Category Archives: Healthcare – Insights

2022 Healthcare Prognosis

When we published our 2021 survey results, vaccines had yet to be broadly released, Tiger Global was still a growth investor and SPACs were en vogue (at least the raising part…). 2021 respondents overwhelmingly correctly predicted a booster would be available before vaccine protection waned, SPACs would return to being a niche product, and that a return to office would include a hybrid approach. However, the Delta and Omicron variants threw a curveball at us and subsequently forced mask mandates back into effect. Covid continues to be unsettling with BA.2 now taking hold and resulting in Philadelphia reinstating an indoor mask mandate on April 11, 2022.

Three months into 2022, the world seems even more unpredictable. While Covid cases have fallen in most of the world from Omicron peaks, there are worrisome signs in China and a giant reservoir of unvaccinated people which could give rise to more variants. Russian aggression and hostilities understandably are top of mind given the worldwide human, economic and political ramifications. Once again, we asked our network of experts for their opinions on the latest trends in health tech, world issues, and the outlook for Covid-19.

Our commentary on the most interesting findings from this year’s survey, followed by the full results, can be found here. Thank you to the hundreds of healthcare experts who took the time to share their views and opinions with us.

2021 Healthcare Prognosis

For our fifth annual survey, we once again tapped our network of pundits to weigh in on the healthcare industry’s news, trends and challenges. With the global pandemic, 2020’s survey results offered insights into the sentiment elicited by Covid-19, as well as predictions and questions about its impact on the presidential election, return to work and vaccines. It was the first year we conducted multiple surveys, and dramatic changes in opinion were captured as the country locked down and we slowly came to understand what we were up against. We were SO, SO wrong about the stock market as it quickly recovered from March lows and soon reached new heights, and less than 50% predicted that an effective vaccine would be available by the end of 2021. But we got more right than wrong as the election did swing to Biden, the GDP dropped more than 2% for 2020, and telemedicine broke-through, emerging as a lasting component of patient care.

This year, respondents weighed in on the impact of Covid-19, vaccine rollouts and passports, how the Biden administration will shape the future of healthcare, and the outlook for health IT startups in 2021 and beyond.

Our commentary on the most interesting findings can be found here, including the full results. Thank you to the hundreds of people who took the time to share their views and opinions with us this year.

I’ve Seen Common Themes from Successful M&A Journeys During my 20 Years as a VC. Here are my Top 10 Lessons for Companies Looking to Get Acquired.

Late this summer, Massachusetts-based biotech company Corvidia was acquired for $725 million upfront and $2.1 billion after earn-out.

I had the honor of serving on the Corvidia board and have gotten to thinking about the common themes that have emerged in the M&A journeys that I have witnessed over my 20 years as a VC — the last five of which I’ve served as a partner at Venrock.

Turns out there are a handful of generalizable M&A lessons and company builders might learn from them.

1. It’s far better to be bought than sold

Frequently, entrepreneurs build their company for an acquisition — i.e., “our plan is to be acquired post human proof-of-concept” (biotech) or “after $X M in revenue” (tech).

Don’t! Ironically, if you build your company for M&A, you’ll get far worse deal terms.

Acquirers can sense that you built to flip. They’ll smell your reduced alternatives, and they’ll underbid. Part of the reason that Novartis paid $8.7 billion for AveXis was the substantial AAV manufacturing capability that AveXis had created — a capability AveXis would not have built had the plan been to flip. 

2. Great M&A is “cooked” over time

You can’t force the process.

Relationships matter in business deals. No matter how rational the deal is, there is humanity and subjectivity to every company and to every decision to form a combination.

Cultivate those relationships organically over time. M&A usually takes multiple years — even when it takes 30 days.

The two companies meet many times over months and years. Conversation and connection occur at multiple levels in both organizations like when CEOs chat, the scientists or engineers chat, or the BD people chat.

Enthusiasm builds at the acquiror over time and you can’t force it.

Keith Leonard (x-CEO of Kythera) met multiple times with Brent Saunders (c-CEO of Allergan) over multiple years before Allergan’s $2.1 billion bid for Kythera. 

3. Understand who the decision makers are

BD and Corporate Development are almost never the ultimate decision maker for M&A.

Usually, the CEO is the decider if the deal is big enough. Other times, the Chief Scientific Officer or someone at the top of commercial decides, depending on the stage of the technology.

You have to woo the decision maker and refrain from alienating the deal team.

4. Empathy matters

Understand the buyer’s needs and address their objections.

Do they need a product to fill a hole in their commercial pipeline? Are they looking to build out a capability? Are they worried about getting egg on their face (i.e., FOMO)? Did their last deal work out, or are they gun shy now? Are they motivated by fear or greed?

5. Communicate using the Goldilocks principle

Hyperbole and over-selling will spook your potential buyer. Use the art of the subtle sale instead.

Be open and honest about your company or product’s limitations — every deal has warts. This builds trust and goes a long way in building relationships as I wrote above.

6. Unbiased thought leaders matter

Cultivate objective and respected advocates who have no financial “skin in the game.”

For instance, at Corvidia, there were KOL clinicians who loved our program, and Novo called them to ask their opinion about our drug. That’s “free” BD!

Similarly, thought leader detractors can turn off potential acquirers.

7. Competition drives price

It goes without saying that you usually need more than two bidders to get a decent price.

Many of my companies have tried to use a pending IPO or even a JV to drive price. They don’t.

Those things can create more bidder urgency (which can have value), but they are not a stalking horse on valuation. 

8. A robust M&A ecosystem requires proactive buyers

Most buyers are reactive: they window shop until FOMO or some other impetus gets them to act.

But every healthy M&A market has proactive buyers in it — companies that are aggressive and strategic about M&A. Those proactive acquirers get the reactive buyers to move.

In biopharma, Celgene, Allergan, and Gilead have been recent assertive buyers. Back when Novacardia was acquired, there was a proactive buyer who bid, but Merck ultimately “won” the deal after they were galvanized to action by the other party.

One hint: new CSOs and CEOs in pharma companies usually want to leave their imprimatur on their company by being “bold.” Look to them as potential first movers.  

9. Don’t hire a banker until you have a term sheet

Hiring a banker too early means that you are being sold vs. being bought.

Bankers will tell you how good your single lowball valuation is, until you have another bid. Once you do, let your bankers be “bad cop” on driving up price. They’re good at it!

Also, I have not seen a banker bring a totally new bidder to the table. Generally bankers just help galvanize a company that the team has already cultivated. 

10. Management almost always wants to sell before the VCs

The stereotype of the VC selling the company out from under the founders and execs is not consistent with my experience. Maybe I’ve just had good co-investors.

Often the teams that had always planned to personally bring a product to market — and to lead the public company for many decades — get their head turned by the offer once its real. Five or 8% of $X billion or even $YYY million can be very distracting.

While I often would prefer to keep going, its not my choice once my leadership team has mentally moved on … game over.

Being a healthcare VC feels purposeful. It’s an honor to contribute behind the scenes to iconic companies that bring multiple therapies to sick patients. But let’s be realistic too: M&A is also a vital part of the start-up ecosystem and start-ups exits, and, given that, let’s learn from past mistakes — and perhaps a few successes. 

Camille Samuels is an investor at Venrock where she invests in biotech, medical devices and consumer health.

I’ve Seen Common Themes from Successful M&A Journeys During my 20 Years as a VC. Here are my Top 10 Lessons for Companies Looking to Get Acquired was first published in Business Insider.


What happens next: 10 non-COVID health care predictions for 2021

A (hopefully) one-time note: 2020 was an unexpected year (duh). We hope 2021 is both better and more predictable. While it was essentially the only topic of 2020, we are steering clear of COVID-19 predictions here, hoping fervently that an effective vaccine will be (has been?) approved imminently, distributed efficiently and equitably, and that by the end of 2021, COVID-19 becomes as well managed as seasonal flu and that schools, businesses, and our economy are safely open and flourishing.

As 2021 approaches, here are 10 predictions for what we think will happen next for health care in America. But first we look back on our (dismal— think COVID response, not COVID vaccine…) 2020 performance. Suffice it to say, we whiffed, Bill Buckner “through the legs” type whiffed. We published our 2020 predictions on Dec. 6, 2019, three weeks before COVID-19 was discovered in Wuhan, China. Everything got reprioritized. Remarkably, we still got “two plus a little” predictions correct, but who shoots for 20%? 

What did we get right? We were correct that Big Tech did not disrupt health care (again). Haven lost momentum with Atul Gawande being replaced as CEO, while AppleGoogle, and Facebook did little other than support contract tracing and share mobility data with public health agencies. 

We were correct that the election year would lead to health policy paralysis. The ACA remains; no legislation was passed; and new policy has been limited to executive orders of questionable impact (drug pricing) and legality (price transparency). 

We predicted that pharma would shift focus from cancer immunology to other therapeutics areas, and three of the five largest M&As that occurred were outside of oncology: Portola (hematology), Dermira (dermatology), and Corvidia (cardiology). That said, immune oncology remains a centerpiece of everyone’s efforts, and maybe we should have learned by now that drug discovery evolves on a time frame longer than our one-year prediction cycle.l

We still believe in many of our unrealized 2020 predictions. We think growth at all costs has limits, but with excess capital looking for returns and low interest rates, that day of reckoning continues to be postponed. We do think data privacy remains poorly managed, but, amid COVID-19, standards were relaxed to the point that even unencrypted Zoom was allowed for telemedicine visits and hospitals endured more ransomware attacks. We are also bullish on A.I. over the long term and think that DeepMind’s protein-folding breakthrough is an exciting early advance.

So, good riddance to 2020, long live 2021: 

A non-health prediction: U.S. Senate does not flip to Democratic control, which sets health policy landscape

Perhaps Biden’s largest goal as President is to create a sense of normalcy.  He will try to avoid, rather than dominate, the daily news cycle. He will not engage in the stream-of-consciousness Twitter antics of the recent past. He will also be constrained by a 50/50 Senate, which means his cabinet picks will need to be more moderate to get confirmed (as evidenced by the headwinds facing Neera Tanden at OMB). A slim Republican Senate majority will hold the most progressive wing of the Democratic Party in check and also make ideas like Medicare for All or a strong public option nonstarters. 

1. Confidence (and independence) is restored in the CDC and FDA

We expect very experienced and noncontroversial leaders to lead the FDA and CDC. Furthermore, these leaders will be fact-based and transparent in their approaches to approving therapeutics, diagnostic tests, vaccines, and public health measures for COVID-19. We think the FDA and CDC will create surveillance programs to track COVID-19 vaccine side effects, efficacy, and local immunity and outbreaks. 

Expect the CDC to be much more active in shaping the national public health dialogue and instilling confidence in getting a COVID-19 vaccination.  

2. Virtual care for Medicare takes off

While there are not many silver linings to COVID-19, one benefit has been the dramatic increase in telemedicine adoption. Medicare is covering telemedicine for the first time on an emergency basis. 

We think Medicare will make telemedicine coverage permanent. This will lead to seniors, similar to millennials, preferring telemedicine to in-person visits for much of their care. 

Moreover, virtual care will actually work better than infrequent in-person care for seniors since it enables clinicians to do more check-in visits, track biomarkers more often, and engage faster when exacerbations can still be mitigated. Over time, this trend will be embraced by new entrants, risk-bearing clinicians, and ACOs alike.

3. $0 out-of-pocket care options emerge for most people

After 20 years of ever-increasing premiums, deductibles, and co-pays, a combination of many factors will lead to free care options for most people. Biden will take a more progressive approach to public health, enabling everyone to access no-cost-sharing COVID-19 testing, treatments, and vaccinations. 

Fierce competition in Medicare Advantage will lead to most seniors having access to zero-dollar premium plans. As a by-product of the recession, Medicaid enrollment will grow, and Biden will repeal all Medicaid cost sharing and work requirements. We think Biden will also temporarily increase ACA subsidies as part of a COVID-19 relief package. Commercial insurance companies will continue to drive telemedicine usage by waiving co-pays too.

4. ACA survives and repeal efforts (finally) die

After a decade of turmoil, Republicans will stop trying to repeal the ACA, and Democrats will embrace it instead of Medicare for All. This will, for the first time, shift focus to trying to make the ACA work better. 

We also believe the Supreme Court will uphold the ACA when they announce their decision in the final Republican challenge to the law, California v. Texas, over the constitutionality of the individual mandate.

5. “Nursing homes” go virtual and become home care

Nursing homes, forever, have been sources of outbreaks of resistant bacterial infections like MRSA and VRE. 

COVID-19 reinforced that they are the last place you want a loved one to receive care. These cultural shifts combined with improvements in both hardware and software will lead to the rise of home care with visiting nurses and therapists in many cases. 

We think home care will prove better since patients will have lower risk of infection and delirium. Home care providers will be able to remotely keep watch over all of the vital signs monitored today by nursing homes and identify exacerbations and intervene just as early to mitigate them. 

6. Special-purpose acquisition companies (SPACs) fall out of favor

The year 2020 has seen a tornado of SPAC activity. We watched Hims, Clover, and Augmedix all go public via SPACs, as well as the former Livongo team launch a $500 million SPAC. 

We think that SPACs will lose luster over 2021 as several of the completed SPACs perform poorly, leading the (arm’s length) PIPE investors to pull back on pricing and the (theoretical) economic benefits of SPACs versus IPOs to deteriorate for good companies.

This will be counterbalanced by a reduction in the SPAC sponsor economics as the set of interesting target possibilities narrows, allowing those few targets to drive auction-like dynamics as they choose a SPAC vehicle. 

In the end, SPACs will return to a go-public vehicle of choice only for companies with business challenges such as lower growth or less predictable results, which make a traditional IPO not an option.

7. The mental-health revolution continues

2020 has been an emotionally challenging year for us all: COVID-19, recession, social justice protests, school closures, and a contentious election. 

This has turbocharged demand for mental-health services of all types.  COVID-19 has also driven large increases in both virtual and computer based care, which has made care far more scalable. More mental-health care will translate into lower medical care costs, lower turnover among employees, and high patient satisfaction. As a result, we think mental-health will grow faster and also attract more capital than other health care sectors.

8. Health care IT (HCIT) IPOs and M&A increases dramatically

On the heels of the mega-Teladoc/Livongo merger creating a $20 billion behemoth, pressures will intensify on every other HCIT company to grow faster and gain scale. Moreover, since private capital remains plentiful and interest rates near zero, M&A will be an enticing and cost effective approach for companies to augment organic growth. 

More companies will merge, or make acquisitions, to gain scale to go public and also to create businesses that are large enough to exist independently. We think 2021 will be a year of coalescence of lots of point solutions into larger platforms so that there is a single place for patients to engage and a company or payor to partner.

9. No action on drug pricing

With the promise of multiple COVID-19 vaccines being invented and brought to market in record time, public opinion will turn very positive for pharmaceutical companies. This will squash all efforts to regulate drug prices for the next year (at least). 

The recent Trump executive orders on “most favored nation” pricing will be challenged in the courts and never be enacted. We do not think this reprieve extends to pharmacy benefit managers, who will continue to be scrutinized over rebates, pharmacy payments, and their formulary placement criteria.  

10. Amazon pharmacy gains traction

We have been perennially skeptical of Big Tech making progress in health care. One exception is Amazon’s new pharmacy. 

We think that Amazon will gain traction since COVID-19 has led to dramatically more e-commerce for all things and made pharmacies akin to nursing homes: scary places to visit since they are filled with sick and possibly COVID-19-contagious people. 

Amazon’s consumer trust, incredible delivery speed, and low prices will allow the company to take meaningful share from retail pharmacies.

We look forward to seeing how many of these come true. In the meantime, we wish you a safe and happy holiday season and 2021.

Bob Kocher and Bryan Roberts are partners at the venture capital firm Venrock, where they invest in health care businesses.

What happens next: 10 non-COVID health care predictions for 2021 was originally published on Fortune.


Venrock Adds Two New Investors: Mariana Mihalusova and Julie Park

Much has changed during the past six months, but our search for great talent hasn’t stopped. We are excited to welcome two Vice Presidents to the firm, continuing our effort to help build great companies across healthcare and technology. 

Mariana joins the healthcare team with experience across the entire drug development life cycle. Prior to Venrock, she was Executive Director at Celgene, where she led a broad range of preclinical and clinical stage drug programs through early human studies.  She graduated from Harvard with an MBA and Ph.D. in biochemistry after earning her bachelor’s at Brown University. Her focus will be on early stage biotech companies and she was instrumental in Venrock’s recent investment in a stealth oncology antibody drug conjugate company. 

Julie joins our technology team and will focus on investments in consumer, commerce enablement, and SMB tools & services. Most recently, she was an executive at Facebook, where she helped SMBs grow as Director of the global long tail ads business. Previously, she was on the founding product and sales teams at Pinterest. Before moving to the west coast, Julie was a Vice President at Goldman Sachs, where she worked closely with consumer and retail companies. Julie has dual degrees from Stanford, with a Master of Science from the School of Engineering.  

Both Mariana and Julie will be based in our Palo Alto office upon reopening.

Ten Actions For Better Post-Pandemic Health Care In The United States

This article is co-authored with David Beier and Avik Roy.

The 1918 influenza pandemic—the world’s worst viral pandemic of the twentieth century—called into bold relief the deep interconnections among the health of all individuals regardless of race, gender, ethnicity, or income. Despite that fact, the 1918 flu led to few meaningful health care reforms.

Let’s not make the same mistake again. COVID-19 is, hopefully, a once-in-a-lifetime crisis. It has led to a devastating loss of more than 140,000 US lives, and a dramatic disruption in how we all live. It has forced the US health care system to respond and adapt in a multitude of ways. Some of these health system changes are good, such as the embrace of telemedicine and the rapid initiation of COVID-19 testing, treatments, and clinical trials. Some changes are not so good, such as the cancellation of elective surgeries, reduction in access to specialty care and diagnostic testing for non-COVID-19 patients, as well as nursing layoffs as a result of significant decreases in both practice revenue and margins of up to 50 percent.

The most notable changes flowing directly from dealing with COVID-19 include greater need for mental health services; expanded telehealth services; and the need to manage severe stresses arising around supply-chain management of personal protective equipment (PPE), essential medicines, and diagnostic and serologic testing. Staff shortages and mismatches between health care needs and type of health staff available have also arisen.

As we face months more of dealing with the COVID-19 pandemic, we ponder what changes should be made now and to make the US health care system better when things return to a new normal, and, God forbid, in the event of future pandemics. Here are 10 actions that will lead to better post-pandemic health care in the United States.

Adding Public Health To The Curriculum

Medical schools do not sufficiently emphasize instruction on how infectious diseases emerge and spread. COVID-19 must be used to help the next generation of doctors better understand the role of biostatistics, epidemiology, data science, disease surveillance, viral genomics, non-pharmaceutical interventions, and contact tracing of various public health issues.

Some schools are already changing their curriculums for their incoming class of medical students. It is important that we learn from what worked and what didn’t work. For example, policy responses designed to combat influenza pandemics may not be as effective in addressing coronavirus pandemics, and vice versa, and students will need to learn to apply scientific thinking to novel pathogens that do not fit established patterns.

Getting Serious About Evidence-Based Care

The urgency to figure out how to treat COVID-19 and its high mortality has led to a stunning increase in interest in pre-prints of articles regarding treatments and potential vaccines for the disease, enrolling patients in clinical trials, and adopting new treatments as well as stopping ineffective ones. We believe that this will lead to the creation of global data sets and integration of artificial intelligence and machine learning in key specialties, including radiology and diagnostic medicine. Prior to COVID-19, it took 17 years for breakthroughs to become implemented widely in clinical practice. That is far too long of a lag given the tools we now have at our disposal.

Using “Real-World Evidence”

The Food and Drug Administration (FDA) has dramatically changed its approach to evaluating new diagnostic tests and treatments to enable new entrants to bring tests to market. Between February 2 and May 28, the FDA issued emergency use authorization for 114 (polymerise chain reaction) PCR tests. The FDA was similarly permissive about letting new antibody tests enter the market, but after negative data emerged about test performance the FDA took action to increase oversight of these tests.

Allowing patients to access tests rapidly and only increasing regulation when a real-world need emerged is antithetical to pre-COVID-19 FDA approaches. A continuation of this approach when a technology or diagnostic offers large potential benefit, with real-time monitoring of clinical data, would be a more productive approach than the FDA’s pre-COVID stance. Since the agency’s new approach is less costly for developers of new technologies, continuing it would prompt more innovations to enter the market. This also could lead to more adaptive clinical trial designs—which allow modifications to ongoing trials in response to emerging evidence—as seen with Genentech’s Actemra trial.

Creating Spare Capacity

As the severity of COVID-19 become clear, states scrambled to create surge capacity. While fairgrounds and convention centers were transformed into field hospitals by the National Guard, the big question was how we would staff these facilities with clinicians. While states rapidly created reciprocity to accept out-of-state licenses, there were few excess clinicians in other states since the pandemic was impacting everyone, everywhere.

California addressed this labor shortage by creating a State Health Corps of retired and in-training clinicians. We think this could become a national model, since we need to draw upon new and unused pools of labor in times of crisis. Once we get through this acute phase of our crisis, we hope that these clinicians undergo structured training modeled on the National Guard so that they are well prepared to mobilize and work productively when called upon for future crises. One important addition would be the creation of a new emergency use electronic health record that is easily connectable to all existing systems and able to access critical data to improve patient care, safety, and coordination. As an incentive, student debt could be forgiven in exchange for service.

Investing In Safer Housing

The highest mortality outbreaks of COVID-19 have been in skilled nursing facilities, prisons, and homeless encampments. Forty-five percent of all US deaths from COVID-19 have occurred in nursing homes and assisted living facilities, places that house only 0.6 percent of the US population. COVID-19 has laid bare the health consequences for vulnerable populations living in nursing homes, congregate living, jails/prisons, detention centers, and areas of acute poverty. Efforts to improve the safety of these living situations will make communities safer by lowering local infection rates. Programs to provide more home-based care; hygienic congregate housing; workers who are both safely protected with PPE from becoming infected and also non-infection carrying based upon negative PCR tests; and PCR screening of high-risk populations can deliver very tangible benefits to society. We hope that these move from a progressive dream to funded initiatives.

Ensuring Providers Stay In Business

COVID-19 is crippling the balance sheets of the health care system we are depending on to treat us. This is happening precisely at the time when we most want our health care system to invest in PPE, additional workers to meet the surge of demand, and testing capacity. We predict that far more health care providers will opt into arrangements that pay them a per-patient-per month fee or shared savings so they are protected from sudden drops in demand and revenue. Even better, we think hospitals could be offered additional incentives to invest in buffer capacity that can be brought online when needed.

Adopting Telehealth For Real

Prior to COVID-19, telehealth was a niche business among commercial health plans for patients needing low-acuity urgent care. As a result of COVID-19, nearly all patients and providers have been forced to use telemedicine services, out of fear that going to the doctor may be dangerous. We think that payers will continue to reimburse telehealth, and we hope that Medicare continues to allow seniors to access telemedicine.

Moreover, we think the tremendous increase in demand will spur innovations to make telemedicine useful for treating many more diseases. These innovations are likely to include incorporating biometric data, enabling group visits with specialists and primary care doctors to improve coordination, and offering real-time second opinion visits and universal electronic health record connectivity. Telehealth can also dramatically improve access to behavioral health care and improve efficacy by helping support patients between visits, too.

Delivering On Mental Health Parity

Pandemics are stressful and can exacerbate mental health conditions. As a direct consequence of the pandemic, it is widely expected that the suicide rate and mental health treatment need will dramatically increase. Sadly, access to metal health care services is uneven and sometimes unethically limited.

Significant improvement in the enforcement of existing federal laws requiring parity of coverage for mental health services, as compared to coverage for physical health services, is needed. What is also needed is greater access to caregivers, both safely in-person and virtually. A new program to train and deploy thousands of new community mental health workers, modeled after new programs elsewhere in the world, could help a great deal.

Creating Effective Public-Private Partnerships

California Governor Gavin Newsom launched a state COVID-19 Testing Task Force co-led by Blue Shield of California, the largest health plan in the state, and the California Department of Public Health. This partnership was able to ramp up testing in California from 2,000 tests per day to more than 110,000 tests per day in 12 weeks, a faster increase than any other state. By bringing in outside talent and leverage, the state was able to respond faster and better.

We hope that this type of inclusive approach is used more often by governments to solve problems. Public and private sector may be useful for tackling challenges such as excess mortality among African Americans and Hispanics and to speed the development of new vaccines and treatments.

Insisting On Better Information

Myths, falsehoods, faulty assumptions, poor modeling, and poor information undermined the US response to the pandemic. Public health authorities found themselves without strong enough tools to collect basic data such as infection rates, hospitalization rates, and mortality rates, let alone data stratified by age, health status, residential status, and other risk factors.

Despite the extraordinary concentration of morbidity and mortality in long-term care facilities, not until late May were all states reporting long-term care fatalities to the public or to the federal government. An improved nationwide system of public health reporting in long-term care facilities would aid greatly in addressing infectious disease deaths.

There has been no uniform standard for counting COVID-19 fatalities. For example, patients who die of non-COVID-19-related causes, but carry a positive test result, are often counted as COVID-19 fatalities; it is also likely that a significant number of individuals have died of COVID-19-related causes where the virus went undetected.

We hope that the experience with COVID-19 leads to a global disease surveillance system of data sharing and monitoring. This would allow us to simultaneously learn about emerging diseases and understand what actions would be useful to reduce spread and improve care.

While a pandemic is never the incentive one would want to spur innovation, these 10 actions could provide a modest silver lining and lead to a better health system. We hope policy makers seize upon the emergence of many of these ideas today and take action to ensure that they persist. This can be done by simply continuing funding for services such as telemedicine, which should actually be cost saving, and adding items such as loan repayment for national service or data interoperability to subsequent stimulus packages.

In the meantime, we will keep physical distancing and rooting for the world’s most rapid development of a very safe and effective vaccine.

Ten Actions For Better Post-Pandemic Health Care In The United States was originally published on Health Affairs.


2020 Healthcare Prognosis

As we all entered January 2020, many years into a historic bull run along (too?) many dimensions, few of us (well, maybe Stephon Marbury) had any idea what the next 4 months would bring. We have all had to adapt, finding resiliency and grace in the face of uncertainty and adversity. We have had to throw out the old playbook.

That includes our annual survey on the biggest news, trends and challenges facing the healthcare industry. We issued our survey on February 24, 2020, and over the course of the 2 week response period, the world began internalizing that COVID-19 would become a global pandemic, forever changing our everyday lives and dramatically altering the economy.

A bunch of the survey responses were “same old, same old”: Haven would not do much (who knew how right that would be); there would be more talk than action on drug prices; people are enamored of Farzad’s bow tie and epidemiology prowess… There was, however, a dramatic change in sentiment regarding COVID-19 and the economy over the course of the survey. As a result, we broke with tradition and issued two follow-up surveys in late March and April in order to track the rapidly changing sentiment elicited by COVID-19. These include timelines for a vaccine and drug treatment, stark economic predictions and questions about the virus’s impact on the upcoming presidential election and returning to work.

Our commentary on the most interesting findings can be found here, including the full results from all three surveys. Many thanks to the hundreds of people who took the time to share their views and opinions.

An explosion of knowledge: Multiplexed interventional genomics

Discovery biology, pre-genomics, followed a linear path: develop a hypothesis, design an experiment and carefully control variables, one at a time, to prove or disprove the hypothesis. 

The challenge with this “classical” approach is not only the “one step after another” pace, but the fact that the formation of a hypothesis is limited by our current knowledge and imagination. Not only do we not know what we don’t know, we cannot even put boundaries on how vast that negative knowledge space is—a thimble or an ocean’s worth of possibility?

When it comes to biology, our knowledge remains very limited, even after decades of eye-opening discoveries. Even for the most well-researched, monogenic diseases, such as cystic fibrosis, there are vast gaps in our knowledge. It was only in 2018 that scientists, using single cell genomics, discovered the actual cell type in the human airway that expresses the CFTR mutation causing cystic fibrosis. 

While the following quote accurately describes the field of genomics, it entirely misses the dramatic impact that genomics platforms have had on scientific experimentation: 

“Genomics: a branch of biotechnology concerned with applying the techniques of genetics and molecular biology to the genetic mapping and DNA sequencing of sets of genes or the complete genomes of selected organisms”

Merriam Webster

Over the last 20 years, new experimentation platforms like arrays, next-generation sequencing and single cell analysis have dramatically increased experimental throughput while decreasing experimental cost, thereby enabling genome-wide analysis within a single experiment.   

These exponential improvements (10^6+) have unleashed a multitude of non-hypothesis driven approaches that have catapulted the genomics field forward; scientists have moved from developing and testing a hypothesis regarding a single gene (…then rinse and repeat) and instead now study many, many genes simultaneously.

While these non-hypothesis driven, hugely multiplexed experiments have turbo-charged the field of biology, it has largely been a revolution of observation. 

For instance, in genome-wide association studies (GWAS), scientists commonly compare, across the genome, a diseased population versus a control population -seeking variations that are statistically different.  These studies have yielded putative disease-causing variants and, by inference, putative disease-causing genes. 

That is terrific; however, there have been two limiting factors:

  1. One has had to rely on low throughput, high cost experiments to validate these findings.  Additionally, the identified variants often display no connection to our current functional understanding of the disease, showing up in “junk” DNA – primarily referred to as junk because we do not understand its functional importance… yet. 
  2. Perhaps more importantly, studies have been limited to interrogating naturally occurring biology.  We are only testing what is available in nature, yet evolution is incomplete.   The ability to test non-natural variation would eliminate the “looking for your keys under the lamp-post” conundrum and dramatically expand the exploration space, very likely resulting in many, heretofore unimaginable, biological insights and potential commercial opportunities.

Advances in synthetic biology, such as CRISPR, and the initial merging of genomics with synthetic biology is beginning to allow genomics to explore more than the naturally occurring genetic space, moving the field from an “observation of nature” science to an interventional endeavor.  

While next-generation sequencing has revealed millions of naturally occurring variants, the ability to intervene in a cell to create a new variation and then observe, test and measure the results at scale will dramatically expand our biological knowledge. 

An early approach is Perturb-seq, which enables researchers to turn off single genes in single cells, thousands at a time, and then observe the results through RNA sequencing. 

Perturb-seq provides genomic scale and resolution, allowing both multiplexed intervention in a genome as well as analysis of non-natural configurations for the first time.  

However, Perturb-seq addresses only one type of mutational change, that of stopping a single gene’s transcription. Additional tools would allow us to experimentally analyze other types of genetic variation—single nucleotide polymorphisms, multi-base variations, structural changes, promoter swaps—at genomic scale.  

Beyond increasing biological potential, scientists will want to explore such variation in combinations of variants.  For diseases caused by a single, highly penetrant mutation, we have learned a lot. 

In fact, this knowledge has fueled a growth industry in discoveries to treat rare diseases by pharma and biotech companies. We know a lot about monogenic diseases because they are easy to study with our current tools.  However, most diseases plaguing our society, like heart disease and cancer, result from the interactions between multiple genes and their environment.   To unravel this complexity, we need genomic scale tools that create multiple mutations in cell lines and then challenge them with different conditions, all in large multiplex and for reasonable experimental cost. 

These capabilities are on the horizon.  For instance, a recently launched tool from Inscripta created over 200,000 massively parallelized, precisely defined variants distributed throughout the E. coli genome. 

There were several remarkable effects: (1) the discovery of over 100 variants that increase lysine production, most of which were outside of known genes; and (2) the discovery of three variants which each increased production only several fold individually, but over 14,000-fold when combined. These results further underscore our limited understanding of biology even in one of the most studied pathways in one of the most studied organisms.

Although recent advances have unveiled tremendous knowledge and revived interest and excitement among scientists and entrepreneurs, the more we learn the more we realize we still have to learn.  

Distributed genomic tools that allow for cost-effective, highly multiplexed, recursive genetic editing combined with current genetic analysis platforms like single cell and next-generation sequencing will enable a closed loop of intervention and analysis that allows us to explore the full potential of nature’s variations. 

We can hardly imagine, much less prognosticate, how this will impact our understanding of biology, or the new products that will arise to treat disease, produce better crops, and create novel materials.

John Stuelpnagel is a co-founder of both Illumina and Ariosa Diagnostics. Additionally, he currently serves as Chairman of the Board of Directors of Inscripta. Bryan Roberts is a partner at Venrock. Venrock is an investor in Inscripta.

An explosion of knowledge: Multiplexed interventional genomics was originally published on Fortune.


Ethan Batraski and Racquel Bracken Promoted to Partner

Todd Graham Joins with Focus on Cybersecurity and Infrastructure

For over 40 years, Venrock has been committed to diversified, early stage investing – supporting entrepreneurs who will run through walls to create new products and services, surmounting obstacles that most think impossible. The Venrock team consists of individuals with diverse backgrounds and passions, but all share a collaborative approach to investing and supporting companies with a performance driven, long-term view. Ethan Batraski, who invests in frontier tech and enterprise software, and Racquel Bracken, who invests in biotechnology and creates new companies on behalf of Venrock, reflect the firm’s unique approach. We are thrilled to announce that they have both been promoted to Partner.

Ethan joined Venrock’s technology team in 2017, after 15 years as a product executive, founder, and angel investor, with leadership positions at Facebook, Box, and Yahoo!. Since joining Venrock, Ethan has led our investments across space, autonomy, and frontier technologies, including Skyryse, an autonomy company focused on VTOL aircraft, Atom Computing, a neutral atoms based quantum computing company, as well as three additional companies that have not been publicly announced. He also holds 16 patents. Ethan is a passionate early adopter, space geek, and competitive athlete.

Racquel has been a member of Venrock’s healthcare investment team since 2016. She led the Series B round for Cyteir, an oncology start-up focused on DNA damage repair, as well as the formation and seed funding of Federation Bio, a microbial cell therapy company for intractable disease. Since its founding, she has also served as the CEO of Federation Bio in addition to her Venrock investment activities. Prior to Venrock, Racquel was one of the first employees at Clovis Oncology and helped the company from inception through approval of its first product, with responsibilities in business development and commercialization over 7 years. Racquel is an avid outdoorswoman, backcountry skier, mountain biker, and board game lover. 

We are also happy to welcome Todd Graham to the technology team as a Vice President in Palo Alto. Building on Venrock’s history in the security and infrastructure space – including CloudFlare, Shape Security and CheckPoint Software –Todd is excited about the future of digital transformation, human-based cyber-threats, disruptive go-to-market, and the consumerization of the enterprise experience. Todd joins Venrock from Cisco, where he led corporate strategy for the security and collaboration businesses. Todd was also an early employee at Tablus, a Data Loss Prevention company that was acquired by EMC’s security division, RSA.  

We are honored to recognize Racquel, Ethan and Todd’s accomplishments and look forward to their continued partnership and future successes, joining forces with early stage leaders to build substantial, durable businesses that improve lives across the globe. 

Health Care Investors Predict 10 Ways the Industry Will Change in 2020

As we near the end of 2019, it is time for us to look ahead and share what we believe 2020 has in store for the health care ecosystem. But first, let’s look back and assess how we did with our 2019 predictions

Overall, we got about half correct (five or six out of 10 depending on whether you count Blue Cross Blue Shield of North Carolina’s attempt to consolidate with Cambia).  What we got right was growth of Accountable Care Organizations, more digital health consolidation, dialysis disrupted, dramatic growth in telemedicine, and breakthroughs in DNA sequencing platforms. 

We were wrong about electronic health records (EHRs)—both about any meaningful improvement in the UI and that the government would break the ice on interoperability. 

While there has been lots of talk about both of these topics, we do not think much progress was made in 2019. We were equally wrong about pharmacy benefit manager (PBM) disruption, with lots of talk but no action after the Centers for Medicare and Medicaid Services (CMS) withdrew their proposal to eliminate drug rebates. 

We do think interoperability and PBM changes will happen but, like most changes in our ecosystem, they will take longer to come to fruition. We were also wrong about insuretech getting tarnished as start-ups, or at least start-up valuations, continue to do very well. 

As we look ahead to 2020, here are 10 predictions that are shaping our thinking:

1. Turns Out “Growth at All Costs” Has a Limit

After the debacle of WeWork’s unsuccessful IPO, SoftBank’s subsequent $8.9 billion bailout (Too Big to Fail?) and many formerly high-flying private companies trading below their 2019 IPO prices, growth investors are going to become more discerning regarding eventual, or even near term, financial independence. 

To be clear, there will still be way too much money available given the low rates of return in other asset classes, but that sea of cash seeking a home will focus on high growth, high gross margin businesses that could be cash flow positive if necessary. This could push more mature companies to exit (whether M&A or IPO) since the private markets will no longer be so permissive. 

2. Cancer Immunotherapy Is Recognized—As Crowded

After multiple years of focus and investment from biotech investors, the market for the next blockbuster immunotherapy runs dry of differentiated ideas and the current batch of immune oncology programs starts to look incremental, therefore not revolutionary enough to command the high prices required for their production. As a result, investors’ cash rotates toward other areas like CNS and autoimmune disorders.

3. Medicare Advantage is Everyone’s Favorite. Uh Oh…

CMS will continue to make Medicare Advantage (MA) a better deal for new Medicare beneficiaries. We think CMS will continue raising rates for MA, thereby allowing plans to lower cost sharing as well as offer more generous drug, dental, and vision benefits.  

MA plans will continue to differentiate from traditional Medicare—offering patients better experiences like telemedicine, text-based care interactions, and help with social determinants of health. 

The ensuing growth in MA membership will drive even more investment in MA oriented start-ups, most of which will succumb to poor execution compared to the large incumbents that receive most of their net Income from MA (so they really care).

4. Data Privacy Taken Seriously

Hospitals have long viewed their medical records as gold waiting to be mined.  For the last few years, a slew of start-ups and Google have come to health systems offering to anonymize, organize, and sell their data to pharma. 

The hitch is, it’s very hard to anonymize data and most of the time this was done without patient consent, so a backlash around violating patient privacy is coming. These debates will be intensified by the hunger of AI for large datasets and, we think, the discovery of many examples of patients being re-identified.

5. More Biomedical Philanthropy

Perhaps a by-product of the Warren and Sanders campaigns, the decade long bull market or more likely turning 35 years old with bad knees… more billionaires, especially from the recent generation of tech companies, will follow the lead of Chan-Zuckerberg and Sean Parker and set up biomedical research institutes. Successful entrepreneurs will be entranced by the potential of using new tools and computing power to tackle biology and cure disease. 

6. AI Begins to Prove Useful

After several years of pure hype, beyond being able to recognize images, AI will begin to become useful clinically. 

While we remain equally excited about non-clinical use cases like more efficient billing, coding, credentialing, and provider directories, we think that AI use cases to support biomedical research and clinical decision support will begin to become useful and practical. 

We also think that AI’s insatiable appetite for data will be rate limiting for most clinical use cases since the training data is contaminated with medical errors and bias.     

7. More Skeletons Come Out, a la uBiome

As investors pivot towards more rigorous diligence processes, we think it is inevitable that cut corners, made by startups to grow faster, will come back to haunt them—tales of artificial user growth, phantom unit economics, and regulatory disregard will lead to hand wringing and schadenfreude.

8. No Disruption Bogeyman from Big Tech

Despite a steady stream of breathless articles about Amazon and Haven, Google, Facebook, and Apple disrupting health care, we think that they will shift much of that attention to other things in 2020. 

Next year big tech is going to deprioritize health care disruption to deal with crises in public trust, privacy, and other consumer technology opportunities. For all the talk about building consumer health products and disrupting PBMs and payers, we think the best we can hope for are continued small experiments and acquihire acquisitions. 

9. Election Year Policy Paralysis

While disappointing, we do not believe Congress is going to be able to cooperate long enough to solve problems like surprise billing, make any meaningful progress on drug prices, or to improve the Affordable Care Act. 

With a presidential election and impeachment overshadowing everything, neither side will want the other to declare any sort of victory. To the extent policy is developed, the action will happen at the State level (which we think is interesting).

10. Primary Care Physicians (PCPs) Break Free from Hospitals

2020 will be the year the PCPs wake up and realize that they can earn more and be happier working independently of health systems. 

As a result, payers will try to tempt PCPs to break free by offering them higher reimbursement, start-up capital, and even subsidized office space and technology. 

We also think that we will begin to see a reprise of the 1990s with lower margin health systems tiring of losing money on their employed doctors and offer to sell them back their practices for peanuts.

We hope that this gave you a glimpse into our minds and piqued your curiosity. We look forward to seeing what happens. Until then, wishing you all a happy holiday season and 2020.

Bob Kocher and Bryan Roberts are both health care investors and partners at the venture capital firm Venrock.

Health Care Investors Predict 10 Ways the Industry Will Change in 2020 was originally published on Fortune.