Healthcare
See the 24-slide pitch deck a biotech startup used to sell investors on a new approach to AI in medicine and raise $110 million
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- Scipher Medicine uses blood testing and AI to determine if autoimmune drugs will work on a person.
- The biotech just raised $110 million from crossover investors like Cowen and Neuberger Berman.
- “Not a lot of companies are doing this sort of raise in the current environment,” the CEO said.
Rheumatoid arthritis treatments like AbbVie’s Humira are some of the biggest moneymakers in the drug industry.
But they only work on about 35% of patients who try them, according to the blood-testing company Scipher Medicine. In the US, that can lead to billions of dollars of wasted spending each year.
Scipher Medicine, which is based in Waltham, Massachusetts, wants to help physicians determine whether a person will benefit from drugs like Humira before they go through weeks or months of trial and error. The company sells one blood test to predict whether rheumatoid-arthritis treatments will work for specific patients, and it plans to launch another five tests over the next five years for conditions like inflammatory bowel disease.
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Last week, the company announced it had raised $110 million to help develop those tests and expand Scipher’s business by partnering with drug companies to develop new medications.
The Series D round included several crossover investors like Cowen Healthcare Investments and Neuberger Berman. Those investors usually put their money into a company right before it goes public, giving them a clear idea of when they’ll recoup their money and some profit.
But successful biotech IPOs are far from certain right now. Valuations that ballooned due to the pandemic are coming back to earth, and regulatory setbacks are also contributing to a biotech stock slump. A leading index fund tracking biotechs is down 46% from its peak last month.
“Not a lot of companies are doing this sort of raise in the current environment, so I think that speaks to the strength of our technology and momentum,” said CEO Alif Saleh. The company is planning on filing for an IPO in the future, he said.
Here’s how Scipher pitched its plans to investors:
Scipher Medicine was started by Drs. Joseph Loscalzo and Laszlo Barabasi and incorporated in 2013.
Scipher Medicine
The company’s tests are not only meant to stop the trial-and-error process of prescribing new immunology drugs but also help pharmacy benefit managers and insurance providers cut down on excessive spending.
Scipher Medicine
Poor patient-response rates are a significant issue across the drug industry. More and more companies are trying to find genetic clues that could help predict whether patients will benefit from a treatment.
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Scipher is focused on complex diseases that are caused by both biology and a person’s environment.
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The US healthcare system spends more on autoimmune disease drugs than cancer or diabetes treatments, the company says.
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DNA analysis is helpful for cancer, which has many genetic links. But autoimmune diseases are different, which is why Scipher focuses on RNA analysis.
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The challenge with RNA is that the data is complex and messy, Saleh said. Scipher uses artificial-intelligence tools to help interpret the data.
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Scipher plans to introduce five tests over the next five years for diseases like ulcerative colitis and multiple sclerosis.
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Scipher’s first commercial test is for rheumatoid arthritis.
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About 65% of patients that are given blockbuster rheumatoid arthritis drugs like Humira don’t see a benefit, according to Scipher.
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Scipher’s PrismRA test is 90% accurate at predicting whether a person will benefit from anti-TNF drugs like Enbrel and Humira, the company says.
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Scipher says its test helps reduce the amount it costs to treat a person’s rheumatoid arthritis by 38%.
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Saleh said the test has been remarkably well-received by doctors. About 85% of the healthcare providers who tried it on a patient have ordered PrismRA tests again.
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Scipher is working with nearly two dozen insurers and pharmacy benefit managers. Optum’s venture arm invested in Scipher’s Series D round.
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The next Prism test will be used for patients will ulcerative colitis or inflammatory bowel disease.
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Scipher plans to use the data it’s collecting to help drug companies find new treatment targets.
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“Fundamentally, what we believe is wrong with the healthcare industry is the diagnostic world and therapeutic world is separated,” Saleh said.
Each person who uses the company’s test helps funnel more data in Scipher’s system. The company expects to increase the amount of data in its system nearly tenfold over the next three years.
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Not only does Scipher’s PrismRA test indicate whether a patient will respond to a specific medicine, but it’s also leading to a new hypothesis about rheumatoid arthritis.
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“Rheumatoid arthritis, as an example, is not one disease. Rheumatoid arthritis is actually eight different diseases that are biologically different, but all symptomatically the same,” Saleh said.
Scipher has some partnerships with drug companies and pharmacy benefit managers, like the collaboration it announced with Tara Biosystems in November, and it is negotiating more.
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Before its Series D round, Scipher had raised $117 million from healthcare investors and corporate venture arms. The company has now raised $227 million.
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Scipher brought in Sam Asgarian as chief medical officer a few months ago. He previously held the same position at cancer blood-testing company Thrive Earlier Detection Corp.
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Scipher’s board includes a former US surgeon general and ex-executives from two Big Pharma companies.
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Several companies are competing to make the best cancer blood test, but Scipher believes it’s a front-runner in autoimmune disorders.
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Scipher Medicine has 120 employees and plans to hire another 80 this year.
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This article has been updated with a new slide showing Scipher’s executive team.