company is building a probe to navigate narrow airways and imaging systems to enable real-time imaging, tumor detection and biopsy guidance.

Leadoptik is working with nano-sized materials (a human hair is about 60,000 nanometers thick) with the bold goal of enabling surgeons to see objects 50 times smaller than today’s imaging systems permit.

A core component of its imaging technology is the ability to adapt to movement inside the lungs — as patients breathe — with what it calls adaptive focusing, which makes use of multiple focal spots rather than one to capture a high-resolution image.

"Most of the time technologies today are blind. They take tissue near the nodule and collect it without real-time imaging," says Khorasaninejad. "We can see where the needle goes, when it punctures the nodule, and where we take tissue from."

What they're saying: MetaVC managing partner Conrad Burke tells Axios he foresees interest from academic medical centers and hospitals in Leadoptik's imaging devices.

What's happening: Leadoptik is targeting hospitals in areas with the largest lung cancer biopsy volume such as Los Angeles, Florida and New York.

The company is also pursuing FDA clearance as a Class II medical device under the 510(k) pathway.

Importantly, Leadoptik is not attempting to diagnose lung cancer but rather to assist clinicians in identifying it.

Flashback: Khorasaninejad, a former Harvard research associate whose 2016 paper on high-end optical lenses landed him on the cover of Science magazine, built a prototype of Leadoptik's system in his garage in 2020.

That's where he met Burke, who says he was attracted by Khorasaninejad's "infectious energy."

"He called it speed dating," says Khorasaninejad. "We did that for a year and then he became interested in leading this round."

State of play: Most of Leadoptik's potential rivals are publicly traded medical device and imaging giants that manufacture one of the two components of Leadoptik's system. For example...

Boston Scientific (NYSE: BSX) has a market cap of $76.7 million.

Olympus, based in Japan, has a market cap of $2.89 trillion.

1 big thing: A miniature feat in spotting lung cancer

Illustration of a stethoscope in the shape of a pair of lungs

Women's health startup FemTec Health is out of money and winding down operations, per a letter sent to shareholders and viewed by Erin.

Why it's the BFD: The wind-down is a culmination of troubles plaguing FemTec, once envisioned as the launchpad for a one-stop women's health shop.

Details: A document emailed to several shareholders and dated May 12 says FemTec "has decided to discontinue its business" and is transferring all its property and assets to an unaffiliated assignee named FemTec Health LLC.

Signed by FemTec CEO Kimon Angelides, the document also says FemTec is "indebted to various creditors and is unable to pay its debts in full."

Zoom in: The process FemTec is using to liquidate, known as an "assignment for the benefit of creditors" (ABC), is simpler than a traditional Chapter 7 bankruptcy filing.

ABC involves a debtor assigning its assets to an assignee to liquidate the assets and pay off creditors, says Jason Binford, a lawyer at Texas bankruptcy and mediation firm Ross, Smith & Binford.

An ABC process is overseen by state law, not federal, which means there can be more uncertainty in how the process unfolds, Binford adds.

Catch up quick: Axios' previous reporting covered allegations that Angelides misrepresented the company's financial and operational status.

In a letter viewed by Axios earlier this month, the former CEO of FemTec subsidiary Birchbox demanded $2 million from FemTec and Angelides.

That follows actions taken in January by a group of former leaders at FemTec subsidiary Ava who filed with Switzerland's debt enforcement office to recoup wages they allege were not paid.

Of note: On May 12, a somewhat cryptic press release announced FemTec sold Birchbox assets to Retention Brands, effective mid-April.

"In an open bid process, the company's Birchbox assets were purchased by Retention Brands through an assignment for the benefit of creditors," the release said.

What they're saying: Three FemTec shareholders who spoke to Axios on condition of anonymity for fear of legal retaliation say they have received very little communication — besides the documents sent May 12 — from Angelides or FemTec about its status, and say multiple attempts to reach them have failed.

"Founders have not been paid and their equity has vanished," one source tells Axios.

"Every shareholder I have spoken to is deeply concerned about the lack of transparency," another source says. "We have been kept in the dark with all requests for information ignored."

The big picture: FemTec's apparent dissolution takes place against a thorny health-tech funding environment that appears to be taking a disproportionate toll on women's health companies.

A New York Healthcare Innovation report published this week found investment in women's health in the New York metro area plummeted from a high of $540 million in 2021 to a low of $78 million in 2022.

Neither FemTec nor Angelides responded to Axios' requests for comment.

2. The BFD: FemTec Health comes to an end

Illustration: Shoshana Gordon/Axios. Logo: Femtec Health

Digital therapeutics company Pear Therapeutics was sold for parts to four companies for a combined $6.05 million in an auction last week.

Why it matters: Valued at $1.6 billion just two years ago, Pear's fall from grace points to a larger reimbursement challenge for digital therapeutics, Axios' Claire Rychlewski writes.

What's happening: Click Therapeutics, Welt Corp, Harvest Bio and Nox Health Group each acquired bits of the company.

The price tag falls short of the $32 million in debt Pear carried. A hearing to approve the sale will be held on May 22.

Pear filed for Chapter 11 bankruptcy last month.

Zoom in: Health and wellness apps developer Click Therapeutics offered $70,000 for the patents behind the Pear Platform for digital therapeutic development.

Patents and licenses related to Pear's invention science fund, as well as Pear's assets related to schizophrenia, multiple sclerosis, depression, and rights to its opioid-specific program went to Harvest Bio for $2.03 million.

Sleep therapy company Nox Health Group put down $3.9 million for assets related to Pear's FDA-cleared insomnia treatment Somryst.

Digital health maker Welt paid $50,000 for Pear’s migraine-focused program.

Catch up quick: Pear, whose therapeutics are designed to address conditions including insomnia and substance use disorder (SUD), was the first to secure regulatory clearance for a prescription digital therapeutic.

Pear merged with SPAC Thimble Point Acquisition Corp. at a valuation of $1.6 billion in 2021.

In 2022, the company underwent two rounds of layoffs and, finding itself short on cash, paused work on its clinical pipeline.

Pear said in a regulatory filing in March that it was exploring strategic options via MTS ahead of a formal restructuring.

How it worked: The company had three digital therapeutics on the market for insomnia, SUD and opioid use disorder (OUD).

Through clinical trials, Pear succeeded in getting clearance from federal regulators to market its products.

Yet the company struggled to secure reimbursement for its novel treatments, especially among commercial and government payers.

Pear Therapeutics sold for parts

3. Pear Therapeutics sold for parts 

Illustration of a red cross on a billboard with a "SALE" sticker.

• Catalyst by Wellstar, the Atlanta-based innovation arm of Wellstar Health System, raised $100m for a fund focused on early-stage health care startups. https://axios.link/3of0XJW

• Somethings, an NYC-based youth platform that connects teens with trained mentors, raised $3.2m in a seed round led by General Catalyst with support from Tau Ventures, Cityblock Health CEO Toyin Ajayi, MVP Ventures, and others. https://axios.link/3pRE2EQ

• NMS Capital-owned Flourish Research, a New York-based clinical research company acquired AMC Research, a Charlotte-based Alzheimer's disease research company, and Central Research Associates, a Birmingham, Ala.-based multi-specialty clinical research site. www.flourishresearch.com

• Iron Path Capital-backed Capitol Pain Institute acquired Balcones Pain Consultants, an Austin, Texas-based pain management company, and Water Leaf Surgery Center, an Austin, Texas-based outpatient surgery practice. https://capitolpain.com/

• Amulet Capital Partners acquired Alliance Clinical Network, a Las Vegas-based clinical site platform. www.allianceclinicalnetwork.com

• BVP Forge invested in Medisolv Inc., a Columbia, Maryland-based health care data measurement and reporting company. https://medisolv.com/

• GoHealth, a Chicago-based health insurance marketplace and Medicare-focused digital health company, received an unsolicited acquisition proposal from Centerbridge Partners and NVX Holdings, its two largest shareholders. https://axios.link/3IwfBDw 

4. Deals o' the day

• Togetherall promoted former president Matthew McEvoy to CEO.

• Big Health named former Verily communications lead Jess Ayers director of strategic communications.

• HealthVerity promoted former VP Amanda Elefante to SVP of people.

 • Axxes Capital named former GQG Partners executive Gary Bachman as CFO, and former Capital Group exec Kirk Kazanjian as global CMO. 

5. It's Personnel

📂 FTC orders records from Zinc Health, Ascent Health as PBM probe widens — Modern Healthcare

🥊 Icahn's Illumina fight heads to high-stakes vote — Axios

6. Your daily dose 

✨ Erin has the latest on FemTec in today's BFD. Read on.

🍣 Erin is in Japan to visit family and eat all the sushi humanly possible.

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

May 22, 2023

1 big thing: A miniature feat in spotting lung cancer