"In the health industry, despite all the hype of digital health, the traditional sectors like medical devices are short on investors, especially for early-stage companies. The VC firms are looking for biotech offerings, the ones with exponential potential - the fantasies and the dreams; and they tend to invest in companies that are more developed. It is hard today for young medical devices ventures, and Sanara Ventures is stepping in to fill the void - with excellent timing," says Assaf Barnea, CEO of the Sanara Ventures incubator launched by Teva and Philips.
Sanara (from the latin word "sanare" - to heal) was established exactly one year ago. It has since looked at 400 companies and invested in four: HomeDoc, MeWay Pharma, MGD, and another company which will soon be named.
"Sanara is not merely an incubator, it is also a platform for early stage investments," says Barnea, who previously managed the Kinrot Ventures accelerator. "As far as our model is concerned, we can invest as an accelerator simply to test the technology’s feasibility, even before a company joins the incubator. On the regular incubator track, we add extra funds to the budget from the Chief Scientist, and then we have the ability to invest in the post-incubator stage, in the investment rounds that are in the seven-figure range."
So far, all of the investments have been seed stage and in Israeli companies, but Sanara has not ruled out investing in foreign companies. "We do not have to invest. We aim to improve the chances of success for these start-ups and to build good, stable, and successful companies - with the professional support and the great knowledgebase of Teva and Philips, both in helping shape a product in the development stages and in opening doors," Barnea says.
He also explains that the companies are not committed to any future exclusivity in their agreements with Teva or Philips. "We are not trying to scare entrepreneurs or force them to tie their fates to ours," he says, "If that happens after a relationship is formed, and Teva or Philips invest a few million dollars and sign a distribution deal - then it’s a win-win scenario. But in the early stages, the companies will not be developing for a Teva or Philips product - they are working on independent products. We invest both in what is relevant to Teva and Philips and in what is not; and we can certainly invest in fascinating technologies with potential financial value."
Barnea, who previously played professional basketball for several teams in the Israeli league as well as the national squad, laid out the company’s (wide) areas of interest: digital medicine and telemedicine; drug delivery; simulation; microinvasive procedures; diagnostics; and any technology which deals with the cycle of sickness and health.
Last summer, at the incubator’s launch event, the focus was on two Sanara investments: MGD and Kaleidoscope Medical. The investment in Kaleidoscope Medical never materialized. MGD, Barnea explains, is based on a respiratory technology from Sheba Medical Center which interested both Teva and Philips.
"Today, to measure lung volume, you need to enter a slightly claustrophobic room in a hospital - it’s uncomfortable and you need a technician. MGD’s technology switches the test to a manual spirometer that is light and simple," said Barnea.
Another respiratory health startup in which Sanara invested is MeWay Pharma (one of its first investors is Moshe Manor - Protalix CEO and a former Teva executive). "MeWay was founded by the serial entrepreneur Dr. Eran Eilat, and it developed a specialized inhaler which breaks the medication into tiny particles and inserts them deep into the lungs. It considerably reduces the treatment time - an important feature, particulalry in the treatment of children," says Barnea.
The third investment, HomeDoc, is in digital health. "It’s a company taking its first steps," Barnea says, "In telemedicine there are many models in which the doctor and patient communicate through a screen, but the doctor cannot to look at the patient’s throat or ear. It’s for this reason that HomeDoc was founded; it allows the doctor to conduct basic tests with sensors that examine the patient’s body.
"In many cases, people rush to hospital unnecessarily, and the medical systems bear huge costs. Part of the changes in global health systems is the transfer of service provision to clinics and to patients’ homes," Barnea explains.
The Sanara CEO emphasizes that HomeDoc is unique because "it is a very affordable system, and we believe that it is designed in such a way as to be suitable for both developed and developing countries."
Each company received an investment of $1-1.5 million.
"The budget we announced was NIS 100 million, but we are not running as a closed fund and we can ‘call for capital’ depending on the opportunities," notes Barnea, who says the goal is to approach 10 investments in 2016.
How is the partnership between Teva, Philips, and Sanara handled?
"Fortunately, the ‘dance’ that started between the companies around the incubator creates more and more ties and opportunities for cooperation in other fields. One of our unique attributes is the advisory board which is composed of senior executives in Philips and Teva alongside external advisers. We employ their help in determining suitability and we rely on their experience and their knowledge of markets; we host brainstorming sessions on how to adapt non-medical technology to the medical field. I am in daily contact with Teva and Philips personnel."
Where do you see Sanara in two-three years?
"With 20-25 companies in its portfolio and some post-incubator investments. I hope to have a diversified, rich portfolio with the right mix in the most relevant fields, and that we will be a platform that supports ventures through the ups and the downs. We have the stamina and financial capability to support ventures: I see us backing the companies, and if Teva or Philips are not interested in any specific company, we can bring other strategic players for joint investments."
Published by Globes [online], Israel business news - www.globes-online.com - on January 26, 2016
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