More than a billion dollars of mergers and acquisitions and more than $347M million of public and private capital to fund new developments fueled a strong first quarter in Medical Alley. Boosted by the return of the Angel Tax Credit Program (ATCP), 43 companies raised $109 million in private capital and $238 million was raised in the public markets. Put together, Medical Alley’s first quarter laid the groundwork for another record-breaking year of healthcare innovation.
$1 Billion+ in M&A
Four mergers and acquisitions set the stage for Medical Alley’s Q1: Bright Health Group’s acquisition of Zipnosis; StemoniX’s merger with Cancer Genetics, Inc. (Rutherford, NJ); Preventice Solutions’ acquisition by Boston Scientific; and NAMSA’s acquisition of American Preclinical Services. Each deal demonstrated how the innovations of Medical Alley’s start-up community are changing the global healthcare landscape.
The acquisition of virtual-care company Zipnosis by individualized-insurance company Bright Health Group was the culmination of meteoric successes for both companies. Zipnosis, an ATCP recipient in 2014, saw explosive growth in 2020 during the COVID-19 pandemic, while Bright Health Group has become the top unicorn in Medical Alley’s start-up community. Bright Health Group has raised over $1.5B in the last four years and has become increasingly active in acquiring companies, including Medical Alley-based Spyder Trap.
StemoniX, the groundbreaking bio-modeling company who also received ATCP funds, merged with Cancer Genetics, Inc., on March 31st, and now operate under the name Vyant Bio. The merged company, listed on NASDAQ under VYNT, will expand the two companies’ drug discovery tools to drive the next generation of biopharmaceutical development.
Preventice Solutions is a Medical Alley success story, having spun out of the Mayo Clinic and growing to 1,000 employees before being acquired. Preventice, which markets a novel remote heart monitoring device, was acquired by Boston Scientific with an up-front value of $925 million. Boston Scientific had been an early investor in the company, and the acquisition will add to their already robust cardiac care and connected health portfolio.
Early-Stage Pipeline Grows
While 2020 was characterized by large, later-stage raises, 2021 is starting out with a refilling of the early-stage pipeline. A total of 43 companies raised funds, nearly doubling Q1 2020’s total of 22. Overall, $109M in private capital was raised in Q1 2021, led by $28M from Gravie and $15M from Flywheel. The two companies helped place digital health as the top Medical Alley sector once again. Over the last five years, Medical Alley’s digital health sector has led quarterly totals eight times. Digital health was followed by the medical device sector, with $36M raised, and biotech and pharma, with $20.6M raised.
The return of the Angel Tax Credit Program was immediately felt in Medical Alley, with 18 healthcare companies raising $7.6M through the program. Since its inception in 2012, the ATCP has helped fund some of Medical Alley’s biggest early-stage companies, including Zipnosis. StemoniX, OneOme, and Recombinetics.
The public markets were also active, with Medical Alley companies raising $238M in development capital. Neovasc lead the way with $72M raised, Marker Therapeutics followed with $56M, and Predictive Oncology’s $34.4M came in third. The Medical Alley Association tracks public companies who raise money for development purposes, rather than those who publicly list for exit purposes.
On February 22nd, the Medical Alley Association announced Medical Alley Starts, an initiative to lower the cost of starting, scaling, and pivoting new ventures. Building a new venture requires years of commitment and millions of dollars, but in Medical Alley, it is becoming more routine each quarter with more investments, more exits, and more serial entrepreneurs.
The first quarter of 2021 was marked by major acquisitions and healthy raises by Medical Alley companies, and the second quarter has already shown much of the same, with Respicardia’s acquisition by Zoll Medical. The funding of the Angel Tax Credit Program has added new companies into the start-up pipeline and will undoubtedly add more in the quarters to come. All of these are proof that Medical Alley continues to be The Global Epicenter of Health Innovation and Care®.