Billionaire Eric Lefkofsky’s Tempus Raises $200 Million To Bring Personalized Medicine To New Diseases

On the surface, Eric Lefkofsky’s Tempus sounds much like every other AI-powered personalized medicine company. “We try to infuse as much data and technology as we can into the diagnosis itself,” Lefkofsky says, which could be said by the founder of any number of new healthcare companies.. But what makes Tempus different is that it is quickly branching out, moving from a focus on cancer to additional programs including mental health, infectious diseases, cardiology and soon diabetes. “We’re focused on those disease areas that are the most deadly,” Lefkofsky says. 

Now, the billionaire founder has an additional $200 million to reach that goal. The Chicago-based company announced the series G-2 round on Thursday, which includes a massive valuation of $8.1 billion. Lefkofsky, the founder of multiple companies including Groupon, also saw his net worth rise from the financing, from an estimated $3.2 billion to an estimated $4.2 billion.

Tempus is “trying to disrupt a very large industry that is very complex,” Lefkofsky says, “we’ve known it was going to cost a lot of money to see our business model to fruition.” 

In addition to investors Baillie Gifford, Franklin Templeton, Novo Holdings, and funds managed by T. Rowe Price, Lefkofsky, who has invested about $100 million of his own money into the company since inception, also contributed an undisclosed amount to the round. Google also participated as an investor, and Tempus says it will now store its deidentified patient data on Google Cloud. 

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“We are particularly attracted to companies that aim to solve fundamental and complex challenges within life sciences,” says Robert Ghenchev, a senior partner at Novo Holdings. “Tempus is, in many respects, the poster child for the kind of companies we like to support.” 

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Tempus, founded by Lefkofsky in 2015, is one of a new breed of personalized cancer diagnostic companies like Foundation Medicine and Guardant Health. The company’s main source of revenue comes from sequencing the genome of cancer patients’ tumors in order to help doctors decide which treatments would be most effective. “We generate a lot of molecular data about you as a patient,” Lefkofsky says. He estimates that Tempus has the data of about 1 in 3 cancer patients in the United States. 

But billing insurance companies for sequencing isn’t the only way the company makes money. Tempus also offers a service that matches eligible patients to clinical trials, and it licenses  de-identified patient data to other players in the oncology industry. That patient data, which includes images and clinical information, is “super important and valuable,” says Lefkofsky, who adds that such data sharing only occurs if patients consent. 

At first glance, precision oncology seems like a crowded market, but analysts say there is still plenty of room for companies to grow. “We’re just getting started in this market,” says Puneet Souda, a senior research analyst at SVB Leerink, “[and] what comes next is even larger.” Souda estimates that as the personalized oncology market expands from diagnostics to screening, another $30 billion or more will be available for companies to snatch up. And Tempus is already thinking ahead by moving into new therapeutic areas. 

While it’s not leaving cancer behind, Tempus has branched into other areas of precision medicine over the last year, including cardiology and mental health. The company now offers a service for psychiatrists to use a patient’s genetic information to determine the best treatments for major depressive disorder. 

In May, Lefkofsky also pushed the company to use its expertise to fight the coronavirus pandemic. The company now offers PCR tests for Covid-19, and has run over 1 million so far. The company also sequences other respiratory pathogens, such as the flu and soon pneumonia. As with cancer, Tempus will continue to make patient data accessible for others in the field— for a price. “Because we have one of the largest repositories of data in the world,” says Lefkofsky, “[it is imperative] that we make it available to anyone.” 

Lefkofsky plans to use capital from the latest funding round to continue Tempus’ expansion and grow its team. The company has hired about 700 since the start of the pandemic, he says, and currently has about 1,800 employees. He wouldn’t comment on exact figures, but while the company is not yet profitable he says Tempus has reached “significant scale in terms of revenue.” 

And why is he so sure that his company’s massive valuation isn’t over-inflated? “We benefit from two really exciting financial sector trends,” he says: complex genomic profiling and AI-driven health data. Right now, Lefkofsky estimates, about one-third of cancer patients have their tumors sequenced in three years. Soon, he says, that number will increase to two-thirds of patients getting their tumors sequenced multiple times a year. “The space itself is very exciting,” he says, “we think it will grow dramatically.” Follow me on Twitter. Send me a secure tip

Leah Rosenbaum

Leah Rosenbaum

I am the assistant editor of healthcare and science at Forbes. I graduated from UC Berkeley with a Master’s of Journalism and a Master’s of Public Health, with a specialty in infectious disease. Before that, I was at Johns Hopkins University where I double-majored in writing and public health. I’ve written articles for STAT, Vice, Science News, HealthNewsReview and other publications. At Forbes, I cover all aspects of health, from disease outbreaks to biotech startups.

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Eric Lefkofsky

To impact the nearly 1.7 million Americans who will be newly diagnosed with cancer this year, Eric Lefkofsky, co-founder and CEO of Tempus, discusses with Matter CEO Steven Collens how he is applying his disruptive-technology expertise to create an operating system to battle cancer. (November 29, 2016)

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Groupon Made Eric Lefkofsky A Billionaire—His Cancer-Fighting Startup Is Worth Far More

Eric Lefkofsky hasn’t taken a science class since college. But as he meanders through the Chicago lab of Tempus, his medical startup, he presents an air of expertise. “One thing you can see right off the bat is the purple staining of this cell,” he says, pointing to the pathology slide of a patient with breast cancer. He walks past vials of lysis buffer and a $1 million genomic sequencer. “Tempus is attempting to bring the power of artificial intelligence to healthcare,” he says. “The first step in all that is data.”

Assembling data was the first step in Lefkofsky’s other ventures. The 49-year-old has launched five companies worth at least $250 million apiece, each promising to transform an industry by using big data. His best-known venture is Groupon; despite the deals site’s disappointing share price, Lefkofsky is worth an estimated $2.7 billion.

Tempus is predicated on the theory that information, lots of it, will enable doctors to personalize cancer treatments and make them more effective. A doctor treating a patient with lung cancer might send a tumor sample to Tempus for genomic sequencing. Tempus identifies a mutation in the gene for epidermal growth factor receptor, which causes cells to grow and divide too much. With that, the doctor prescribes a targeted therapy that can have better results than chemotherapy.

So far the 700-employee company has raised $520 million (Lefkofsky put in $100 million). The lavish $3.1 billion valuation suggests investors expect his approach to make a big score, starting with cancer, then against chronic conditions like depression and diabetes. But precision medicine is a nascent field. Tempus, on its own or with a research partner, has published fewer than 20 peer-reviewed manuscripts since its founding four years ago. A competitor, sequencing firm Foundation Medicine, has published over 400 in 9 years.

While the cost of sequencing has dropped, it still runs $1,000 to $5,000 per analysis, and Tempus loses money doing it. Tempus also licenses its library of anonymized data to drug companies, insurers and researchers. Lefkofsky won’t reveal revenues, but says it gets seven-figure fees from seven of the ten largest cancer drug companies.

Lefkofsky got the entrepreneurial bug at the University of Michigan, where he studied history and made money selling carpets. In 2001, he cofounded InnerWorkings (marketing), then Echo Global Logistics (transportation) and Mediaocean (advertising software). One of Lefkofsky’s hires, Andrew Mason, pitched an idea for a business focused on “collective action.” Lefkofsky invested $1 million in what became Groupon. A year after its 2008 founding, it booked $14.5 million in revenue; in 2011, it generated $1.6 billion.

“It certainly feels like my entire career has led to this point,” Lefkofsky says. “I hope this will be my legacy project.”

Lefkofsky spent a few years dabbling on other projects, including Uptake (predictive analytics for heavy industry). “I always knew back then, [with] those businesses, that I would be in and out,” he says.

In 2014, Lefkofsky’s wife, Liz, was diagnosed with breast cancer. “I was just perplexed at how little data had permeated her care,” he says. That experience ultimately launched Tempus. (Liz has “been taking it one day at a time,” Lefkofsky says.)

Yet again, Lefkofsky needed data. But some researchers were initially hesitant to share. “They wanted us to basically send all our samples there for all our patients” in the future, says John McPherson, deputy director of the UC Davis Comprehensive Cancer Center. “But we took a more cautious approach.” They ran a head-to-head comparison involving gastrointestinal cancer between Tempus and Foundation Medicine; Tempus fared well.

                       

In 2017 Tempus reached a licensing agreement with the American Society of Clinical Oncology to extract and organize data from 1 million patient records. Today the company says it already works with 30% of U.S. oncologists; many send patient records and biopsies to Tempus for analysis. Tempus hopes to sequence 120,000 genomic samples for doctors this year.

Even with that data, Tempus faces stiff competition. Last year Swiss drug giant Roche spent $4.3 billion acquiring Foundation Medicine and big data firm Flatiron Health. Another startup, Concerto HealthAI, backed by billionaire Romesh Wadhwani, has access to many of the same records as Tempus.

                           

Doctors at UC Davis, McPherson says, have only sent about 100 samples to Tempus, considerably fewer than they’ve sent to Foundation. “I think they were a little baffled by the amount of data that came back [from Tempus],” McPherson says. Clinicians “tend to take the easier route just to save time. But there are several clinicians that are now working fairly closely on the research side with them.”

Lefkofsky remains supremely optimistic. “It certainly feels like my entire career has led to this point,” he says. “I hope this will be my legacy project.”

I’ve been a reporter at Forbes since 2016. Before that, I spent a year on the road—driving for Uber in Cleveland, volcano climbing in Guatemala, cattle farming in Urugua…

Staff writer at Forbes. Email me at mtindera@forbes.com and follow me on twitter @mtindera07.

Source: Groupon Made Eric Lefkofsky A Billionaire—His Cancer-Fighting Startup Is Worth Far More

Amazon Shakes Up Drugstore Business With Deal to Buy Online Pharmacy PillPack – Angelica LaVito/Lauren Hirsch

 

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Amazon shakes up drug store industry by acquiring online pharmacy company PillPack  

Amazon is acquiring online pharmacy PillPack in a deal that is already shaking up the drugstore industry.

The move is the strongest indication yet of Amazon’s intent to push further into the health-care industry. It threatens to remove one of the few distinguishing factors pharmacy chains have relied on to fend off Amazon, the sale of prescription drugs. Retailers like Walgreens Boots Alliance, CVS Health and Rite Aid have seen their so-called front of store sales threatened as shoppers increasingly buy household staples online or from convenience stores.

Shares of all three tanked Thursday on the news, along with drug distributors Cardinal Health, AmerisourceBergen and McKesson. Rite Aid, Walgreens and CVS Health lost about $12.8 billion in market value on Thursday alone.

PillPack, which organizes and delivers packages of medications for consumers, is licensed to ship prescriptions in 49 states, according to its website.

“Yes, it’s a declaration of intent from Amazon,” Walgreens Boots Alliance CEO Stefano Pessina acknowledged to analysts in a planned call to discuss its quarterly earnings, according to an initial transcript from FactSet. “[But] the pharmacy world is much more complex than the delivery of a certain [pills or] packages.”

Terms of the deal with Amazon were not disclosed, though people familiar with the matter told CNBC that Amazon paid roughly $1 billion. The companies expect it to close during the second half of the year.

The start-up has raised $118 million in funding from investors including CRV and Menlo Ventures, and it reached more than $100 million in revenue in 2017, the company has said. In 2016 it was reported to be valued at $330 million.

The company previously had sale talks with Walmart, which had considered buying the start-up for less than $1 billion, CNBC has reported.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, Amazon CEO Worldwide Consumer, said in a statement. “PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

Amazon already sells private label over-the-counter drugs through a partnership with Perrigo and has obtained pharmacy licenses in a few states. It also has licenses to distribute medical devices in nearly every state.

“The pharmacy industry has entered its next phase of evolution,” said Adam Fein, CEO of Pembroke Consulting’s Drug Channels Institute. “Retail pharmacies will find their high-profit cash business under pressure. Expect a pharmacy shakeout over the next five years.”

Most drugstores and pharmacy benefits managers, firms that administer prescription drug plans, already offer mail services.

CVS last week announced it would offer one- and two-day delivery to all of its retail pharmacy customers nationwide and extend same-day delivery to more cities. A spokeswoman told CNBC the company thinks it’s well-positioned and ahead in the area where PillPack plays, saying CVS offers similar services.

“Keep in mind, that we have not seen a large shift of patients that are looking for their medications to be delivered versus coming to a retail pharmacy,” she said.

For Amazon to move into prescription drug delivery, though, it will need to change the shopping habits of a set of shoppers that tend to stick to a routine when it comes to how and where they buy their prescription drugs. It may also find a more limited buyer-set, as people with pressing needs like medicine for a sinus infection may have little patience to wait for online delivery.

PillPack generally caters to people with multiple chronic conditions who can benefit from its drug sorting capabilities.

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“I think it’s an overhang more than anything else,” said Jefferies analyst Brian Tanquilut. “It’s hard to figure out what it really does or when it impacts the pharmacies, but it weakens sentiment on the group further. PillPack is already in the market, so it shouldn’t have much of an incremental impact until Amazon figures out how to grow its share and expand it by integrating it into the app.”

Nonetheless, drugstores continue to build up their Amazon defenses.

CVS is in the process of acquiring health insurer Aetna for $69 billion in a deal that would combine its retail pharmacies, walk-in clinics and pharmacy benefits manager Caremark with Aetna’s insurance plans.

Rite Aid, meanwhile, is trying to merge with grocery chain Albertsons. Walgreens is partnering with a number of health-care businesses, including health insurers Humana and UnitedHealth Group and lab testing provider LabCorp, to add more health services to its stores.

Amazon CEO Jeff Bezos partnered with J.P. Morgan CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett earlier this year to create a nonprofit company aimed at lowering health-care costs for their roughly 1.2 million employees. They revealed last week that acclaimed surgeon and author Dr. Atul Gawande will lead the initiative.

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