Pharma giant Roche to acquire Flatiron Health for $1.9 billion
The deal represents one of the first big payouts for investors in New York City's health tech industry
Manhattan oncology data company Flatiron Health said Thursday it has agreed to be acquired by the Swiss drugmaker Roche for $1.9 billion. The landmark deal signals the growing strength of the city's health technology sector.
Flatiron sells a specialized electronic health record system for oncology and collects data from community oncology practices and academic medical centers. It curates the data to provide oncologists with insights into cancer treatment.
New York City health tech companies have raised hundreds of millions in venture capital but few have cashed out for investors through a sale or an initial public offering. Flatiron's deal with Roche represents the start of a new stage for the city's health tech ecosystem, said Unity Stoakes, co-founder and president of StartUp Health, a Manhattan-based digital health accelerator.
"While there's been a lot of capital flowing into the market, not enough investors have been thinking about how long it takes to build a truly great company," Stoakes said. "This is a great example that there's much more to come. It just takes time."
For Roche, the deal will give it access to data at the community level to help with drug development.
"This is an important step in our personalized health care strategy for Roche, as we believe that regulatory-grade real-world evidence is a key ingredient to accelerate the development of, and access to, new cancer treatments," Daniel O'Day, Roche Pharmaceuticals' chief executive, said in a statement.
Roche had previously led Flatiron's $175 million investment round in 2016, acquiring a 12.6% stake.
Flatiron raised more than $300 million in venture-capital funding and most recently was valued at $1.2 billion. Other investors that will cash out in the deal include Google Ventures and First Round Capital. The company said it would "continue its current business model, network of partnerships and overall objectives."
Nat Turner, Flatiron's co-founder and chief executive, said in the joint announcement that Flatiron would use the money to invest in its oncology software for providers. He said the data it aggregates would "remain available to the entire health care industry."
"Roche has been a tremendous partner to us over the past two years and shares our vision for building a learning health care platform in oncology ultimately designed to improve the lives of cancer patients," Turner said.
Turner co-founded Flatiron in June 2012 with his former University of Pennsylvania classmate Zach Weinberg. The duo had previously started Invite Media, an advertising technology company that Google bought for a reported $81 million in 2010.
After helping to integrate Invite Media into Google, Turner and Weinberg left to start Flatiron.
Turner told Crain's in 2015 he was motivated to found Flatiron after his young cousin was diagnosed with leukemia. He recognized that data that was being created in cancer treatment, outside of clinical trials, wasn't being organized in a meaningful way that could help physicians and researchers.
But neither Turner nor Weinberg had a medical degree or experience in oncology.
Turner said back in 2011, while they were still at Google they began exploring an oncology company, and Google allowed them to build out the idea. They did so by taking about 10 meetings a day for six months, meeting with oncologists, researchers and whoever else would meet with them, Turner recalled in 2015.
StartUp Health's Stoakes said Flatiron won't be the last startup to follow that path.
"It's indicative of a trend of entrepreneurs from other industries that are coming into health care and reinventing the future."
"Pharma giant Roche to acquire Flatiron Health for $1.9 billion" originally appeared in Crain's New York Business.
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