Part 2 of our report looks closely at some of the high profile failures to date in order to highlight warnings signs for projects and collaborations in the future. You’ll hear from Skip Fleshman, General Partner at Asset Management Ventures, about his perspective on the enormous investment being pumped into the market and how it should be managed. You’ll get an insider view from Cure Forward and Imperial College Health Partners about some of the reasons behind failures they have experienced and what we can learn from them. And through 2 case studies, you’ll learn more about how transparent and accurate results and trials are integral to ongoing development and success.

1. Failed Digital Health Efforts
What Can We Learn?
1

2. INVESTMENTANDOUTCOMEDISPARITIES-A
TROUBLINGTREND
GENERAL PARTNER
Asset Management Ventures
Skip Fleshman
Portfolio Companies Include:
Freenome
Proteus Digital Health
Evidation Health
HealthTap
Arterys
WellDoc
1DocWay
Chimerix
3T Bio
Lark
Collaborators Include:
Boston Children’s Hospital
“The recent large Series A financings in digital health caught my attention. Clover grabbed
$100 million in equity and debt financing, Color Genomics raised $15 million, Cure Forward
raised $15 million, Honor raised $20 million and Lyra Health raised a whopping $35 million.
Although the proliferation of $1 billion + mega-funds has made it hard for many venture
capitalists to justify smaller Series A investments, I don’t think this is the right approach for
venture capitalists or for startups. The excess capital creates the wrong incentive structure for
long-term success.
As soon as a large Series A is closed, entrepreneurs will have a strong temptation to spend
this money faster than is prudent which can quickly lead to inefficient, and sometimes wasteful,
spending. This pressure to spend could come from within or from investors directly, as they
expect this money to be used to generate returns on their investment.
Large Series A rounds are highly correlated with very high valuations which can cause other
problems too. First, this increases early stock option strike prices. One of the benefits of being
an early employee is getting options that have a value in pennies, not dollars. This is taken
away when the Series A valuation is already high. High valuations also set higher exit
expectations which take the option of an early and smaller M+A, off the table. Investors still
expect outsized returns on the larger valuation.
What’s a better way to deal with this? Historically the venture capital community relied on a
milestone-based investment approach where the company was funded with enough capital
(plus reserves) to get to specific, value-creating milestones. These smaller rounds create
expectations that the company will hit manageable milestones over time in an efficient manner
— increasing value with each subsequent round and iterating along the way. This creates
achievable incentives that focus the team on specific goals but also engenders a sense of
urgency to create appreciable value.”
EXPERT PERSPECTIVE

3. CASESTUDY-IMPERIALCOLLEGEHEALTH
PARTNERS&BABYLON
“In our experience and having seen dozens of digital solutions cycling through
various local accelerators and NHS programmes, there are a number of
challenges that digital entrepreneurs may want to consider:
1. Be clear on the problem (up to 80% of companies we see can’t
articulate what the problem is they are aiming to address with their
solution)
1. Lack of technical and operational integration is by far the biggest
deployment block for those solutions that get taken forward. Even
technically sound and powerful solutions such as mobile ECG devices
are often not interoperable with existing EPR systems in primary or
secondary care. As a consequence, exchange happens fairly manually
or via pdf files. These are often not searchable in the EPR systems and
therefore lose their value. Consequently, digital solutions struggle to
integrate into existing workflows and risk creating additional operational
steps. Moving from these point solutions to solutions that anticipate
workflow and pathways is paramount.
Axel has been involved with Imperial
College Health Partners since its
conception in 2011 as an Interim Director
and joined the Partnership full-time in
August 2013 as Director of Strategy and
Commerce. As of September 2016 Axel
was appointed as Managing Director.
Prior to joining the Partnership, Axel was
Executive Director of Strategy and
Business Development at Chelsea and
Westminster Hospital NHS Foundation
Trust. He brings a broad range of
experience from academia and central
government where he was Deputy Director
and Chief Analyst at the Prime Minister’s
Strategy Unit in the Cabinet Office and No
10.
Dr Axel Heitmueller
Managing Director
Imperial College Health Partners
INSIDER CASE STUDY

4. CASESTUDY-IMPERIALCOLLEGEHEALTH
PARTNERS&BABYLON
4
3. We do not see a future for small app or solution developers selling individually
into health care systems. The transaction costs are too high and often these
relationships never go beyond initial pilots. Instead, we would like to see greater
integration of solutions into existing supply relationships. E.g. it seems inconceivable
that in the future MRI scanners would not come with a marketplace for decision support
applications potentially driven by AI as part of the machine. Selling into a smaller
number of large suppliers seems more effective than selling to the large number of
relatively small healthcare organisations. However, ensuring plurality of solutions in
these market places will be a key challenge for e.g. device companies.
4. Patient centred design should be the norm not the exception. Today, the vast
majority of digital solutions are not developed with that design principle in mind.
5. Increasingly, health professionals are looking for a bundle of solutions. For
example, a package of diabetes self-care may consist of educational content, behaviour
change interventions and monitoring. At the moment, clinicians or patients have to
interact with individual apps or solutions when the true value comes by combining them
into a coherent package. But there is a lack of integrator functions and business models.
Combinatorial solutions that self-regulate and ensure the best solutions reach the patient
or care professional at any point in time are not currently in the market.
Axel has been involved with Imperial
College Health Partners since its
conception in 2011 as an Interim Director
and joined the Partnership full-time in
August 2013 as Director of Strategy and
Commerce. As of September 2016 Axel
was appointed as Managing Director.
Prior to joining the Partnership, Axel was
Executive Director of Strategy and
Business Development at Chelsea and
Westminster Hospital NHS Foundation
Trust. He brings a broad range of
experience from academia and central
government where he was Deputy Director
and Chief Analyst at the Prime Minister’s
Strategy Unit in the Cabinet Office and No
10.
Dr Axel Heitmueller
Managing Director
Imperial College Health Partners
INSIDER CASE STUDY

5. Why didn’t this work?: What was once Chicago’s leading Unicorns is now embroiled in
controversy and is being dogged by allegations and lawsuits relating to misleading clients
and investors on its performance. BMS has not renewed its investment in the company in
the wake of this controversy. The company refutes the claims, but it is clear significant
reputational damage has been incurred and in health care, loss of reputation can be fatal
When: November 2017
Total Investment: $500,000,000
What can we learn?: Don’t rest on your laurels and don’t celebrate the wrong metrics.
Outcome Health reached a valuation of $5.5 Billion in 2017 - a lot of time and effort went
into the business model and marketing at the detriment of the offering.
To Investors: Don’t promote cutting corners - rapid growth is not always a good thing.
To Founders: Deal with allegation head on both internally and externally. The whole
system is still learning and the is a certain about of room for mistakes but sweeping
failures under the carpet will benefit no-one.
To Consumers: Don’t expect the integration of new tech systems to be a one stop shop -
engage in your own monitoring and evaluation and work with your collaborators to iterate
solutions and keep outcomes in check
5
Outcome Health – The Danger of Aggressive Growth

6. ResApp - Failed Clinical Trial
Why didn’t this work?: Acquired by Narhex Life Sciences in 2015 ResApp has enjoyed its fair share of
success. However ResApp recently failed trials in the USA (Massachusetts General Hospital, Texas
Children's Hospital, Cleveland Clinic) due to lack of fluency in understanding of such technology, lack
of standardization across multiple sites, lack of quality control. Proposed re-trials in the pipeline.
When: November 2017
Total Investment: $16,500,000 AUD
What can we learn?: ResApp CEO Tony Keating spoke openly about his key lessons following the
failed ResApp Trial calling for those engaging in similar collaborations to not make assumptions about
technical fluency; make sure that data protocols are clear and lead to meaningful data and to carefully
choose great partners and be willing to try again if at first things don’t work out as expected. Read the
full interview here
To Founders: Take a leaf out of Tony Keating's book - learn from your mistakes and speak as candidly
as possible to help the wider community mitigate against the same stumbling blocks.
To Partners/Consumers: For CROs and healthcare systems who are experts in their fields testing tech
interactions may seem like something that can relatively easily be tested in line with existing
processes and frameworks - think twice. Accept that what you’re doing is unique and unprecedented
and make sure to invest your time in getting all stakeholders on the same page to adjust your usual
approach appropriately.
6

7. 7
“I think the lesson learned was different
than "know your business model".
The issue was more that we took too much
time and money to build and launch the
platform, and then we had too little time
to demonstrate market uptake and
revenue before we needed to raise more
capital.
If we had started sooner with a less-perfect
website, we would have demonstrated
better proof of principle and the next
financial round wouldn't have been so risky
for new investors.”
Martin Naley
FOUNDING CEO and CSO
CURE FORWARD
INSIDER CASE STUDY
Why didn’t this work?: Cure Forward were forced to suspend their services which aimed to
address the disconnect between patients and awareness of clinical trials relevant to them as
one way to solve the most costly and prolonged part of drug development - clinical trial
recruitment. This suspension of services was claimed to be due to the inability of the company
to generate enough revenue in order to attract new investors
When: May 2017
Total Investment: $17,000,000
Customers: Quintiles and Novartis
What can we learn?
To Founders: Cure Forward's model consisted of payment once a patient was activated in a
trial, payment for value rather than fee for service, bravo. However in this situation long lead
times exist which can make getting a startup off the ground difficult when waiting to get paid
To Partners/Consumers: Even following the announcement that Cure Forward was dissolving
the company maintained its loyalty to their existing customers. They communicated to patients
that they should refer to the Cancer Support Community for guidance in their treatment
options. Loyalty to consumers is crucial even in times of tough transition.

8. What Next?
Collaborating for Improved Outcomes & Financial Returns
8

9. Key Takeaways
DEFINE SUCCESS BY
IMPACT NOT
INVESTMENT
True innovation does not
happen in isolation
9
JUSTIFY ADOPTION
AND REDUCE COSTS
Who pays? healthcare is
already expensive don’t add to
the noise
STAY LASER FOCUSED
ON EVIDENCE OF
EFFICACY
Accept that in healthcare that
takes time
REAL SUCCESS
REQUIRES
COLLABORATION
True innovation does not
happen in isolation

10. 10
Sanjeev Bhavnani, MD, is a board certified
physician specializing in cardiac intensive
care, heart failure, left ventricular assist
devices (LVAD), therapeutic hypothermia and
multimodal imaging, including
echocardiography, nuclear and vascular
imaging.Dr. Bhavnani has deep academic and
research expertise in mobile health, wireless
medicine and healthcare delivery
transformation. His work has focused on the
utilization of technology-enabled care, device
designs, data analytics and policy
implementation. As a lead investigator, he has
designed clinical trials using smartphone apps,
wearable and wireless devices, and sensor-
based technologies designed to improve
healthcare quality and patient self-care, while
reducing hospital readmissions.
Dr Sanjeev Bhavnani
Division of Cardiology
Scripps Clinic and Research Foundation
FUTURE GAZING
"Transformation with digital health, big data, and precision health is likely
to result from a confluence of approaches that brings together multiple
stakeholders in the care delivery process. By incorporating key
principles of evaluation, integration, and engagement to those
factors important to patient care and research will facilitate the creation
of the next phase of technology-enabled healthcare to drive
improved outcomes.
Healthcare transformation requires collaboration between
stakeholders and to best position early phase ideas to grow into scalable
and meaningful solutions. Harnessing new partnerships and promoting
collaborative efforts will enable the identification of unmet needs, and to
design for efficient implementation as new technology, data, and
precision-based innovations are applied to patient care.”
Read More in the 2017 Roadmap for Innovation—ACC Health Policy
Statement on Healthcare Transformation in the Era of Digital Health, Big
Data, and Precision Health
Key Takeaway for Future Successes:

11. 11
“As we look at digital and data plays, our models and processes of
evaluating the ventures associated with them tend to remain
outdated. Our manual diligence processes can and should be
supplemented with data analysis that includes predictions of market
risk. These tools are not widely used today in venture, despite their
strategic relevance and ability to deliver on highly accurate predictive
models of market survival and growth.
Why is that? Why is it that in venture we tend to still rely heavily on the
manual diligence process without collaborating with or investing in
predictive models that can complement our manual diligence and lead
to higher portfolio performance and success?
Moreover, incorporating this capability at government grant funding
levels in the value chain will naturally yield better ‘hit rates’ for follow-
on investors as well- improving overall performance in this
space.”
Sarah Fisher is the Commercial Director for
Janssen Healthcare Innovation, Europe, within
Johnson & Johnson. She specializes in global
commercialisation strategies for new
technology introductions with a focus on
execution excellence and the formation of new
business units. She started her career with
J&J in New York City, and has a combined 12
years of experience across medical device
and pharmaceutical business units within the
Johnson & Johnson portfolio of companies.
Sarah’s passion for entrepreneurial ventures
has driven her to serve in various commercial
and operational roles within 5 different
intrapreneurial ventures, and one post-
acquisition commercial integration venture.
Sarah Fisher
DIRECTOR GLOBAL MARKETS
EXTERNAL INNOVATION
Johnson & Johnson
FUTURE GAZING
Key Takeaway for Future Successes:

12. Connecting healthcare leaders