By Dave Wurzer, Connecticut Innovations
Cities and states looking to remake their economies by attracting venture capital and business innovators to their markets would be wise to consider healthcare. There’s already been more than $5.5 billion invested in digital health in 2019, which is trailing only the $8 billion-plus poured into the sector last year.
But making a winning play in this space requires a keen understanding of where the trends are headed. As someone who oversees investments in over 80 healthcare companies, I believe precision medicine, where individual genetic makeup, lifestyle and environment become part of disease prevention and treatment, is going to fuel the healthcare space in the next few years.
Within that field, here’s a few healthcare investment trends that we are keeping close tabs on:
Data is the new gold
In the next six years, the volume of data in healthcare is expected to grow faster than nearly any other business sector, including manufacturing, finance or media. However, to be able to apply precision medicine to patients, healthcare providers and payors will need to aggregate and make sense of an enormous amount of data.
There will be a number of companies that need to show that their data is being aggregated smartly, and with integrity. That effort will require building strong provider relationships and utilizing AI and other tools to help decipher data and put it in the hands of decision-makers (clinicians and patients).
Two Connecticut companies doing that are Diameter Health, a company bringing order to complex clinical data while integrating multiple systems and datasets, and Sema4, a patient-centered health intelligence company dedicated to advancing the diagnosis, treatment, and prevention of disease.
Nationally, digital healthcare startups are regularly attracting the attention of investors. Livongo Health, which combines an array of data to turn into “health signals” that help patients manage chronic diseases, executed an IPO in July and has a current market cap of about $2 billion.
Healthcare at home
Across the U.S., digital therapeutics is fast gaining steam with investors. Referred to as a subset of digital health, with various treatment settings (including the home), digital therapeutics are evidence-based therapeutic interventions driven by high-quality software programs and digitally collected/analyzed datasets to prevent, manage, or treat a medical disorder or disease.
Fitscript is a company doing just that for Type II diabetes patients, using its GlucoseZone product to actively provide exercise guidance, education and support to patients who have been prescribed exercise and fitness goals to reduce medications, lose weight and control their diabetes.
Omada Health, with a user base of over 85,000, is also focused on changing behaviors for those with high-risk conditions like diabetes, and recently raised $73 million. And, Omada even takes the idea of healthcare at home a step further, embracing mobile technology to make healthcare and advice available across, which will hopefully bring overall costs down.
Every one of us begins collecting microbes at birth and continues to do so until we have a fully interdependent system of microorganisms living and evolving in our gastrointestinal tract. Human microbiomes truly embody the idea of precision medicine. The National Institutes of Health (NIH) set up the Human Microbiome Project (HMP) in 2007 with some $150 million to fund research.
Many microbiome startups are moving far beyond probiotic pills and towards testing, monitoring and clinical trials, all with over a half-billion dollars in funding behind it.
As the links between bacteria and precision medicine are unearthed, this is an area where investors can still get in at an early stage. Two Connecticut companies are on the forefront of this reseach: Shoreline Biome, developing cost-effective tools for end-to-end microbiome analysis, and Azitra, with a microbiome product pipeline for treating skin diseases, including one in clinical trials for cancer therapy-associated rashes.
Investment options will only grow
The number of healthcare and biosciences investment options are growing exponentially.
Taking a measured look at the trends for the next five to 10 years, the direction of these investment opportunities is taking shape: the future will be about putting control in the hands of the patient through rapidly evolving precision medicine techniques to collect, analyze and interpret data and to drive improved patient outcomes in alternative treatment settings, especially the home.
It’s an exciting time to invest in healthcare innovation.
Dave Wurzer is responsible for managing the investment function at Connecticut Innovations, which includes portfolio and risk management. He also is responsible for oversight of the Connecticut Bioscience Innovation Fund and the Regenerative Medicine Research Fund.