Life Sciences are the heart of health. New approaches in bio, microbiome, treatments, disease prevention, neuroscience, and pharma propel transformation in care. As such, life sciences stand at the heart of our funds focus on individual health and happiness.

We have been investing in life sciences since 2016 when we started Joyance, our initial health-focused fund. But this year, we are going to take it up a notch.

We have deepened our deep science team. Jun Deng (PhD in Physiology), our first hire for Joyance, continues to lead our bio practice from Silicon Valley. Jun has been joined by Neha Tanna (MD/MBA) in London, as well as Michio Painter (PhD in Immunology) and Emilia Gonzalez (Harvard bioscientist) in Boston. This Gang of Four has completely rethought our approach to life sciences.

For an early and relatively small fund like ours, the key to successful life sciences investing is picking out potential winners early. Unlike other areas of investing, in Life Sciences, a company can drop to zero in value quite suddenly, after millions of dollars are expended. A treatment that worked great in the lab, and in mice and pigs, can show unexpected side effects or simply fail to work or in humans. This is dangerous investment territory. Even if things go well, it can take literally decades for a new Life Sciences approach to make the market. We are a 10-year fund that invests at inception, so those long lead times are problematic.

So, what will we do?

The watchword for our funds in life sciences is Discipline.

For 2020, we will organize Life Sciences into three sectors: Digital Health, Pharma, and Medical Devices. Our approach to each of these will be different. In this post, well look at how we organize these areas. The next post digs into the new investing frameworks weve developed.

Digital Health

The primary Life Sciences focus area for both of our funds will be Digital Health.Digital Health, broadly defined, is the convergence of digital technologies with health, healthcare, daily life, and society to enhance the efficiency of healthcare delivery and make delivery of prevention and care personalized and precise.

We only want to invest in digital health companies that address large pain points, have the potential for dramatic impact on patient/consumer outcomes, and have clear business models.

Our investments will target consumers, providers, or payers as the sources of revenue, in that order.

Our Digital Health focus areas for 2020 will be:

Healthcare-enabling technology

Major chronic diseases

Neurotech

Mental health and happiness

Nutrition and fitness

Femtech

Boomer economy/Senior care

Digital Health will be the primary Life Sciences focus area for Joyance. Digital Health is a powerful way for science to deliver Delightful Moments, which is Joyances singular target. Delightful Moments shift individuals, for at least a short time, out of the daily humdrum and toward greater joy, calm, comfort, absence of anxiety, absence of pain.

Social Starts will focus on Digital Health alongside the other deeper bioscience, pharma, and medical device areas described below. Our new Social Starts fund, Social Starts Health and Happiness, will bring resources and attention to therapeutics, pharma, and biologics we have never had before.

Our approach to Digital Health will be encompassing. We will find and evaluate many companies. Because digital health startups can achieve revenue quickly, we can evaluate these companies using tools similar to those we use for CPG.

Pharma/Biotech/TherapeuticsSocial Starts will be exceedingly disciplined yet maximize investments in pharmaceuticals, therapeutics, and biotechnologies that address a large consumer pain point, have a defined lead asset, a <24-month path to Series A, display a strong human rationale and address an obvious clinical need. Joyance will invest in these areas rarely, only when Delightful Moments emerge from clinical development.

For 2020, our Pharma/Biotech/Therapeutics focus will be:

Microbiome: When there are clear indications and evidence for species/strain value and level of importance.

Oncology: Space may be an opportunity only if the approach is novel, as it is a crowded area.

Neuro: Worth exploring, but we need to be stringent in following our rules, as there are very high failure rates.

Metabolic, cardiovascular, infectious disease, vaccines, and ophthalmology: Also worth exploring, as they have the highest approval rates from the FDA.

We need to avoid:

Big platform plays with little evidence, as they are capital intensive from the start and have long timelines.

Longevity, as the field is not mature enough; though we should watch this area and pounce when real evidence emerges.

We should work hard to uncover deep science companies in these areas. In deep science bio, though, it doesnt matter if we evaluate 500 companies and invest in only none. In every case, our task is to apply our filters and only move forward when startups completely satisfy our requirements. Charisma doesnt count in pharma/therapeutics. The market wont matter if the science doesnt work.

Medical Devices

Due to long trajectories, lack of exit paths, and heavy regulation, we will be hyper-selective in medical device investment. We will focus on medical device companies that address a large problem, have high barriers (e.g., De novo / PMA), and have veteran teams in their areas.

We will look for appropriate medical devices in these areas for 2020:

We are looking for next-generation medical devices that recognize the increasing patient-centricity of care. Merely improving the performance of current devices/technologies is not sufficient. Devices that can only operate within institutional settings are much less interesting to us than those that can bring care closer to the lives of people.

This three-part approach allows us to evaluate life sciences flexibly. This is a vast area of science and innovation. We need to adapt what we do to the characteristics of the divergent aspects of life sciences.

Reprinted by permission.

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Where We Are Investing Now: Life Sciences, Part 1 - AlleyWatch