Healthcare is saving the world. Software is eating very little of it.

Healthcare is simultaneously one of the fastest evolving markets, and yet the one market most resistant to change. Global healthcare is so big – $8 trillion – that it can sustain this paradox. 

SOSV just published its Human Health 100, a list of our top healthcare investments. They are very diverse. Here’s how to understand them.

Image on a blue and green background with text SOSV Human Health 100

Over the last decade, historical advancements have been brought to market. The COVID vaccines set a sprint record, 12 months, no longer live-attenuated, deploying mRNA. Mostly, this single healthcare innovation helped the entire global economy get back on its feet. What has that been worth? Tens of trillions. During that time, telehealth grew a massive 38x in market size. We’ve seen psychedelics approved by the FDA, with many more coming, and we’ve cured Hepatitis C. Over 20 cell and gene therapies have been approved. Covalently-bound drugs have succeeded in oncology. So has checkpoint-inhibitor immunotherapy. 2018 was the sharpest one-year drop in US Cancer Deaths ever reported, and now the death rate from cancer is going down 1.5% every year. Meanwhile, we’re living in an apex of drug approvals. In 2008, the FDA rejected ⅔ of novel drugs. By 2015, they approved 23 out of 24. And in 2021, they approved 50. This has rewired the risk economics for the entire sector. 

But we pay for this innovation dearly, as a society. In the US, we pay twice as much to see the doctor but only half as often as most other countries. We pay 2x the price for biologics (at least). Physician burnout is unprecedented; they feel like assembly-line workers. The disease burden on our global economy only goes up, and up. Consumers spend 8 cents of every dollar on healthcare, then the government spends another 24 cents out of every dollar. 11% of all workers now are in healthcare. It’s not software eating the world; as others have noted, it’s healthcare. 

At SOSV, our vantage point is informed by living at the deep tech intersection represented by our startup development programs HAX, IndieBio, and CA/MOX … the Shibuya Crossing of hardware, genetics, and frontier markets. This makes us, well, a little different than most funds. We have the world’s fastest antibody discovery platform (Prellis). We also have the fastest-growing mobile health platform in India (Phable). Meanwhile, HAX launched the fastest growing company in our entire SOSV portfolio, R-Zero, a disinfection robot. It’s not that we are agnostic to how we make medicine better – it’s that we can informatively probe, “of all the ways we can attack this problem, which modality is best?”

In many ways, our portfolio mirrors the macro trends of improving efficiency, automation, and data prediction. Finish all these sentences with “is booming.” Remote care is _______ (Optimize, Ria Health). Lab automation is _______ (OpenTrons, Synthace). AI-assisted medicine is _______. (Mendel.ai). Epigenetics screening is _____ (Chronomics). At-home kidney care is ______ (Qidni, ProtonIntel).

Much has been hyped of the de minimus cost of gene sequencing. Though that hype engenders a false connotation that everyone has equal capacity to access all that data. Haha. Not so fast. Companies such as Gatehouse Bio defy that idea; they use novel, proprietary chemistry to read sRNA isoform signatures and parse disease – in ways invisible to others. Then there’s Biomage, whose software makes sense of metabolomic data faster than a thousand lab techs. And Biomesense, which collects microbiome nucleic acids, daily – the only service of its kind in the world – to solve the microbiome interaction that bedevils immunotherapy. 

For patients, most chronic diagnoses today are “rule-out” processes that take a year. So while there has been considerable hype around non-invasive methods of early detection, at SOSV we recognize these are just screening tests. They define probability, not disease. Meanwhile, most of the healthcare spend is in long-term patient monitoring, measuring the biomarkers that drive regular clinical decision-making. Companies such as DeepSpin (a 20x cheaper MRI), BioRosa (a blood test to score autism), StradosLabs (lung care), Cellens (bladder cancer recurrence) and FeetMe (monitoring senior care), are a few of many great SOSV companies in this space.  

As patients get more informed than ever, consumer health is growing much more sophisticated. Startups can run the playbook to grow a meaningful consumer base before (if ever) targeting disease claims and FDA clearance. Consumers are often so frustrated by their medical system and its “drug everything” approach that they want to take personal control. Markets that are open for this strategy include infertility (Microgenesis), pregnancy monitoring (Bloomlife), food sensitivities (FoodMarble), probiotics (SunGenomics), depression (Flow Neuroscience), kidney and liver toxin reduction (Unlocked) and chronic pain management (Sana Health).

In therapeutics, our risk model frees us to fund novel scientific approaches and indications that others are largely averse to at the early stage. DNA Lite has made considerable success with its oral mRNA vaccines and biologics. Synthex and Ten63 have likewise shown their capabilities with targeting protein-protein interactions, long considered undruggable. Non-addictive pain relief, meanwhile, has been near impossible to crack; Pannex believes it has an angle on nociceptor ion channels. Karma Therapeutics is taming auto-immunity with precision tolerogenic vaccines. Prothegen offers a new approach to preventing cell death by tapping the newly-druggable ferroptosis pathway.

One area missing on our thesis list is All Purpose Longevity, the search for a holy grail master switch to prevent disease onset through cellular health. We think it’s dangerously easy to make mice live longer, and dangerously difficult to do the same for humans, who live 50x longer than mice, naturally. However, this hasn’t kept us away from doing our share of regenerative medicine in specific indications. Back surgery is one of the biggest expenses for providers, and results are often poor. Intelligent Implants improves those odds, by inducing and steering spinal bone regrowth. OneSkin is the first skin health serum to turn back the molecular clock on our skin. Bioaesthetics helps women who’ve endured mastectomy, helping them regrow a natural nipple. Innate Bio has distilled essential metabolites that increase the clearing of cholesterol. And ReachNeuro uses an approved pain stimulator – but not for pain – to restore limb motor function for stroke victims. 

COVID challenged the healthcare and biomanufacturing infrastructure; for the first time, investors really understood the legitimacy of projections that our biomanufacturing capacity needs to 10x in ten years. Quickly, infrastructure spending announcements totalled $100 billion for a million liters of bioreactor capacity. At SOSV, we’ve been funding many novel approaches to bioreactors for years – such as STAMM’s laminar flow condensed reactor, and Kolibri’s acoustic wave reactors for gene therapies. In cell therapies, Indee Labs uses microfluidic vortexes for improved transfection and cell viability. “Don’t scale your problems” is a VC proverb, and we believe methods of biomanufacturing can be radically improved before we scale it by $100 billion. 

Lastly, here’s a statistic that very few venture funds can state: SOSV has healthcare companies headquartered on 6 continents. This means we’re tapping into smart innovators everywhere and creating startups for all manner of payer and provider systems. From the fractured and fluid US, to the single-payer dominant countries, to the thin-layer hybrids in developing markets. Drug availability varies dramatically and standard of care can vary even more. As we look to build global companies, sometimes our market exposure leads us to design business models differently than if it was only intended to work in the US – one example is ProtonIntel, with its continuous potassium monitor. Or we may intentionally launch companies ex-US because fee-for-service is the standard, such as Microgenesis Fertility in Europe and Latam. 

Especially with this global perspective, we see both acute and chronic holes in the healthcare system, everywhere. We see trends that will truly shape how people, local and global, will flourish by becoming healthier and overcoming disease. Disease knows no border, and we are playing to win through innovations that others simply are unable to even visualize. By rapidly adapting to COVID disruption, we are magnetizing life science founders – globally – to bring their best ideas to us, first. Though we already have invested in around 200 healthcare companies, we never feel like the good ideas are taken; we never feel our work is done. The best innovations of healthcare are yet to come, and we are cradling them. 

Stelvio Oncology: Live Imaging For a Paradigm Shift in Drug Screening

Stelvio
Stelvio

It’s been clear for some time that a personalized approach to cancer treatment is key in overcoming the disease. Since certain types of cancer, like glioblastoma (brain tumors), have been found to be resistant to chemotherapy, new (and less toxic) approaches are desperately needed to combat the resistant cells. Stelvio is a company with a unique approach to identifying the resistance mechanisms of cancer cells, and overcoming them with targeted therapies for the individual patient. The company’s founder and CEO, Attila Hajdu, explains more:

When did you decide to start a company, and where did your team get together?

AH: We decided to start Stelvio Oncology in May 2017. While we are a relatively new company, we have had a number of major accomplishments which include an invitation to join JLABS San Diego, which is Johnson & Johnson’s innovation centre, where we will be based starting on September 26, 2017. Being a JLABS company exposes us to the ecosystem of J&J’s innovation centre and potential collaborations with the incubator companies as well as J&J. We are also in the middle of an evaluation process with Sanofi to utilize our technology to identify novel targets and molecules in Huntington’s Disease, which opens the door to the formation of Stelvio Therapeutics. We’ll begin the evolution to this new name over the next few weeks.

What problem are you aiming to solve with Stelvio Oncology?

AH: The main problem in cancer remains resistance to chemotherapy based regimens which leads to loss of response to treatment and no viable options for patients afterwards. Not only is chemotherapy based treatment ineffective in cancers like glioblastoma, breast, and lung, but it is also highly toxic. So we are addressing the problem that there is no cure for cancer and ineffective/toxic treatments are still used which give incremental benefit.

The problem we are solving with our work in neurodegenerative diseases is current treatments are ineffective in Huntington’s Disease, which is a neurodegenerative genetic disorder that affects muscle coordination and leads to cognitive decline and dementia.

How does your technology work?

AH: Our technology works by labelling histones within the nucleus which gives each cell an epigenetic fingerprint akin to a bar code, and then we can visualize the changes small molecules or drugs have on the cells using live imaging. This is a paradigm shift in drug screening for disease because it represents a 100 fold improvement in the precision of high throughput screening of proprietary drug libraries.

How did you become interested in biotech?

AH: I became interested in biotech after spending 20 years in big pharma mainly with GSK. I had a strong drive to become a catalyst for change, to solve problems that have a positive impact on people, that could improve their lives for the better.

What lessons did you learn transitioning from science to entrepreneurship at IndieBio?

AH: There were many lessons learned at IndieBio. One main lesson is that clarity creates confidence which was Arvind’s saying over the course of the program. One of the biggest challenges for us has been to explain what we do in a simple manner so that investors could understand and more importantly, write us a check! We’ve learned to communicate more effectively with investors in a simple and meaningful way.

How do you think your success as a company would change the medical industry?

AH: Success for Stelvio would mean ripping cancer out of the pages of medical history books within our lifetime. The same applies to neurodegenerative diseases although this success may not happen within our lifetime!

What are the milestones you’re looking to hit in the near future?

AH: Key milestones are demonstrating that we are stopping tumor growth in vitro and in vivo, screening Johnson & Johnson’s proprietary libraries while housed within JLABS to discover hits which we could further develop into lead candidates, screening Sanofi’s proprietary drug libraries against Huntington’s Disease and potentially other targets such as Multiple Sclerosis, Alzheimer’s, and Parkinson’s Disease, and importantly, closing a seed capital raise of $4 million to fund these milestones.

See Stelvio pitch at IndieBio Demo Day on September 14th in San Francisco or via Livestream! Register here.

Pictured above: Stelvio CEO Attila Hajdu (left) and CSO Alexey V. Terskikh.

DNALite: A New Age of Medicine Is Emerging

DNALite

What if instead of undergoing life-altering chemotherapy or surgery, a patient could take a daily pill to fight cancer? That’s the ultimate vision of DNALite, a new biotech company that wants to actually prevent instead of manage symptoms. Their technology aims to deliver genetic cargo to areas of the body that are hard to reach, giving them the properties they need to kill of the cancerous cells and empower healthy ones. The company’s co-founder Timothy Day explained more:

What problem are you aiming to solve with your company, DNALite?

TD: We are treating diseases for patients that currently have very few treatment options. We are a gene therapy company, and by delivering the correct genes to the necessary cells in the body, we are able to treat the cause of the disease—not just the symptoms. We are focused on tissues that are protected by mucus barriers, like the gastrointestinal tract, lungs, and cervix. The mucus is a necessary protective barrier for these tissues, but it also makes drug delivery a challenge. We are able to overcome this challenge with our technology and are focused on first treating a genetic disease that leads to a 100% chance of colon cancer by age 40.

When did you decide to start a company, and where did your team get together?

TD: We met as students in early 2016 at UC Berkeley. Mubhij had the idea of doing gene therapy for this particular form of colon cancer, and I was working a PhD thesis focused on overcoming physical barriers for gene delivery. We both share the core belief that a new age of medicine is emerging that we want to be part of, and if we have an idea that can help a large number of people we have an obligation to try out that idea. So, we started working on the company on nights, weekends, and in between classes, and haven’t looked back since.

How does your technology work?

TD: We both have virology backgrounds and were inspired by the properties that let viruses penetrate through mucus and deliver genetic cargo to cells. We translated these properties to a non-viral gene delivery system that allows for the delivery of genes to cells protected by mucus for the first time. For our first target indication, the gene that is delivered restores normal tumor suppressor function in cells. For the cells that are already cancerous in this disease, it leads to the cells being killed off or lost, and a regression of the tumors. For cells that are still healthy, it empowers them to suppress cancer mutations and prevents them from becoming cancerous in the future. The vision for this treatment is that instead of these patients undergoing life-altering major surgery and/or chemotherapy, they can just take a daily pill that restores the body’s normal ability to fight cancer.

How did you become interested in biotech?

TD: The appealing thing about biotech is that it is by necessity an applied science, so we are able to take the brilliant biology and chemistry research that has been performed to-date and channel it into something tangible that can change patients’ lives. We also get the privilege to work with top scientists, physicians, and business people to make brand new treatments that treat the cause of the disease and not the symptoms.

What was it like transitioning from science to entrepreneurship?

TD: When starting a new company each person has to wear many hats. Learning to balance all the necessary tasks simultaneously in addition to doing good science is a skillset that has to be learned. As scientists, we tend to carve systematic stories that are only read by a few people in the field, but as entrepreneurs we have realized the importance of selling the vision behind the science.

How do you think your success as a company would change the medical industry?

TD: Many patients with genetic diseases have zero therapeutic options and are either told by doctors that there is nothing that can be done for them or that they have to go through devastating medical procedures that only treat the symptoms of the disease or simply serve to control inflammation. We are actually targeting the cause of the disease and not just the symptoms. This provides medical a new option to patients that is safe, therapeutic and preventative.

What are the milestones you’re looking to hit in the near future?

We have demonstrated efficacy for our first indication in a rat model of the disease. This was one of the first gene therapy attempts for this disease. We are in the process of using that data to optimize our modular system to reach an efficacy endpoint that provides patients with the most meaningful clinical outcome.

See DNALIte pitch at IndieBio Demo Day on September 14th in San Francisco or via Livestream! Register here.

Pictured above: DNALite co-founders Timothy Day (left) and Mubhij Ahmad.