1 Global Healthcare Report Q2 2019 W HA T I S C B I N S I G H T S ? CB Insights is a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships, and news mentions to help you see tomorrow’s opportunities, today. CLICK HERE TO LEARN MORE 3 T R U S T E D B Y T H E W O R L D ’ S L E A D I N G C O M P A N I E S “We use CB Insights to find emerging trends and interesting companies that might signal a shift in technology or require us to reallocate resources.” Beti Cung, Corporate Strategy, Microsoft October 2-3, 2019 New York, NY events.cbinsights.com/future-of-health 5 Contents 8 Q2’19 Investment Trends Quarterly Deals & Dollars Regional Trends Q2’19 Top VC-Backed Digital Health Deals Digital Health Unicorns 66 28 Q2’19 Healthcare Industry Highlights Clinical Trials Women’s Health Cannabis AI Mental Health & Wellness Genomics Digital Therapeutics Appendix: Most Active Digital Health Investors Q2’19 Methodology 6 Hemp/CBD startups take a record 25% of cannabis funding: In Q2'19, 27 (25%) of the 107 cannabis deals were for startups with a hemp and/or CBD business component. That compares to only 11 (15%) of the 73 deals in Q2’18. AI in healthcare startups and mental health & wellness startups reach funding highs in Q2’19: Healthcare AI companies raised $864M in the second quarter, led by a $200M round to Tempus in May. Mental health & wellness companies raised $321M across 26 deals, with large rounds going to Quartet and Talkspace. The application of emerging technologies in genomics is picking up: New platforms such as telegenomics and blockchain-enabled networks are becoming more prevalent. Digital therapeutics continue to provide new avenues of treatment for chronic disease management: This quarter has seen deals going to startups pursuing more specific health issues such as joint pain and respiratory disorders. First Round Capital and Jumpstart Foundry participated in the most digital health rounds in Q2’19: Overlapping targets for the top investors included CureFit and SigTuple. Other leading digital health investors included Chiratae Ventures, Civilization Ventures, and Perceptive Advisers. Note: This report focuses on equity rounds to VC-backed healthcare companies. This report does not cover companies funded solely by angels, private equity firms, or any debt, secondary, or line of credit transactions. All data is sourced from CB Insights. Summary of findings H1’19 saw a first half record in both deals and dollars: The amount invested in healthcare companies globally rose to $26.9B in H1’19 compared to $26.5B in H1’18. Over the same period, deals increased from 2,223 to 2,258. The second quarter saw funding decline in Asia, North America, and Europe: Healthcare funding to Asia-based companies dropped 39% in Q2’19, while North America and Europe funding levels were also down. Digital health funding is on the rise for the second straight quarter: Total digital health funding was $3.5B, up 23% versus Q1’19. There were 371 digital health deals compared to 354 in the first quarter. Massachusetts takes over as the #2 US state for digital health deals: Massachusetts- based companies raised 29 rounds in Q2’19, taking over the number 2 spot from New York (24) but still far behind California (85 deals). There are 38 VC-backed digital health unicorns worth a combined $90.7B: The cohort’s total valuation in 2019 continues to grow as a result of continued mega- rounds to existing unicorns, such as Tempus and Doctolib, among others. Q2’19 clinical trial deals went to startups expediting patient recruitment and enrollment: From recruitment marketplaces to provider tools, we continue to see increased offerings for the healthcare industry to revamp this area. GET ALL THE DATA USED IN THIS REPORT Clinical Trials Collection Women’s Health Collection Cannabis Collection Artificial Intelligence in Healthcare Collection Mental Health and Wellness Collection Genomics Collection Digital Therapeutics Collection #AhaCBI Global Healthcare Investment Trends 9 $31,070 $39,667 $59,538 $26,914 3,322 3,810 4,395 2,258 2016 2017 2018 2019 Amount ($M) Deals Deal count projected to reach all-time high in 2019 Annual global VC-backed healthcare deals and financing, 2016 – Q2’19 ($M) G L O B A L H E A L T H C A R E O N T H E R I S E I N 2 0 1 9 Deal count and funding projections are based on run rate for H2’19. 2019 run rate 4,516 $53,829 10 2019 is off to a record start in deals and dollars First half global VC-backed healthcare deals and financing, 2016 – 2019 ($M) T H E F I R S T H A L F O F 2 0 1 9 S A W R E C O R D H I G H S $15,342 $19,111 $26,499 $26,914 1,690 1,846 2,223 2,258 H1'16 H1'17 H1'18 H1'19 Amount ($M) Deals 11 Global healthcare activity near record highs Quarterly global VC-backed healthcare deals and financing, Q1’16 – Q2’19 ($M) H E A L T H C A R E D E A L S R I S I N G I N 2 0 1 9 $8,442 $6,900 $8,074 $7,655 $9,252 $9,858 $10,532 $10,025 $12,262 $14,237 $15,983 $17,056 $14,719 $12,196 893 797 824 808 942 904 991 973 1,016 1,207 1,153 1,019 1,111 1,147 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Amount ($M) Deals 12 Asian funding fell 39% quarter-over-quarter Global VC-backed healthcare funding by continent, Q1’18 – Q2’19, ($M) Other Europe North America Asia $8,244 $8,736 $9,805 $14,120 $8,743 $8,280 $2,648 $3,625 $4,652 $1,606 $4,218 $2,570 $1,348 $1,810 $1,483 $1,280 $1,708 $1,198 $23 $65 $39 $49 $49 $148 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Other category includes Africa, South America, and Australia. 13 Mixed results for activity across continents Global VC-backed healthcare deals by continent, Q1’18 – Q2’19 Note: Charts not to scale 0 100 200 300 400 500 600 700 800 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 North America Asia Europe 0 5 10 15 20 25 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Africa Australia South America Deals #AhaCBI Global Digital Health Investment Highlights 15 Digital health represents 32% of healthcare deals as pharma accounts for growing proportion of deal share * Digital health accounted for 32% of deals in both Q1 and Q2 D I G I T A L H E A L T H T A K I N G A S M A L L E R P I E C E O F T H E P I E 63% 37% 2016 64% 36% 2017 67% 33% 2018 68% 32% 2019 YTD* Digital health All other healthcare Annual global healthcare deals, 2016 – Q2’19 16 Digital health activity up for consecutive quarters Quarterly global VC-backed digital health deals and financing, 2016 – Q2’19 ($M) D I G I T A L H E A L T H D E A L S P I C K I N G U P $2,685 $2,770 $1,652 $1,983 $2,751 $3,307 $2,102 $2,393 $3,503 $3,629 $4,858 $2,787 $2,843 $3,509 356 288 278 336 342 352 371 321 350 445 391 305 354 371 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 17 Later-stage deal share increasing as space matures Quarterly global VC-backed digital health deals and financing, 2016 – Q2’19 L A T E R - S T A G E D E A L S A R E H E A T I N G U P Later-stage deals defined as Series C or later. 18 North America furthers digital health dominance Global VC-backed digital health deals by continent, Q1’18 – Q2’19 Note: Charts not to scale 185 218 199 144 181 195 74 120 99 80 70 74 69 73 76 59 77 78 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 North America Asia Europe 2 5 2 5 2 2 4 7 0 0 8 5 0 2 3 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Africa Australia South America 19 Japan, South Korea, and Sweden are among emerging countries in digital health Includes countries with 20+ digital health deals since 2016. D I G I T A L H E A L T H D E A L C O U N T B Y C O U N T R Y 3 Deals 50+ Deals Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Australia 5 5 5 7 4 5 4 7 8 4 Belgium 3 3 4 3 4 Brazil 7 3 4 3 Canada 4 9 7 8 5 11 12 5 16 12 12 6 13 9 China 27 16 17 18 16 16 28 44 29 55 43 42 24 26 Finland 4 5 3 France 4 3 6 9 6 7 12 9 9 9 8 14 13 Germany 7 4 8 8 7 16 11 7 5 15 9 4 6 India 24 14 11 16 14 18 16 11 17 21 18 5 8 18 Ireland 4 3 5 4 3 4 Israel 5 5 3 4 3 4 3 4 8 7 3 4 Japan 4 4 3 5 8 15 13 11 8 9 Netherlands 3 3 3 3 5 6 4 3 Russia 4 3 3 3 3 5 3 Singapore 3 5 5 6 5 4 South Korea 5 4 5 4 4 8 5 11 9 10 12 14 10 Spain 5 6 5 4 6 3 3 Sweden 5 6 4 10 9 12 6 5 13 9 3 9 13 Switzerland 3 3 United Kingdom 13 7 13 19 20 16 22 19 24 16 20 15 25 17 United States 207 183 177 181 189 196 202 149 169 205 185 136 168 186 20 California deals bounce back after two down quarters M A S S A C H U S E T T S O V E R T A K E S N E W Y O R K F O R T H E # 2 S P O T Total Deal Count78 81 63 65 90 78 69 77 71 87 87 47 52 85 19 18 17 38 25 21 34 30 27 31 14 19 18 29 40 22 27 22 24 27 22 25 33 40 20 21 28 24 0 10 20 30 40 50 60 70 80 90 100 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 California Massachusetts New York VC-backed digital health deals by state, Q1’16 – Q2’19 21 Illinois, Pennsylvania, North Carolina among under- appreciated digital health hubs U N I T E D S T A T E S O F D I G I T A L H E A L T H Includes unique companies that have raised funding since 2016. Grey indicates states with fewer than 10 startups. 22 U N I T E D S T A T E S O F D I G I T A L H E A L T H Includes unique financing rounds completed since 2016. New York remains hottest metro area for digital health 0 5 10 15 20 25 30 35 40 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 New York Metro Silicon Valley Boston Metro Los Angeles Metro Top 4 metro areas for digital health deals, Q1’16 – Q2’19 23 Q2’19: 4 digital health mega-rounds total $609M Global number of digital health mega-rounds ($100M+), Q1’18 – Q2’19 D I G I T A L H E A L T H M E G A - R O U N D S M A T C H Q 1 ’ 1 9 3 3 3 3 1 3 2 3 2 1 1 1 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 United States China France India 24 Company Deal Date // Amount Raised Total Disclosed Funding Select Investors Description Jun’19 // $205M $434M DFJ Growth Fund, Founders Fund, G Squared, Google Ventures, Maverick Ventures, New Enterprise Associates, SoftBank Group, Sun Life Financial Provides employers with an integrated software platform that allows them to administer their benefits plans, take better care of their people, and optimize their investments all in one place May’19 // $200M $520M ($3.1B Valuation) Baillie Gifford, Franklin Templeton, New Enterprise Associates, Novo Holdings, Revolution, T. Rowe Price Gathers and analyzes clinical and molecular data at scale for precision medicine Jun’19 // $104M $104M Alexandria Venture Investments, ARCH Venture Partners, Boxer Capital, Illumina Ventures, Jlabs, Menlo Ventures, Venrock Gene therapy company utilizing genomic sequencing for drug discovery Jun’19 // $100M $155M Cenova Ventures, IDG Capital, Matrix Partners China, Source Code Capital, Vision Plus Capital, Welight Capital Weimai is a platform that provides medical services, including online consulting, payment, and appointment scheduling May’19 // $90M $137M Enern, Goldman Sachs, One Peak Partners, Piton Capital, Point Nine Capital, RTAventures, Target Global Platform connecting patients with healthcare professionals Top 10 global digital health deals in Q2’19 4 of the top deals to VC-backed digital health companies were mega-rounds ($100M+) 25 Company Deal Date // Amount Raised Total Disclosed Funding Select Investors Description May’19 // $78M $78M Leerink Transformation Partners, Silversmith Capital Partners Health analytics company that assesses the value of medical technologies May’19 // $75M $299M ($520M Valuation) Accel, Axis Bank, Castle Investments, Epiq Capital, HDFC Bank, InnoVen Capital, Oaktree Capital, Unilever Ventures Healthcare and fitness start-up that offers products and solutions for preventive and curative healthcare, combining engagement, coaching, and delivery through online and offline channels Apr’19 // $74M $141M Agricultural Bank of China, China Pacific Insurance, CITIC Capital, Xiran Capital Mobile healthcare platform that integrates data collection, data analysis, health management solutions, health behavioral intervention, and value-added services Jun’19 // $73M $201M Andreessen Horowitz, Cigna Ventures, Kaiser Permanente Ventures, Norwest Venture Partners, Sanofi Ventures, Wellington Management Digital behavioral medicine company that helps people manage chronic disease May’19 // $65M $65M Meraas, Mindset Ventures, Polymath Ventures, Refactor Capital, SignalFire Utilizes wearable technology to monitor, manage, and diagnose lifestyle diseases Top 10 global digital health deals in Q2’19 (cont.) 26 38 HEALTHCARE UNICORNS $90.7 BILLION G L O B A L L Y T H E R E A R E V A L U E D , I N A G G R E G A T E , A T 27 Switzerland EUROPE $3.2B $1.96B $1B $3.5B NORTH AMERICA $12B Valuation $1.8B $3.1B $3.2B $1B $1B 38 healthcare unicorns valued at $90.7B Global VC-backed health companies with a private market valuation of $1B+ (7/26/19) UNITED KINGDOM $1.5B MIDDLE EAST $1B Valuation ISRAEL $7B $1B $1.2B $1B $1.65B $1.8B $1.25B $2.8B $1B $1B $2B Valuation $1.5B UNITED STATES GERMANY $1.7B $2.5B CHINA ASIA $3B $5.5B Valuation $5B $2.4B $2.4B France $1.1B $3.5B $1.6B $1B $1B $1B $1B #AhaCBI Q2’19 Healthcare Industry Highlights 29 DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS Companies selling AI SaaS to healthcare clients or using AI to develop products for the healthcare market Companies that participate in or service businesses within the growing legal cannabis industry Startups focused specifically on providing healthcare products and services to women Companies working to improve clinical trial operations from drug R&D, study design, patient recruitment, and adherence & compliance Companies applying technology to problems of emotional, psychological, and social well-being Companies involved in the capture, sequencing, and/or analysis of genetic data Tech-enabled out-of-hospital solutions that either complement or replace standard medical treatment for a condition GLOBAL HEALTHCARE REPORT Q2’19 CLINICAL TRIALS MENTAL HEALTH AND WELLNESS 30 DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS HEALTHCARE Q2 2019 CLINICAL TRIALS MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 Clinical Trials Collection 31 Clinical trials tech funding dips below highs VC-backed deals and financing to clinical trials tech startups, Q1’18 – Q2’19 ($M) $241 $301 $176 $104 $223 $168 21 17 13 8 14 9 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 32 Expediting clinical trials through faster patient recruitment Q2’19 Funding: $2.57M Series A Investor: One Way Ventures UK-based Citruslabs develops an end-to-end solution for clinical trials – specifically with patient recruitment and retention. It operates a health-app network with pre- screened candidates, facilitating a faster process for study investigators. It has partnerships with NYU, the UK’s NHS, and the University of Glasgow. Its mobile app, called MindMate, is specifically for the baby boomer generation in order to increase their participation in clinical trials. It offers content around their daily routine such as physical exercises, nutrition, and brain games. Pre-screening is also done through the app. H I G H L I G H T # 1 F A S T E R P A T I E N T R E C R U I T M E N T 33 SubjectWell provides patient recruitment services for trial sites, pharmaceutical companies, and clinical research organizations (CROs). It works to accelerate patient enrollment for trials through its marketplace of potential patients. It provides this service through education campaigns and telephone-based prescreening. Clients pay for this service only when patients randomize into trials. Select investors Geekdom Fund, Healthy Ventures, Windham Venture Partners Q2’19 Funding $10M Series A H I G H L I G H T # 2 A P A T I E N T R E C R U I T M E N T M A R K E T P L A C E 34 Bringing more options directly to providers or study sponsors Q2’19 funding: $20M Series C Select investors: Hatteras Venture Partners, Noro-Moseley Partners, Piper Jaffray Elligo Health Research develops software that physicians and study sponsors can use to bring clinical research to eligible patients faster, using EHR-connected data. It also aims to make this platform available to more local physicians in order to cater to a wider population of patients. Q2’19 funding: $14M Series A Select investors: Sierra Ventures, Northpond Ventures, Tamarind Hill Deep Lens uses an AI-based digital pathology platform – known as Deep Lens VIPER – to help care teams find and recruit eligible patients for clinical trials. Its goal is to identify them at the time of diagnosis, which differs from the traditional method of patient recruitment. EHR DATA PATHOLOGY H I G H L I G H T # 3 G I V I N G P R O V I D E R S M O R E O P T I O N S 35 Women’s Health Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS CLINICAL TRIALS HEALTHCARE Q2 2019 MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 36 Women’s health deals continue strong in 2019 VC-backed deals and financing to women’s health startups, Q1’18 – Q2’19 ($M) $43 $129 $445 $97 $311 $284 22 37 42 27 41 33 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Amount ($M) Deals 37 Disrupting traditional fertility services with tech-enabled platforms Q2’19 funding: $15M Series A Select investors: RRE Ventures, Green D Ventures, Trail Mix Ventures Kindbody provides fertility services such as egg freezing and IVF (in-vitro fertilization) along with an emphasis on wellness. It offers an accessible pricing structure and a tech layer. Q2’19 funding: $12M Series A Select investors: Dubin & Co., Special Situations Funds TMRW is a robotic cryo-management platform for IVF. It aims to use robotic process automation (RPA) for reducing risk of misdirected eggs/embryos while also automating environmental health checks for these stored cells. Fertility + wellness Fertility cryostorage H I G H L I G H T # 1 F E R T I L I T Y S E R V I C E S 38 H I G H L I G H T # 1 ( C O N T ’ D ) A C C E S S I B L E F E R T I L I T Y T E S T S C U T O U T E X P E N S I V E C L I N I C V I S I T S Modern Fertility develops a fertility hormone test that measures women’s AMH (Anti-Müllerian hormone) levels – a hormone marker for measuring ovarian reserve. Aside from AMH, it also measures other hormone levels to provide a more comprehensive window into their fertility. It has also added a Timeline Tool, which allows users to customize their individual plans for having kids. The platform provides a fertility score (FEMI beta) based on their age, hormone levels, and health information that they can keep track of over time. Select investors Forerunner Ventures, Y Combinator, First Round Capital, BoxGroup, Union Square Ventures Q2’19 funding $15M Series A 39 Maternal care gets a makeover with connected devices Q2’19 funding: $42M Series B round Select investors: Impact Ventures UK, IPGL, Octopus Ventures Focus: UK-based Elvie develops smart devices connected to mobile apps for new mothers. Its wearable breast pump launched in Sept 2018. Elvie also develops a Kegel trainer for weakened pelvic floor muscles. Q2’19 funding: $70K seed round Select investors: Sustainable Health Initiative Focus: India-based JioVio provides maternal care through its IoT devices combined with telemedicine software. The company currently offers 6 products that target different aspects of navigating maternal and child care along with general health. Q2’19 funding: $2.48M financing round Select investors: Undisclosed Focus: Raydiant Oximetry develops diagnostics technology to improve fetal monitoring during pregnancy in order to provide more care and support. It received an FDA Breakthrough Device status in October 2018 for this noninvasive technology that monitors the baby’s oxygenation. FETAL MONITORING BREASTFEEDING PREGNANCY TRACKERS H I G H L I G H T # 2 M A T E R N A L C A R E 40 The direct-to-consumer (D2C) strategy makes a splash in women’s health D2C telehealth company Ro recently launched its women’s health brand – called Rory – which targets solutions for women experiencing menopause. It aims to provide products that address specific symptoms associated with menopause such as vaginal dryness and hot flashes. Q2’19 Funding: $85M Series B round Investors: Undisclosed H I G H L I G H T # 3 D 2 C H E A L T H 41 Cannabis Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS CLINICAL TRIALS HEALTHCARE Q2 2019 MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 42 Cannabis deals and dollars near record in Q2’19 VC-backed deals and financing to cannabis startups, Q1’18 – Q2’19 ($M) $456 $271 $610 $1,297 $666 $1,026 84 73 96 128 105 107 $(100.0) $100.0 $300.0 $500.0 $700.0 $900.0 $1,100.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 43 Hemp and CBD startups are becoming a larger portion of cannabis deal flow % of equity deal count by quarter, Q1’14 – Q2’19 H I G H L I G H T # 1 H E M P & C B D Other cannabis startups Hemp/CBD startups 5% 8% 12% 17% 8% 9% 9% 16% 18% 8% 7% 8% 10% 15% 13% 14% 23% 25% 100% 95% 92% 88% 83% 92% 91% 97% 91% 84% 97% 98% 82% 92% 93% 92% 90% 85% 87% 86% 77% 75% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2017 2018 2019 44 Illinois became the 11th state to legalize cannabis By 2023, its cannabis market could be 9x its current size, making it the 5th largest in the US ($1.3B). We expect to see continued consolidation as large cannabis companies enter the Illinois market. 2022 cannabis market size estimates H I G H L I G H T # 2 L E G A L I Z A T I O N 45 PAX provides internet-connected vaporizers that allow users to track potency of consumed cannabis. Q2’19 Series E: $420M Round investors: Tao Capital Partners, Tiger Global Management, Redmile Group, Prescott General Partners H I G H L I G H T # 3 P A X R A I S E S A M E G A - R O U N D Total Funding $545M Valuation $1.7B SIMILAR COMPANIES $3.5M raised $72.0M N/A 46 Artificial Intelligence in Healthcare Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS CLINICAL TRIALS HEALTHCARE Q2 2019 MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 47 AI in healthcare funding reaches a high in Q2 VC-backed deals and financing to healthcare AI startups, Q1’18 – Q2’19 ($M) $544 $764 $696 $517 $579 $864 54 81 57 52 78 75 0 10 20 30 40 50 60 70 80 90 $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Amount ($M) Deals 48 Company Deal Date // Amount Raised Total Disclosed Funding Select Investors Description May’19 // $200M $520M Franklin Templeton Investments, New Enterprise Associates, Novo Holdings, Revolution Gathers and analyzes clinical and molecular data at scale for precision medicine Jun’19 // $76M $130M ARCH Venture Partners, Google Ventures, Johnson & Johnson Innovation, Scripps Research Institute Neurobehavioral health company using AI technologies to develop targeted therapeutics for treating brain disorders Jun’19 // $67M $67M Data Collective, Deerfield Management, DROIA Oncology Ventures, MPM Capital, RA Capital Management AI platform that integrates advanced computational approaches and machine learning to develop medicines for disease- causing proteins Apr’19 // $60M $94M 8VC, DHVC, General Atlantic, General Catalyst, KdT Ventures, Pillar, and Refactor Capital AI-powered research tools and services for pathology May’19 // $53M $74M Shumway Capital Machine Learning-based platform to identify microbial agents Top rounds to healthcare AI startups, Q2’19 H I G H L I G H T # 1 B I O T E C H A I S T A R T U P S D O M I N A T E T O P R O U N D S 49 Siemens, GE, Philips among top patent applicants Source: CB Insights patent analytics, based on keyword searches of title and abstract. Date reflected is patent filing date. Patterned column(s) may show a decline due to a delay between patent filing and publication. H I G H L I G H T # 2 H E A L T H C A R E A I P A T E N T S H E A T U P 50 More money is flowing to medical image processing Q2’19 Funding: $60M Series B Select Investors: 8VC, DHVC, General Atlantic, General Catalyst, KdT Ventures, Pillar, Refactor Capital Focus: PathAI provides AI-powered research tools and services for pathology. PathAI's platform promises substantial improvements to the accuracy of diagnosis and the efficacy of treatment of diseases like cancer, leveraging modern approaches in machine and deep learning. Q2’19 Funding: $16M Series C, $1.6M Series C - II Select Investors: Accel, Chiratae Ventures, pi Ventures, Smilegate Investment, Trifecta Capital, Trusted Insight Focus: SigTuple uses artificial intelligence to develop hardware and software products to digitize pathology test results for hospitals and clinics. Q2’19 Funding: $5.2M Series A Select Investors: Kickstart Ventures, Philips, UOB Venture Management Focus: Lifetrack Medical Systems is a teleradiology startup that makes it easy to interpret radiology readings for medical diagnosis. The company's radiology software platform pairs hospital residents with experienced radiologists who help evaluate medical images and send their reports. H I G H L I G H T # 3 A I I S G O I N G A F T E R R A D I O L O G Y A N D P A T H O L O G Y 51 Mental Health and Wellness Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS MENTAL HEALTH AND WELLNESS CLINICAL TRIALS HEALTHCARE Q2 2019 GLOBAL HEALTHCARE REPORT Q2’19 52 Mental health & wellness funding sets quarterly record VC-backed deals and financing to mental health & wellness startups, Q1’18 – Q2’19 ($M) $170 $227 $74 $94 $202 $321 26 25 23 18 22 26 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 53 IBM, WellDoc among top patent applicants Source: CB Insights patent analytics, based on keyword searches of title and abstract. Date reflected is patent filing date. Patterned column(s) may show a decline due to a delay between patent filing and publication. H I G H L I G H T # 1 M E N T A L A N D B E H A V I O R A L P A T E N T S A R E O N T H E R I S E 54 Top investors are flocking towards mental and behavioral health Q2’19 Funding: $60M Series D Select Investors: Centene, F-Prime, Google Ventures, Oak HC/FT, Polaris Partners Focus: Quartet Health is a behavioral health technology company that has developed a suite of products to increase access to behavioral health resources. The company hopes to lower costs by aligning payers, behavioral health clinicians, medical providers, and patients. Q2’19 Funding: $9M Series A Select Investors: Afore Capital, Jared Leto, Kleiner Perkins, Y Combinator Focus: Modern Health is a mental health benefits platform for employers. The company covers the full spectrum of mental well-being needs through both evidence- based technology and professional support from a coach or therapist. Q2’19 Funding: $50M Series D Select Investors: Compound, Norwest Venture Partners, Revolution, Spark Capital Focus: Talkspace is a telebehavioral healthcare company. Its psychotherapy product connects individual users with a network of licensed therapists through a HIPAA-compliant web and mobile platform. Users can send therapists unlimited text, video, picture, and audio messages. H I G H L I G H T # 2 M E N T A L A N D B E H A V I O R A L H E A L T H G O E S V I R T U A L 55 Vida Health’s $30M raise includes partnerships with Teladoc, Guidewell, and Workday Last Funding $30M Series C // Q2’19 Total Funding $53M + Vida Health offers systems for managing both behavioral and physical chronic health conditions. Vida’s systems include digital therapeutics, digital communication with live coaches, and remote monitoring devices. Select Investors Aspect Ventures, Canvas Ventures, Guidewell, NGP Capital, Teladoc Health, Workday Ventures, Khosla Ventures Bundled solutions for virtual and chronic care offerings Adding Florida Blue as customer + focusing on comorbidities Single sign-on integration between Vida and the Workday system + + H I G H L I G H T # 3 P A R T N E R S H I P S A L O N G W I T H F I N A N C I N G S D R I V E A D O P T I O N 56 Genomics Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS CLINICAL TRIALS HEALTHCARE Q2 2019 MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 57 Genomics deals see slight dip in Q2’19 VC-backed deals and financing to genomics startups, Q1’18 – Q2’19 ($M) $989 $637 $1,132 $421 $748 $638 45 44 59 47 54 48 $- $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 58 AI & blockchain applications begin to rise in genomics Q2’19 funding: $16.8M Series A Select investors: Korea Asset Investment Securities Co., Altos Ventures, Saehan Venture Capital Focus: South Korea-based Syntekabio leverages genomics, AI, and computational biology for drug discovery and development. One of its key products includes a “tiny genes” test, which is a gene panel kit for detecting neonatal genetic disorders. Q2’19 funding: $4.6M Series B Select investors: ARCH Ventures Partners, Bain Capital Ventures, F-Prime Capital Focus: Luna DNA develops a genomic database where individuals can share their respective genomic information on its decentralized blockchain network. By doing so, users can earn Luna Coins, which represent shares of ownership. A R T I F I C I A L I N T E L L I G E N C E B L O C K C H A I N H I G H L I G H T # 1 E M E R G I N G T E C H I N G E N O M I C S 59 Genomic medicine becomes more widely accessible Telegenomics company Genome Medical aims to make genomic medicine more accessible for individuals and for healthcare stakeholders (health systems, providers, and employers). For instance, it allows patients to schedule virtual consultations and for providers to seek out genetic expertise through the platform. Q2’19 funding: $23M Series B round Select investors: Canaan Partners, Casdin Capital, Illumina Ventures, Kaiser Permanente Ventures, GE Ventures H I G H L I G H T # 2 T E L E G E N O M I C S 60 Tempus develops an AI-enabled precision medicine software based on its collection and analysis of clinical and molecular data. It uses sequencing technology to get in-depth molecular and genomic data to help identify the right treatments or clinical trials for patients. Other unstructured data sets are also used to deliver treatment options and additional insights. Select investors New Enterprise Associates, Novo Holdings, Revolution, Baillie Gifford & Co. Q2’19 funding $200M Series F H I G H L I G H T # 3 G E N O M I C S F O R P R E C I S I O N M E D I C I N E 61 Digital Therapeutics Collection DIGITAL THERAPEUTICS WOMEN’S HEALTH AI CANNABIS GENOMICS CLINICAL TRIALS HEALTHCARE Q2 2019 MENTAL HEALTH AND WELLNESS GLOBAL HEALTHCARE REPORT Q2’19 62 Digital therapeutics deals bounce back in Q2’19 VC-backed deals and financing to digital therapeutics startups, Q1’18 – Q2’19 ($M) $145 $278 $295 $100 $107 $293 12 15 21 9 11 22 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 63 Chronic disease management through digital therapeutics Q2’19 funding: $30M Series C Select investors: Aspect Ventures, Teladoc Health, NGP Capital Vida develops personalized evidence-based programs that cater to various health conditions. It uses mobile apps, devices, coaching, and personalized content to drive behavioral changes. It offers both individual & enterprise plans. Q2’19 funding: $35M Series B Select investors: Sequoia India, MassMutual Ventures, EDBI Biofourmis develops a connected platform using software and medical sensors in order to monitor a patient’s health and predict potential issues that may arise. It works with payers, providers, biopharmaceutical, and the med tech industries. Targeting behavioral changes Predicting health problems H I G H L I G H T # 1 D I G I T A L T H E R A P E U T I C S T A R G E T C H R O N I C D I S E A S E S 64 New applications of emerging technologies in digital therapies Q2’19 funding: $8.94M Series A Select investors: Sabadell Asset Management, Smartech Capital, Caixa Capital Risc Spain-based Psious develops VR-based digital treatments for behavioral & mental health issues. It aims to create more than 70+ therapeutic environments that treat everything from eating disorders to ADHD (Attention Deficit Hyperactivity Disorder). Q2’19 funding: $16M Series A Select investors: M Ventures, MP Healthcare Venture Management, PureTech Health Spun out of PureTech Health, Sonde Health uses voice-based technology to monitor and diagnose health conditions. Using voice as a biomarker for analyzing brain, muscle, and health measurements, the company intends to focus on neurological, respiratory, and cardiovascular diseases. V I R T U A L R E A L I T Y ( V R ) V O I C E T E C H H I G H L I G H T # 2 N O V E L T E C H N O L O G I E S A R E C O M I N G T O D I G I T A L T H E R A P E U T I C S 65 Q2’19 funding: $3M Series A Investors: Industrifonden, Investment Spiltan Focus: Sweden-based NuvoAir develops a respiratory diagnostic tool (portable spirometer) connected to a mobile app that tracks lung health. Q2’19 funding: $21M Series C Investors: Khosla Ventures, Rethink Impact, Dai-ichi Life Insurance Focus: Neurotrack Technologies develops digital products for cognitive health, including one for those diagnosed with Alzheimer’s Disease. MUSCULOSKELETAL Q2’19 funding: $8M Series A Investor: Khosla Ventures Focus: SWORD Health develops “a digital therapist” platform for treating musculoskeletal disorders. It combines this with real physical therapists and a clinical team for a comprehensive level of care. NEUROLOGICAL RESPIRATORY Digital therapeutics are spreading to more therapeutic areas H I G H L I G H T # 3 M O R E H E A L T H I N D I C A T I O N S A R E B E I N G P U R S U E D #AhaCBI Most Active Digital Health Investors 67 The most active digital health VCs in Q2’19 By unique digital health company investments (new or follow-on) Rank Investor Select Digital Health Investments 1 1 2 2 2 68 Rank Investor Select Digital Health Investments 2 2 2 2 By unique digital health company investments (new or follow-on) The most active digital health VCs in Q2’19 * Funded by Illumina’s accelerator * 69 Methodology CB Insights encourages you to review the methodology and definitions employed to better understand the numbers presented in this report. If you have any questions about the definitions or methodological principles used, we encourage you to reach out to CB Insights directly. Additionally, if you feel your firm has been under-represented, please send an email to info@cbinsights.com and we can work together to ensure your firm’s investment data is up to date. What is included: What is excluded: ― Equity financings into emerging healthcare companies. Fundings must be put into VC-backed companies, which are defined as companies who have received funding at any point from venture capital firms, corporate venture groups, or super angel investors. ― Fundings of only private companies. Funding rounds raised by public companies of any kind on any exchange (including Pink Sheets) are excluded from our numbers, even if they received investment by a venture firm(s). ― Only includes the investment made in the quarter for tranched investments. If a company does a second closing of its Series B round for $5M and previously had closed $2M in a prior quarter, only the $5M is reflected in our results. ― Round numbers reflect what has closed — not what is intended. If a company indicates the closing of $5M out of a desired raise of $15M, our numbers reflect only the amount which has closed. ― Only verifiable fundings are included. Fundings are verified via various federal and state regulatory filings, direct confirmation with firm or investor, or press release. ― For the purposes of this report, digital health is defined as companies in the healthcare space that use technology/software as a key differentiator vs. their competition. This includes everything from disease diagnostics and management, health insurance built on a new tech infrastructure, to AI tools for drug discovery, and more. ― Categories are not mutually exclusive (for example, a company that applies AI to genomics would be included in both categories). Criteria for categories can be found on page 29. — No contingent funding. If a company receives a commitment for $20M subject to hitting certain milestones but first gets $8M, only the $8M is included in our data. — No business development/R&D arrangements, whether transferable into equity now, later, or never. If a company signs a $300M R&D partnership with a larger corporation, this is not equity financing, nor is it from a venture capital firm. As a result, it is not included. — No buyouts, consolidations, and/or recapitalizations. All three of these transaction types are commonly employed by private equity firms and are tracked by CB Insights. However, they are excluded for the purposes of this report. — No private placements. These investments, also known as PIPEs (Private Investment in Public Equities), are excluded even if made by a venture capital firm(s). — No debt/loans of any kind (except convertible notes). Venture debt or any kind of debt/loan issued to emerging startup companies, even if included as an additional part of an equity financing, is not included. If a company receives $3M with $2M from venture investors and $1M in debt, only the $2M is included. — No government funding. Grants, loans, or equity financings by the federal government, state agencies, or public-private partnerships to emerging startup companies are not included. The CB Insights platform has the underlying data included in this report CLICK HERE TO SIGN UP FOR FREE W H E R E I S A L L T H I S D A T A F R O M ?