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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Braven Partners is launching a health care and life sciences unit, focused on investments facilitating coverage of expensive medical treatments, the firm tells Aaron exclusively.

Why it matters: Insurers have long struggled to make the math work when it comes to covering new biologics — and while the drug pricing debate continues to bear out, misaligned financial incentives continue to rankle the industry.

What's happening: Braven's new unit will focus on pre-seed, seed, and Series A investments.

The unit will allocate up to $10 million per investment, with four to five planned annually, says managing partner William Abecassis.

Braven will target technology companies facilitating coverage payment for expensive treatments, like cell and gene therapies (CGT) and precision oncology.

The new unit will also focus on companies offloading risk during early and late-stage drug development, as well as those providing AI facilitation of regulatory submissions.

What they're saying: Innovation in drug development is "being thwarted by misaligned incentives," says Abecassis. "Any solution needs to fix that mismatch for it to work."

"That's where marrying insurance and financial strategy — for economic risk transfer —  along with tech — to manage all the data and operations — can do wonders," he says.

"We can unlock new models of operating in a way where focusing just on tech would not allow us to do that," says Sean Khozin, senior life sciences and health care partner at Braven.

The arena Braven's new unit is targeting is underserved, in part because solutions require "deep knowledge of the health system and drug development, as well as specialized expertise in finance, insurance, and law and regulation," Abecassis says.

Meanwhile, a robust pipeline of new CGT in pharma has insurers grappling with a growing burden of cost.

"Our current health care insurance system is not set up to accommodate this influx of multimillion-dollar claims," writes Mehb Khoja, chief actuary at BCS Financial, which serves Blue Cross Blue Shield.

"These costs will inevitably make their way from health care companies to insurers, to employers, and to patients’ pocketbooks," he says of the burgeoning but booming CGT market.

Catch up quick: Braven was founded in 2022 by Abecassis, former head of BlackRock's Innovation Venture Capital Group.

Khozin's resume includes serving as global head of Johnson & Johnson's data strategy and data innovation, as well as executive director of the FDA's Information Exchange and Data Transformation.

"From experience, I can vouch for the challenges health care founders face in overcoming systemic obstacles, and I am excited by Braven’s unique value proposition for founders," says Khozin.

1 big thing: Braven Partners launches health care, life sciences unit

Illustration of a price tag in the shape of a red cross

Well, that was quick. Thermo Fisher Scientific agreed to acquire clinical registry data company CorEvitas fr0m Audax for $913 million — just two days after news of the company's auction hit.

Why it's the BFD: The successful sale of a sponsor-backed health tech business could open the deals spigot for other scaled private equity-backed platforms waiting in the wings, Axios' Claire Rychlewski writes.

Details: Lab equipment giant Thermo Fisher will pay $912.5 million in cash, according to a statement.

The transaction is expected to be immediately accretive to adjusted earnings per share by 2024.

The deal should be completed by the end of the year.

What they're saying: “The addition of CorEvitas will further advance our capabilities to better serve our pharma and biotech customers and strengthen our value proposition,” Thermo Fisher CEO Marc Casper said in a statement.

What we're watching: The outcome of Thomas H. Lee Partners' auction of physician practice software provider Nextech.

2. The BFD: Thermo Fisher to buy CorEvitas for $913M

Illustration of a giant health plus on top of a pile of cash, the ground underneath is cracking.

• Anise Health, an NYC-based telemental health startup for communities of color starting with a focus on the Asian American population, raised $1.2m in pre-seed funding led by Kicker Ventures and joined by Gold House Ventures, Allston Venture Fund and individual backers. https://axios.link/3XGGr2c

• Blackstone invested in Lazeo, a French provider of aesthetic medicine services. https://axios.link/3D6UGDO

• WM Partners-backed HPH III Investments acquired Allergy Research Group LLC, an Aventura, Fla.-based subsidiary of KI NutriCare, from Kikkoman Corporation. https://www.wmplp.com/

• Bausch + Lomb acquired Blink, an eye drop and contact lens brand, from Johnson & Johnson for $106.5m. https://axios.link/43eFejC

• ClinChoice, a Chinese contract research organization, is talking with banks about a 2024 IPO in Hong Kong, per Bloomberg. The company's raised over $200m from investors including Goldman Sachs, Legend Capital, DFJ, Lilly Asia Ventures and Taikang Life Insurance. https://axios.link/3PLVeqw

3. Deals o' the day

• Richard Brown left a post as vice chair of clinical operations at the University of Utah School of Medicine radiology department to become SVP of clinical strategy at Covera Health.

• Adina Tecklu was promoted from principal to partner at Khosla Ventures.

• Elijah Yi joined Cathay Innovation as a VC investor focused on digital health.

• Jonathan Steinberg, Rajesh Dash, Daniel Frisch, Arun Sridhar and John Dodson became AliveCor advisory board members.

4. It's Personnel

🇺🇸 Biden announces new actions to lower care costs — White House

✨ Jeff Leerink on resurrecting Leerink Partners after buying it back from SVB — EndPoints News

👀 Headspace laid off scores of therapists. Their patients don’t know where they went. — LATimes

5. Your daily dose

Illustration of a Axios brand medicine bottle that says "your daily dose" next to a spoon.

Here's your recap of what we've covered this week:

July 5 —Weight management booms; Thermo Fisher eyeing CorEvitas for $1b. Read the whole newsletter.

July 6 —The latest telehealth consolidation fuel; Force Therapeutics eyes capital raise. Read the whole newsletter.

6. 🗞️ Catch up quick

🛰️ Erin indulged in "Black Mirror" this week and is still recovering from an alternative history episode about space explorers and their on-Earth duplicates.

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

July 07, 2023

1 big thing: Braven Partners launches health care, life sciences unit