From Hinge Health’s IPO to Regeneron buying 23andMe: Unpacking the mega deals of the week

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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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.