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BFD Expert Voices - Health Tech Deals

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Grant Avenue Capital invested in CREO, a Durham, N.C.-based strategic consultancy for the life sciences and health care markets. 

Why it matters: As regulatory changes around drug pricing create increased uncertainty for the pharmaceutical and life sciences industry, demand is growing for solutions to help navigate evolving complexities.

Details: The deal was a recapitalization and Grant Avenue didn't use debt to finance, managing director Brian Berkin at Grant Avenue tells Aaron.

Valuation was consistent with Grant Avenue's target of investing between $25 million and $75 million of equity, a source familiar tells Aaron.

CREO founders and management, including CEO Susan Acker-Walsh and president Mike Townley, "continue to be significant owners in the business," Berkin says.

Clearsight Advisors served as financial adviser to CREO and Crosstree Capital Partners advised Grant Avenue.

What's next: "Grant Avenue is eager to help strengthen CREO's reach and impact across new geographies, partnerships, service offerings, and M&A," Berkin says.

How it works: CREO helps life sciences and health care companies navigate various strategies, including business development, cybersecurity and regulatory compliance.

What they're saying: "While there is strong underlying end market growth, cybersecurity, IT compliance, and digital transformation are key areas of increasing concern for CREO's life sciences and healthcare customers," Berkin says.

"With a wider capital base and more experience around the table, the company can further invest in the business to drive growth and ensure consistent high-quality customer service," he adds.

1 big thing: Grant Avenue recaps CREO

health care mergers, cvs, aetna, health, pills, drugs, money, funding, pharma, ascension, providence

AI-powered drug development startup Inceptive popped $100 million in funding from backers including Nvidia venture arm NVentures and Andreessen Horowitz.

Why it's the BFD: Founded by former Google Brain researcher Jakob Uszkoreit, Inceptive aims to bring the power of generative AI to bear on the $1.4 trillion pharmaceutical industry, Erin writes.

Details: The unlabeled round of fresh funding includes new backer Obvious Ventures and, per the FT, more than triples Inceptive's valuation.

Inceptive collected a $20 million seed round in 2021.

How it works: The Palo Alto-based company uses AI to create unique mRNA-based molecules which it then licenses to pharmaceutical companies, who can use them to run clinical trials.

What they're saying: Uszkoreit tells the FT that a large European pharma company is experimenting with Inceptive's molecules in the development of a new infectious disease vaccine.

"We want to provide this as a horizontal capability to any entity developing mRNA and later RNA medicines," says Uszkoreit.

Yes, but: While mRNA tech is being tested for infectious agents including Ebola, Zika virus and influenza, no vaccines have yet emerged beyond those for COVID.

2. The BFD: Inceptive pops $100M for AI-fueled drug development

Illustration of binary code falling into a prescription pill bottle.

Several startups have for years used AI in the quest to create better medicines, often collecting massive datasets of small molecules and using machine learning to identify therapeutic targets and hone drug candidates. 

Salt Lake City, Utah-based Recursion Pharmaceuticals (Nasdaq: RXRX) in July collected $50 million from Nvidia executed as a PIPE.

Hong Kong-based Insilico Medicine in 2022 raised $60 million in Series D financing from insiders including Warburg Pincus, B Capital and Qiming Venture Partners.

San Francisco-based Insitro in 2021 pulled in $400 million in Series C financing led by the Canada Pension Plan Investment Board with support from backers including Andreessen Horowitz, Casdin Capital and Arch Venture Partners.

AI-powered drug discovery tech: State of play

3. State of play: AI-powered drug discovery tech

Illustration of a person retrieving a newspaper titled "State of Play" from a mailbox.

Looking for a deal story? Search the Axios Pro Deals Tracker beta.

• Noetik, an SF-based AI drug discovery startup focused on immune oncology, raised $14m in seed funding led by DCVC. www.noetik.ai

4. Deals o' the day

• Windi Hary, formerly an executive at HeartFlow, was hired as Elucid's SVP of regulatory affairs. https://axios.link/3sLzemd

• Marissa Pittard, Beaming Health co-founder, joined Big Health as senior director for new market development. www.bighealth.com

• Erick Sunarto, formerly Olive AI's VP of engineering, joined Rivet as VP of technology. https://www.rivethealth.com/ 

• Alex Brochu, formerly customer success manager at Olive, was appointed client success manager at Carrum Health. www.carrumhealth.com

5. It's Personnel

📝 House Republicans circulate transparency bill — Axios

🩺 How to make American health care cheaper and better — New York Times

6. Your daily dose

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

🐶 Aaron is dog-sitting one of his favorite clients this week, Roman, who is an 11-month Great Pyrenees currently weighing 120 pounds.

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

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September 07, 2023

1 big thing: Grant Avenue recaps CREO