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The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Healthcare & Life Sciences Private Equity Deal Tracker: Syndax Secures $80 Million in Financing

Posted in Healthcare Services Investing

Syndax Pharmaceuticals has announced (pdf) it has secured $80 million in series C financing.

Syndax, based in Waltham, Mass., is a clinical stage biopharmaceutical company. It is developing entinostat, an investigational, targeted, epigenetic immunomodulator, as a combination therapy in multiple cancer indications with an initial focus on tumors that have shown sensitivity to immunotherapy, including lung cancer, melanoma and triple negative breast cancer.

The financing round was led by Fidelity Management & Research Company and Delos Capital Fund. It involved participation with several other new and existing investors.

The company indicated the proceeds from the financing will go toward funding the continued development of entinostat.

Investors’ Interest In Dermatology Is More Than Skin-Deep

Posted in Healthcare Services Investing

Incidences of skin cancer in the United States have increased over the past 30 years, especially among patients over the age of 60. As of 2014, 42 percent of dermatology patients were over the age of 60, and the U.S. Department of Health and Human Services estimates this percentage will continue to increase until 2030. As a result of this growing demand for dermatology services, the dermatology subsector is expected to grow to $13.1 billion by 2017. Unsurprisingly, the growing number of dermatology patients, coupled with the fact that skin cancer has become one of the most costly Medicare diagnoses (accounting for roughly $2.9 billion in Medicare charges annually), has increased the profitability of dermatology practices across the country.   In our recent Law360 column, we discuss investors’ interest in dermatology platforms, which is driven in part by this growth in the dermatology sector.

View the Law360 column “Investors’ Interest In Dermatology Is More Than Skin-Deep” (pdf).

Healthcare & Life Sciences Private Equity Deal Tracker: Wave Life Sciences Secures $66 Million in Financing

Posted in Healthcare Services Investing

WAVE Life Sciences has announced (pdf) it has secured $66 million in series B preferred stock financing.

WAVE Life Sciences, based in Boston, is a genetic medicine company focused on developing stereopure nucleic acid therapies for patients impacted by rare diseases.

The round was led by new investor Foresite Capital. Additional new investors included Fidelity Management and Research Company, New Leaf Venture Partners, Redmile Group, Jennison Associates (on behalf of certain clients), Cormorant Asset Management. RA Capital Management, a lead investor in WAVE’s Series A financing, participated significantly in the series B round, joined by other Series A investor Kagoshima Shinsangyo Sosei Investment.

WAVE indicated it expects to use the proceeds from the series B financing round to continue to evolve its chemistry platform and advance a broad pipeline of stereopure nucleic acid therapeutics, including candidates for Huntington’s disease and Duchenne muscular dystrophy.

Healthcare & Life Sciences Private Equity Deal Tracker: Metacrine Secures $36 Million in Financing

Posted in Healthcare Services Investing

Metacrine has announced it has secured $36 million in funding.

Metacrine, based in San Diego, Calif., is a biotechnology company focused on advancing research in nuclear hormone receptors for treatment of metabolic diseases originated at the Salk Institute for Biological Studies.

The series A financing round included participation from Arch Venture Partners, EcoR1 Capital, Polaris Partners and venBio.

CMS Report Provides Projection of Increases in Health Expenditure Over 2014-2024

Posted in Healthcare Services Investing

In a report authored by CMS’s Office of the Actuary and published in Health Affairs, CMS projected that healthcare spending would grow by an average of 5.8% in the aggregate over 2014-2024. Such a rate is 1.1% higher than the Gross Domestic Product is expected to grow during the same period, but substantially lower than the 9% average rate of increase from 1978-2008.

The report included the following findings:

  • The rate of per-capital premium growth in private plans is expected to slow to 2.8% as a result of marketplace enrollees being somewhat heathier;
  • Over the next 11 years, approximately 19.1 million additional people are expected to enroll in Medicare as baby boomers continue to age;
  • The insured rate is expected to increase from 86% to 92% over the next 11 years; and
  • As a result of increased coverage, aggregated out-of-pocket expenses for the insured and uninsured are projected to decline from 11.6% in 2014 to 10% by 2024.

Deerfield Management Launches $550 Million Healthcare VC Fund

Posted in Healthcare Services Investing

Deerfield Management Co. has announced the launch of a new $550 million healthcare venture-capital fund, Deerfield Healthcare Innovations Fund, L.P.

The firm indicated the new fund will invest in advancements in science that may lead to therapeutic interventions in genetic diseases, cancer and orphan diseases, as well as back new technologies focused on the development of therapeutics and delivery of healthcare.

All of Deerfield Healthcare Innovations Fund’s profits not allocated to investors will be donated to the Deerfield Partnership Foundation, which focuses on charitable purposes to improve the provision of healthcare services to underserved children and investment in healthcare research, including orphan diseases, age-related conditions such as Alzheimer’s disease, and other therapeutic, diagnostic and healthcare service delivery breakthroughs.

Investors in the Deerfield Healthcare Innovations Fund include New York-Presbyterian Hospital, Memorial Sloan Kettering, Seattle Children’s Hospital, Robert Wood Johnson Foundation, Princeton University and Northwestern University.

Deerfield, based in New York, launched in 1994 with $17 million in equity. Today, the firm manages funds in excess of $5 billion.

MPT to Acquire GTCR-Backed Capella; Shows Value Added for PE in Hospital Space

Posted in Healthcare Services Investing

Medical Properties Trust (MPT) has announced it will acquire Capella Healthcare for $900 million in cash.

MPT is a Birmingham, Ala.-based self-advised real estate investment trust. Capella is one of the largest for-profit hospital companies in the U.S. Based in Franklin, Tenn., Capella owns and/or operates seven hospitals across five states in three U.S. regions. These facilities have 1,169 beds and occupy 2.0 million square feet.

Capella is presently owned by funds affiliated with GTCR, a Chicago-based private equity firm. Capella has partnered with GTCR since its founding in 2005.

The $900 million total value of the transactions will be comprised of a $600 million investment allocated to Capella’s real estate interests and a $300 million investment allocated to Capella’s operating entities, which is expected to be jointly owned by MPT and Capella management.

The transaction is expected to be finalized during the second half of 2015.

Healthcare & Life Sciences Private Equity Deal Tracker: Oncobiologics Secures $31 Million in Financing

Posted in Healthcare Services Investing

Oncobiologics has announced it has secured $31 million in funding.

Oncobiologics, based in Cranbury, N.J., is a biopharmaceutical company focused on developing and commercializing monoclonal antibody biosimilar therapeutics.

The investment round was led by new investor Perceptive Advisors. Participating new investors included Cormorant Global Healthcare Master Fund, Longwood Capital Partners and venBio Select Fund. Other investors included Proximare Lifesciences Fund, OSSB Pharma Fund and MIH Fund.

Oncobiologics indicated the financing would go toward supporting continued development and expansion of the company’s proprietary BioSymphony biosimilar platform and advancement of preclinical and clinical programs.

NaviMed Capital Closes New $110 Million Healthcare PE Fund

Posted in Healthcare Services Investing

NaviMed Capital has announced (pdf) the closing of its inaugural healthcare private equity fund, NaviMed Partners, LP.

The fund has more than $110 million of total capital commitments.

NaviMed Capital, based in Washington, D.C., is focused exclusively on the healthcare industry. More specifically, it invests in lower middle-market healthcare companies providing healthcare services, healthcare IT, hospital products and distribution businesses.

The new fund made its initial investment in October 2014 in Lucent Health Solutions, a healthcare risk management company.

NaviMed typically invests in profitable private companies with up to $10 million of EBITDA and double digit revenue growth.

Aetna to Acquire Humana for $37 Billion

Posted in Healthcare Services Investing

Aetna will acquire Humana for a combination of cash and stock valued at $37 billion, according to a joint news release from the two insurers.

According to data supplied by the companies (pdf), Aetna is the larger of the companies, with 23.67 million medical members to Humana’s 9.77 million. Aetna also has a larger dental insurance business, with 15.56 million members, compared with Humana’s 3.89 million.

In 2014, Aetna reported total revenue of $58 billion, while Humana reported revenue of $48.5 billion. Aetna reported a net income of $2.04 billion in 2014, compared with Humana’s $1.15 billion.

As Modern Healthcare notes, the deal must still survive antitrust review. The merger is presently expected to close in the second half of 2016.

If the merger is approved, the company would become the second largest managed care company in the United States, trailing only UnitedHealth Group.