This week on Second Opinion, Christina Farr and Luba Greenwood discuss the acquisition of 23andMe by Regeneron, the involvement of Hims and Hers in the GLP-1 market, and two significant IPOs in the digital health sector.

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LINKS:
Christina Farr's Second Opinion Newsletter: https://secondopinion.media/

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FOLLOW:
https://www.linkedin.com/in/christinafarr/
https://www.linkedin.com/in/lubagreenwood/

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TIMESTAMPS:
(00:00) Preview
(00;48) Intro
(01:50) Regeneron’s acquisition of 23andMe
(11:59) Sponsor: Fatty15
(13:19) Hims and Hers: A billion-dollar raise
(17:49) Digital health IPOs: Hinge and Omada
(23:46) Wrap

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HIGHLIGHTS FROM THE EPISODE:
• Regeneron acquired 23andMe for $256 million as the genetic testing company was heading toward bankruptcy.
• 23andMe struggled because they tried to operate both a consumer business and expensive drug discovery R&D simultaneously without adequate synergy.
• The acquisition price represents roughly $20 per person's genetic data, which is considered a good deal for Regeneron given 23andMe's 15 million user database.
• Regeneron faces a "patent cliff" where their blockbuster drugs are losing exclusivity, driving the need for new drug discovery capabilities.
• The genetic data will help Regeneron with early-stage drug discovery, though combining genetic data with medical records for drug discovery remains scientifically challenging.
• Hims & Hers raised another billion dollars, largely boosted by their partnership with Novo Nordisk to distribute Wegovy (a GLP-1 obesity drug).
• The GLP-1 market represents an outlier situation where pharma companies are seeking novel distribution channels due to intense competition and previous drug shortages.
• Two major digital health IPOs are happening: Hinge Health (physical therapy) went public at under $3 billion valuation (down from $6 billion private valuation) and Omada Health (chronic disease management) filed their S-1.
• Hinge Health's profitability and AI integration in virtual physical therapy positioned them well for their IPO, while Omada faces more skepticism due to lack of profitability.
• Both companies primarily serve employers and face challenges expanding into Medicare and health plan markets, requiring different sales teams and strategies.
• The success of these IPOs will determine whether the IPO window opens for other digital health companies with $100+ million revenue run rates.
• The digital health industry desperately needs successful exits that return money to investors, as M&A activity has been slower than expected despite favorable market conditions.