In this week’s edition of InnovationRx, we look at the Khosla Ventures-Cleveland Clinic partnership, Town Hall Ventures’ $440 million haul, the CDC’s “Friday night massacre,” Boehringer’s new pulmonary fibrosis drug, and more. To get it in your inbox, subscribe here.
New technologies are transforming the way that hospitals operate. To try and gain an edge, Khosla Ventures and Cleveland Clinic signed a deal in which the health system will test new technologies that span AI, digital health and next-generation therapeutics from the VC firm’s portfolio companies—and the two will explore opportunities to incubate new companies together.
“I think this is a novel approach,” Hal Paz, Khosla Ventures’ operating partner, told Forbes.
Discussions that led to the agreement, announced at Cleveland Clinic’s Life Sciences Summit in London on Tuesday, had been in the works for a year. The storied VC firm, with $17 billion in assets under management and more than 300 portfolio companies (about one-third of them in healthcare), gains a substantial healthcare partner with whom to test new technologies from clinical validation through adoption, that may also become a valuable customer for the companies it’s invested in. Meanwhile, Cleveland Clinic, the highly-regarded non-profit health system that spans 23 hospitals and 280 outpatient facilities, gets access to a pipeline of emerging technologies that could help it improve care and efficiency.
Already, some 10 to 12 of Khosla’s portfolio companies, mostly in AI and digital health, are in discussions with Cleveland Clinic about how they could work with the health system, Paz said. One, Vista AI, which has developed AI to automate and simplify cardiac MRIs, is already working with Cleveland Clinic at its Akron hospital. Vista’s software enables more scans to be done on a single machine with improved quality and consistency. The two are also already working on a first startup incubation, though neither the final idea nor the timing of its launch has been set.
“We are at an inflection point in the industry,” said JD Friedland, Cleveland Clinic’s executive director of venture. “New transformational technologies are emerging that we believe are going to fundamentally address some of the perpetual challenges in healthcare.”
The agreement comes as tech-based venture firms have increasingly viewed healthcare as an area of opportunity and as hospitals and health systems have been testing how technology could improve patient care, reduce physician burnout and increase razor-thin margins. It also follows a move by General Catalyst to acquire health system Summa Health, a $515 million deal that created the first hospital system to be owned by a VC firm.
“I bet the more significant venture investors in healthcare are going to find different ways to get access to that clinical and research expertise,” Cleveland Clinic’s Friedland said. “It certainly costs a lot less money to partner with Cleveland Clinic than to buy a hospital, and it comes with less strings attached and less brain damage.”
For both Khosla and Cleveland Clinic, their non-exclusive partnership could be the first of multiple collaborations—but both Paz and Friedland stressed there was much to do first. Said Paz: “Before we get over our skis and think about the second health system to partner with and the third, we need to give this a little time and learn from it.”
When Andy Slavitt left government, he wanted to prove that you could use technology to improve healthcare for underserved and low-income communities—and still make a profit. The former acting administrator of the Centers for Medicare & Medicaid Services and overseer of the successful turnaround of healthcare.gov, set up healthcare-focused VC firm Town Hall Ventures in the summer of 2018 to do just that.
“I’ve got a little bit of a chip on my shoulder,” he told Forbes. “If [investors] think you are impact, they’ll put you in this bucket—people who do nice things and maybe some nice family office wants to invest in you because they’ve got an impact mandate. I have always resisted that.”
Since its launch seven years ago, Town Hall Ventures has invested in 35 companies and started seven others, including kidney care specialist Strive and Suvida, which offers primary care focused on Hispanic seniors and their families. Its first fund posted top-decile performance, with a net internal rate of return from its July 2018 inception (thru June 30) of 33% versus 12% for the median VC fund. A total of 10 its bets surpassed a billion-dollar valuation, including Cityblock Health, a healthcare provider focused on low-income communities that was one of its initial investments and has since reached a valuation of $6.3 billion; SignifyHealth, a provider of tech-enabled at-home risk assessment acquired by CVS for $8 billion in 2023; and Landmark Health, a startup offering in-home medical care to patients with chronic conditions purchased by Optum Health for $3.5 billion in 2021.
Buoyed by that track record, Town Hall Ventures told Forbes it has now raised $440 million for a fourth fund, bringing its total assets under management to $1.4 billion. While the New York-based firm, whose general partners consist of Slavitt, David Whelan and Meera Mani, remains small compared to venture capital giants like Andreessen Horowitz, General Catalyst or Sequoia, each of which has tens of billions in assets under management, it’s a well-regarded player in healthcare.
Boehringer Ingelheim gained FDA approval for the first new treatment for idiopathic pulmonary fibrosis in a decade with its drug Jascayd, a twice-daily pill. Pulmonary fibrosis is a progressive disease in which scarring on the lungs makes it increasingly difficult to breathe. Martin Beck, head of Boehringer’s inflammation disease area, told trade publication Fierce Pharma that the drug represented a major shift forward in treating a disease that had been a “graveyard of clinical development” with more than 36 failed trials over the past decade. Jascayd blocks a type of enzyme, called PDE4B, that’s involved in the honeycomb-patterned lung scarring and inflammation associated with the disease. A study published in the New England Journal of Medicine showed that it slowed patients’ decline in lung function compared to a placebo over the course of a year.
Plus: Obesity startup Kailera Therapeutics raised $600 million, led by Bain Capital Private Equity, to start Phase III trials of its lead drug candidate, an injectable GLP-1 drug similar to Lilly’s Zepbound. The size of the round ties it with Isomorphic Labs for the largest biotech fundraise of the year. Forbes profiled Kailera earlier this year. Kailera was worth $1.5 billion before the new funding; its new valuation was not disclosed.
Duos, a digital health company focused on seniors, raised $130 million, led by FTV Capital, at an undisclosed valuation. The two-year-old company helps members enroll in government programs, retain Medicaid coverage and figure out benefits they may be eligible for but aren’t using.
Plus: Umar Afridi, a pharmacist who previously cofounded Truepill, raised $20 million to bring AI to pharmacy operations with Foundation Health. Truepill was acquired by LetsGetChecked for $525 million last year. Digital Health-focused VC firm Define Ventures led the funding round.
Biotech startup Immusoft safely re-dosed a patient with its experimental gene therapy for progressive genetic disorder called mucopolysaccharidosis type I that causes skeletal abnormalities, heart disease and vision loss. The company’s gene therapy makes use of engineered B-cells, which the body typically uses to make antibodies, to make specific proteins that treat diseases instead. The benefit of the approach is that it doesn’t require immunosuppression or chemotherapy as other gene therapies do. The ability to safely re-dose makes the therapy more long-lasting, which had been a question during its clinical trial. Forbes spoke with CEO Sean Ainsworth about the company’s technology earlier this year.
Plus: Johnson & Johnson is spinning off its orthopedics business, which generated $9.2 billion in revenue in 2024. The new company, called DePuy Synthes, is expected to launch in 2027.
Last Friday, around 1,300 CDC employees received notices that they’d been laid off with no warning. Over the weekend, more than half appear to have been told their firing was rescinded, though some 600 employees still appear to remain fired, according to the National Public Health Coalition, an organization of former CDC employees. So far, many of the departments hit appear to be core to the agency’s work, including the CDC library, which provides access to crucial scientific data for agency scientists; the agency’s entire Washington office, which provides information and support to Congress, the Center for Chronic Disease Prevention and staff focused on data collection and disease surveillance.
The Health and Human Services Department blamed the layoffs on the current government shutdown and said that employees laid off had been declared non-essential. This is one of several waves of layoffs that have eliminated around 25% of the CDC’s staff since Trump took office. The American Federation of Government Employees has sued the Trump Administration, challenging the legality of layoffs during a government shutdown. In a lawsuit over a previous round of layoffs, a federal judge found that the Administration’s firing of CDC staff was likely unlawful.
“Many experts, including myself, are concerned that we are no longer prepared for the next big outbreak or disaster because of the Trump Administration’s continued erosion of our nation’s ability to respond to public health emergencies,” John Brooks, former chief medical officer for CDC’s Division of HIV Prevention, told reporters at an National Public Health Coalition press conference on Tuesday.
In response these ongoing program cuts, the Wall Street Journal reported today that 15 states, all with Democratic governors, are building an alliance to manage public health threats. The states have agreed that they will “help one another prepare for pandemics, track infectious diseases, write public-health guidelines, share expertise on preventive care and buy vaccines and supplies in bulk.”
Novo Nordisk agreed to acquire Akero Therapeutics for up to $5.2 billion for its experimental liver disease treatment. San Francisco-based Akero has been testing its drug, efruxifermin, as a treatment for MASH, which causes fat to build up on the liver, leading to fibrosis. The deal follows Roche’s announcement last month that it was buying 89bio for $3.5 billion for its experimental MASH drug.
Amazon sellers made millions from banned “Dechoker” medical devices, according to the FDA.
Biotech dealmaking, from M&A to venture investments, ticked up in the third quarter.
Political pressures are influencing work at FDA, according to career staffers there.
Consumer Reports found that some protein shakes and powders contain extremely high levels of lead.
Mixtures of common drugs that wind up in waterways may accelerate the evolution of antibiotic resistant bacteria, according to research led by the University of Exeter.
Wearable health company Oura raised $900 million led by Fidelity, bringing its valuation to $11 billion. That’s more than double the $5.2 billion it was worth last December.
The United Nations World Food Programme warned that nearly 14 million people faced severe hunger due to cuts in global aid, especially from the Trump Administration.