The Wider View: Which are the medtech unicorns of 2018?

With only one month to go before 2018 draws to a close, FirstWord MedTech takes a look at the year’s biggest venture investment deals so far to see which are the emerging unicorns in this space and finds out the buzzwords that get investors digging deep into their pockets.

 

The low-down

2018 has been a record year for venture investing, particularly for the larger, late-stage, growth equity rounds of over $100 million. While the medtech industry would traditionally see fewer and smaller venture financing rounds compared to its pharma or biotech counterparts, where valuations are notoriously (and some argue over-optimistically) higher, this year’s bucking the trend with so far nearly 20 fundraisings of $100 million or more in the medical device and diagnostics space - hefty investments that have enabled some of these companies to attaining the much-coveted unicorn status.

Below is the 15 largest venture financing deals in medtech this year to date, as recorded by FirstWord MedTech:

Rank

Company

Est

Specialty

Technology

Size of round

1

Grail (US)

2016

Cancer IVD

Grail, an Illumina spin-out, is aiming to develop a pan-cancer screening test that can detect the disease at the early stages. The test will combine high-intensity genomic sequencing with complex algorithms to find cancer-specific patterns. Illumina is currently conducting a number of population-scale studies to identify these patterns.

$300m

2

Butterfly Network (US)

2011

Diagnostic imaging

Butterfly Network has developed iQ, a handheld ultrasound device for performing full-body scans. The device is connected to an app and images are managed on a smartphone or tablet. The ultrasound device costs much less than a conventional machine, at $2000, as it uses a semiconductor chip instead of piezoelectric crystals.

$250m

3

HeartFlow (US)

2007

Cardiac imaging

HeartFlow's FFRct analysis is described as virtual stenting, as it uses CT technology to noninvasively measure and analyse fractional flow reserve in the heart vessels for coronary artery blockage. The company is already commercialising the FFRct in North America, Europe and Japan.

$240m

4

Auris Health (US)

2007

Robotic endoscopy

Auris has developed the Monarch platform which combines robotics, microinstrumentation, endoscope design, sensors and algorithms to provide minimally invasive diagnostics and treatment. Its first target indication is lung cancer and Monarch allows physicians to access small and hard to reach lung nodules early, for diagnosing and targeted treatment.

$220m

5

WuXi NextCODE (China)

2011

Genomics IVD

WuXi NextCODE is using next-generation sequencing to build a genomic data platform. The data can be applied to clinical diagnostics and therapeutics.

$200m

6

SomaLogic (US)

2000

Proteomics IVD

SomaLogic is developing consumer wellness and diagnostic products based on its SomaScan platform, which can measure up to 5000 proteins in a single sample.

$200m

7

Helix (US)

2015

Consumer genomics IVD

Helix offers personal genomics services. Its Exome+ assay sequences each customers 20 000 protein-coding genes and other areas, yielding 100 times more data than other consumer genomics companies.

$200m

8

Mevion Medical Systems (US)

2004

Proton beam therapy for cancer

Mevion's S250 Series is designed to be smaller and less complex than conventional proton beam systems. It also costs less upfront and is easier to operate. The company has also developed the Hyperscan pencil beam scanning technology.

$150m

9

Humacyte (US)

2004

Haemodialysis management

Humacyte is conducting Phase III clinical trials in the US and Europe of its Humacyl human accellular vessel as a conduit for haemodialysis in patients with end stage renal disease and who are not candidates for fistula placement.

$150m

10

Outset Medical (US)

2003

Haemodialysis management

Outset aims to take the high cost and inconvenience out of haemodialysis with an all-in-one haemodialysis system that can be used for acute and chronic care settings. It is designed to handle water purification and dialysate production, using tap water.

$132m

11

Oxford Nanopore (UK)

2005

Nanopore sequencing

Oxford Nanopore specialises in nanopore sequencing technology. Its first product is MinION, a portable real-time, low-cost DNA/RNA sequencer and it has developed  different formats of its technology for different applications; Flongle, SmidgION, GridION and PromethION. The products can be applied for infectious disease testing, among other things.

£100m ($125m)

12

Procept BioRobotics (US)

2009

Robotic water-based ablation

Procept BioRobotics has developed the Aquabeam system, a robotically-enabled device that provides real-time multi-dimensional imaging and autonomous tissue removal using waterjet ablation. The system is already available in North America, EU and Australia/New Zealand for minimally invasive treatment of benign prostate hyperplasia.

$118m

13

Tempus (US)

2015

Genomics IVD

Tempus has built a library of molecular and clinical data alongside an operating system to make the data useful. The company uses machine learning, next-generation sequencing, and AI-assisted image recognition to enable scientific discovery and help physicians make real-time decisions to guide treatment of their patients.

$110m

14

Livongo Health (US)

2014

Diabetes management

Livongo develops cloud-based systems to allow patients to manage their chronic diseases. Their first product is a connected blood glucose meter.

$105m

=15

RefleXion Medical (US)

2009

Radiotherapy for cancer

RefleXion is developing a biology-guided radiotherapy system that combines PET imaging and radiation in one device, so that patients can be treated in real-time and at higher doses while sparing healthy tissue.

$100m

=15

CMR Surgical (UK)

2014

Robotic surgery

CMR Surgical has developed the Versius robotically-assisted surgical system for performing minimally invasive procedures including upper gastrointestinal, gynaecological, colorectal and renal surgery.

$100m

 

What’s catnip to investors

Unless a company pulls in a fundraising of over $300 million before the end of the year, Grail tops the 2018 list big-buck financings. The firm had already hit unicorn status before completing this series C; its first round when it spun out of Illumina in 2016 had raised around $100 million and its series B in the following year was nearly $1 billion. With the last tranche of the series C closed, the company - working to develop a blood-based cancer screening test for asymptomatic patients - has now received investments of over $2.2 billion in total.

Other firms in the top 15 list that were established within this decade, like Grail, and would better fit the description of a unicorn - a start-up with a valuation of $1 billion - as opposed to the more mature firms include Butterfly Network, Wuxi NextCODE (although it is part of the much bigger Wuxi Pharmaceutical Group), Helix, Tempus, Livongo and CMR Surgical.

These companies, as well as the others that succeeded in raising these sizeable funds, are diverse in terms of their technologies and the disease areas that they target.

But what are commonalities within this group that has enabled them to convince investors, new and old, to put their money down? What are the buzzwords - reflecting underlying trends driving investment activity - that act as catnip to the financial backers?

Below is a word cloud generated from a list of key terms that FirstWord MedTech pooled together. The terms are linked to the top 15 companies’ mission statement and descriptions of their business and their technology and products.

Data driving personalised tech that offers simplicity and userbility

Unsurprisingly, data - or the use of data science, to be more specific - features the most strongly among the top 15 companies’ technologies. It’s not just in genomics-related IVD businesses like Grail, Helix and the like, but connected, multi-component systems like Livongo’s diabetes management platform and Auris Health’s Monarch robotic endoscopy platform system that also incorporates data capture and analytics to allow for better navigation and more precise diagnostics and treatment.

Indeed, precision and personalised intervention are also two key terms that make investors’ sit up, according to our word cloud.

As are technologies that offer simplicity and userbility, taking away complexity of current procedures or streamlining workflow. Examples are Mevion Medical’s proton beam therapy systems, designed to be smaller and less complex to handle than conventional systems, and Outset Medical’s Tablo haemodialysis machines that can be used in both clinical and home settings and allows the use of tap water for dialysate production. These two technologies - which also help to reduce costs and thus increase accessibility - also highlight the need for innovators to address the issue of cost in this era of budget-constrained healthcare.

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