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Edition 3 — May 5, 2021
Good morning, 

Routine is slowly setting in with our third edition of MedTech Pulse. We are therefore very interested in your opinion and criticism. Please get in touch and send us your thoughts on what can and needs to be better. 🙏

And now for the content: Last week, a post by Peter Junghans made the rounds in the German-speaking digital health community, showing that investment in German digital health startups is comparatively hesitant. The approximately $100 million invested in German digital health startups in Q1 2021 is less than 1.5% of the $7.2 billion invested in U.S. companies during the same period. 

These numbers show that Germany and the EU still have a lot of homework to do in terms of venture capital, cross-border regulation, and entrepreneurial spirit. All the more positive are the encouraging news of Kaia Health's $75M Series C round, Caresyntax's $100m Series C round, and Endeavour Vision's new €290M Medtech Growth fund in the last two weeks. Keeping that in mind, in today's edition you will find:
  • An overview of the global telehealth craze in recent months,
  • news about mostly US-based AI startups, and 
  • an interview with Kry’s Germany MD Daniel Schneider
Thank you for reading. Let's go.

RECORD INVESTMENTS AND MARKETS ENTRANTS FROM ALL SIDES UNDERLINE THAT TELEHEALTH IS HERE TO STAY

Illustration by Mary Delaney

The telemedicine race fueled by the COVID-19 pandemic continues. Startups as well as established players from the healthcare industry and beyond are racing each other for innovation, venture capital, and customer access. According to CB Insights’ State Of Healthcare Q1’21 Report, telemedicine investment reached $4.2 billion in just 139 deals in Q1/21, a record-breaking quarter that gave birth to 6 new telehealth unicorns. And the story continues: In late April, Stockholm-based telehealth startup Kry secured €262 million to accelerate its European expansion. In the U.S., Seattle-based healthcare delivery platform Accolade is buying PlushCare, a virtual primary care startup, for $450 million. Best Buy is considering offering in-home health devices & services. And even wireless carriers like Verizon and T-Mobile are venturing into the telehealth space through partnerships and acquisitions. 

→ Last week, we showed that telemedicine demand was taken to a new level by the COVID-19 pandemic. These numbers and the developments above support that observation. Telemedicine allows for better patient care (in primary care but also in rehabilitation) and creates more frequent contact points between doctor and patient - a point not to be neglected. Slowly but steadily, the basic understanding of medicine is changing toward value-based practices and away from fee-for-service care. Today, this is possible thanks to the low cost of communication and the broad penetration of the Internet. Low prices, high-quality connections, and an understanding of how to interact and create value and trust in the virtual world ensure that telehealth is here to stay.

We think that the development will continue to expand as clinicians recognize its benefits and patients come to expect them. In part because, in addition to regulatory issues, the biggest problems can currently be addressed with incremental steps: peripheral device integration, translation services, documentation, improved audiovisual quality, usability, connectivity, flexible workflows, and live support are all essential components, but improvements are easy to achieve.

ROAM ROBOTICS INTRODUCES A SOFT KNEE EXOSKELETON 

Image: Roam Robotics

Roam Robotics, a San Francisco-based robotics company, unveiled a $7,000 fabric exoskeletal knee brace for anyone. The robotic, smart knee orthosis called Ascend actively adapts, meaning it recognizes the body's movements, automatically adjusts to the wearer's needs, and provides precise support to target muscle groups. The device is available for pre-order and will ship in late summer this year.

→ Approximately 40% of the global population over the age of 55 suffers from chronic knee pain. Exoskeletons can be a non-invasive alternative to surgery for some patients. However, while Roam's knee brace is a step in the right direction, it will not replace a knee replacement. It certainly helps to reduce the load and therefore the pain, but free movement is only possible with a replacement of the joint. Furthermore, the $7,000 price tag needs to drop to be truly attractive to the masses. But Ascend points to a promising future. Osteoarthritis of the knee is one of the most common forms of arthritis with over 200 million symptomatic patients. Ascend is designed to support people in their daily lives, and the lack of electromechanical systems and a metal frame means that the device is more comfortable and lighter. The future of exoskeletons is soft, unobtrusive, and supportive.

STARTUPS SHOW THE POTENTIAL FOR ARTIFICIAL INTELLIGENCE IN HEALTHCARE

Image: Forbes

For the third time, Forbes has released its annual AI 50 list, with the goal of finding startups that best leverage AI for purposes that are fundamental to their respective businesses. Surprisingly, nearly one-fifth of the field works in healthcare:

  • Atomwise (San Francisco), Genesis Therapeutics (Burlingame), Intelligencia (New York City) and Verge Genomics (San Francisco) work in the field of drug discovery.
  • Ezra (New York City) wants to make cancer detection on MRI scans cheaper.
  • Komodo Health (San Francisco) offers mass patient analytics.
  • Nines (Palo Alto) wants to make teleradiology diagnostics more efficient.
  • Viz.ai (San Francisco) uses AI to automatically detect strokes on CTA imaging, and
  • Whisper (San Francisco) offers a new hearing assistance service. 

→ Technological revolutions are followed by periods of adaptation: in the past, AI was considered a toy. Now it is changing workflows and professions. New and successful digital business models are a sign of the approval of established and mature technological infrastructures, and startups are a good proxy for the things to come. AI in healthcare is emerging as a remarkable capability. According to a recent report, the healthcare AI industry could be worth $21 billion by 2026. Whether startup, corporate, or government, today AI supports many decision-making processes and nearly 82% of medtech leaders have indicated AI to be integral to their business. And it is data-driven areas such as drug discovery that are benefiting massively from the increased interest.

Over the past weeks, various reports on the HealthTech and MedTech startup ecosystem have been published (among others by SpeedInvest and Rock Health). According to the State Of Healthcare Report by CB Insights, which is well worth reading, more venture capital was invested in the first quarter of this year than ever before. We were particularly interested in which sectors were responsible for the growth.

It turns out that while Medical Device startups raised the most venture capital, they received less funding than the 2020 average, contrary to the general trend. It's worth noting that the more traditional medical sectors of Omics and Medical Devices dropped slightly while investments in the newer sectors increased massively. The ecosystem growth is largely driven by telemedicine companies (+61.2%). The two verticals of Women's Health and Mental Health are still small compared to the other sectors, but are growing significantly faster than the rest of the ecosystem. 

Dr. Daniel Schneider is General Manager for Kry in Germany. We spoke to Daniel about COVID-19 as a digitization catalyst, the fact that no company alone can change the healthcare system, and why “better done than perfect” was the best advice he ever received.

"The big headline in health care digitalization for me is patient empowerment"

Dr. Daniel Schneider (General Manager Germany, Kry)

Angel
Diagnostics
MiDiagnostics, the developer of an ultra-fast PCR COVID-19 point-of-care test, raised a $69 million angel round in the form of equity from individual investors and a non-dilutive loan from the European Investment Bank. The company is a spin-off of the world-leading nano-electronics research center imec.  
globEnewswire.com (21-04-30) ↗
Series C
EEG
Ceribell, a developer of a non-invasive brain monitor, raised a $53 million Series C financing round co-led by Longitude Capital and The Rise Fund. The company aims to further its commercial presence in emergency departments and intensive care units.
finsmes.com (2021-04-29) ↗
Series C
Surgery
Caresyntax, a Berlin-based digital surgery startup, closed a $100 million Series C funding round led by PFM Health Sciences LP. The company develops algorithms that analyse risk factors during surgery and recognises which steps could lead to critical situations in the operating room.
sifted.eu (21-04-29) ↗
Series C
MSK care
Kaia Health, the Munich-based healthtech startup, has raised a $75 million Series C led by an unnamed leading growth equity fund. The company offers AI-assisted digital therapies for chronic pain related to musculoskeletal (MSK) disorders.
techcrunch.com (21-04-28) ↗
Series D
Pharmacy
Capsule, the NYC-based digital pharmacy operator, has raised $300 million in a Series D funding round led by Durable Capital Partners. The startup is now valued at more than $1 billion and plans to build on its pharmacy offerings with telehealth and mental health services. 
bloomberg.com (21-04-28) ↗
Series B
Surgery
Proximie, a digital surgery startup, announced the completion of its $38 million Series B financing round led by F-Prime Capital. Proximie uses augmented reality to allow a surgeon to remotely watch an operation and use their hands to demonstrate things.
sifted.eu (21-04-21) ↗

Even if we have lost sight of it somewhat during the pandemic, climate change and its consequences are the world's biggest problem. Putting an end to it is a task that we all have to face up to. And I am firmly convinced that we will find solutions. Here is why: Earth Day activity last week was at an all-time high. It’s not only activists who are taking action. More and more politicians, technologists, and business people are recognizing the need and dedicating themselves to the cause. And that gives me confidence.

In addition, if the pandemic has one good thing going for it, it's that many people have come to appreciate the benefits of telecommuting and virtual services like telehealth. This has led to reduced travel and thus a temporary decrease in daily global carbon dioxide emissions. According to an internal study from CommonSpirit Health, switching to virtual care during COVID-19 saved the company 1.7 million gallons of fuel and 15,000 tons of CO2 emissions, which corresponds to 83 railroad wagons worth of coal burned. A study in Spain came to similar conclusions at the end of 2019. It’s a positive second-order effect that now needs to be reinforced.

As is often the case, it's the little things that add up and make a difference. Sustainability is not a spectator sport. Promoting the health and well-being of the community and the planet is fundamental to transforming healthcare. The more we can do to help the planet as a whole, the better it will be for our health and for the well-being of humankind.

Share this newsletter with a friend or colleague if you have enjoyed it. And feel free to get in touch with any criticism or comments. 

Take care and see you in two weeks!