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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Big retailers increasingly see clinical trials as a growth opportunity, Axios' Tina Reed writes.

Why it matters: The moves by store operators including Kroger, Walgreens and Walmart could create a more diverse pool of subjects and expand access to cutting-edge treatments — but concerns include safeguards around sensitive patient data.

What they're saying: "We're trying to build the right highway into our communities to bring trials closer to where they are," Ramita Tandon, Walgreens' chief clinical trials officer, tells Reed, noting the retailer has 8-9 daily visitors.

Walgreen's clinical trial business, part of its $109 million U.S. Healthcare unit, has eight signed contracts with pharma companies including Prothena and Freenome for an experimental Alzheimer’s treatment and a colorectal cancer screening test, respectively.

What it looks like: Since the retailers have locations in more vulnerable neighborhoods and can eliminate barriers including transportation and time costs while leveraging existing relationships, they say they can drive more diverse participation in studies.

"Right now, what does a patient do? They go to clinicaltrials.gov and that doesn't make sense," says Jim Kirby, Kroger Health's chief commercial officer.

Retailers, by contrast, have existing relationships with people and say they can tell them they are eligible right at the pharmacy counter.

Yes, but: Retailers still have to invest in more capabilities, including buying the appropriate technology to capture and safely store patient information, per a recent Ernst & Young report.

And CVS Health recently opted to wind down its two-year-old clinical trials business to focus on core operations.

The big picture: The clinical trial market is already $50 billion market expected to grow at a yearly rate of 5.8% to top $78 billion in 2030, per Grand View Research. 

Analysts have mixed views about retailers' forays here. While patient recruitment isn't as lucrative as other business lines, life sciences companies have cash and are looking for partnerships, Peter Bonis, chief medical officer at Wolters Kluwer Health, tells Axios.

"They have very deep pockets and they write checks quickly," Bonis says. "Getting the patients quickly is really important. Time is money here."

Zoom in: Retailers point to dismal past recruitment efforts in arguing the trials business is ripe for disruption — only about 5% of people in the U.S. have ever participated in a trial.

The FDA in February laid out a roadmap requiring any parties seeking clinical trial approval to outline plans to include more people of color.

The other side: The EY report notes the retailers' ambitions require a lot of new capabilities including remotely identifying patients, monitoring them remotely and capturing and securing their data.

State of play: Clinical trial startups are attracting VC capital on the heels of the FDA's recent guidance and more public awareness about trials' lack of diversity, Erin has written.

High-value therapeutics-focused Macro Trials and cancer therapeutics-focused Altis Labs in June raised a collective $12 million in seed funding, their CEOs told Erin exclusively.

Power, a startup developing user-friendly search tools to help people more easily find open trials, last August collected $7 million in seed funds.

Topography Health, which provides community physicians with a plug-and-play research platform, last January landed $21.5 million in Series A capital.

raised a collective $12 million in seed funding

1 big thing: Retailers seek to shake up clinical trials business

Illustration of a line of people walking along a bar chart with binary code

Danish medtech Coloplast is paying roughly $1.3 billion for Kerecis, an Icelandic developer of fish-skin dressings for human wound care, Axios' Dan Primack writes.

Why it's the BFD: The $21.4 billion global wound care market has an estimated CAGR of 4.2%, with demand driven by a rising number of surgeries and an uptick in the prevalence of chronic disease, per Grand View Research, Erin writes.

Of note: Virtual-first wound care startup The Wound Company last month collected $4.25 million in seed funding co-led by Susa and Sozo Ventures.

Zoom in: Kerecis raised $140 million+ in VC funding, most recently last year at a $620 million valuation. 

Backers include LSV Capital Partners, Emerson Collective, Novator Partners and Vatryggingafelag Islands.

The company bagged its first FDA approval — for MariGen Omega3 fish skin sheets — in 2013, and has since received agency clearance for a number of other fish skin-based products for use in wound care, including a regenerative surgical mesh for use in lung, bariatric, gastric and other surgeries.

How it works: Fish skin and human skin are structurally similar, leading researchers to begin studying their beneficial effects on wound healing more than a decade ago, Erin writes.

Kerecis' MariGen products are intact, decellularized fish skin sheets with the cells and antigenic materials removed. 

When the product is placed on or in damaged human tissue, it is quickly populated by the patient’s own cells and ultimately transformed into living tissue.

The backstory: Kerecis CEO Fertram Sigurjonsson founded the company in the remote town of Isafjordur, where as a teen he had a job manning the conveyor belt of the local fish factory, per Bloomberg

"Years later, after working in the wound-care industry, he came up with the idea to use discarded fish skins to heal cuts," Bloomberg notes.

2. The BFD: Coloplast is buying Kerecis for $1.3B

Illustration of a fisherman holding up a giant hundred dollar bill on a hook. 

• Fremman Capital acquired Medinet, a British provider of insourcing services to NHS organizations, from Volpi Capital. https://axios.link/3rpjyEe

• Stallergenes Greer, a Swiss health care group owned by B-Flexion, is in talks to buy peanut allergy treatment Palforzia from Nestlé (Swx: NESN), per Bloomberg. https://axios.link/43jFIoI

• Transaction Data Systems, an Orlando-Fla.-based pharmacy management software portfolio company of BlackRock Long Term Private Capital and GTCR-backed Transaction Data, merged with Cardinal Health (NYSE: CAH) business unit Outcomes, a digital medication adherence company. https://www.tdsclinical.com/ 

3. Deals o' the day

• Paul Gonsalves left a post as executive adviser at Water Street Healthcare Partners to become CEO of Nasco Healthcare.

• Ravi Chari left a post as CEO of HCA Healthcare’s West Florida Division to become COO of InnovaCare Health.

• Will Abbott was promoted from COO to CEO at InnovaCare Health.

• Jordi Parramon left a post as president of medical devices at Verily to become CEO of Nexus NeuroTech.

• Vytalize Health, named former UnitedHealth Group CEO Dave Wichmann and Press Ganey president Amy Compton-Phillips to its board of directors.

• Mike Kohl left a post at Vida Health to become vice president of enterprise sales at Carrum Health.

4. It's Personnel

Nurses Have Had Enough, Threatening Big Gaps in US Health Care — Bloomberg

CMS proposes $9 billion repayment to safety net hospitals — Axios

5. Your daily dose

Illustration of a hand holding an eyedropper that has spelled out "daily dose" in liquid.

ICYMI: Molina Healthcare agreed to buy Bright Health's MA lives for $600 million in cash over the holiday, just three years after scooping up Brand New Day and Central Health Plan for $538 million.

📺 Aaron has been binging Apple TV's series "Silo" and highly recommends it. 

🌟 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 10, 2023

1 big thing: Retailers seek to shake up clinical trials business