Big deal: Element Science factors in $145m series C

What do you do after you have launched a spinout that has raised venture capital from illustrious backers such as pharmaceutical firm Novo, care provider Kaiser Permanente and medical device manufacturer St Jude Medical, and successfully gone public through a $107m initial public offering?

You do it again, of course.

Uday Kumar, an adjunct professor in bioengineering at Stanford University, may sound familiar if you have been reading Global University Venturing for a while: his previous venture, arrhythmia diagnostics technology producer iRhythm Technologies, won the GUV Award for Exit of the Year in 2017.

That spinout, founded in 2006, had collected $112m in equity financing before going public and has only gone from strength to strength since then: both in terms of commercial successes – for example, it signed a collaboration deal with Verily, the life science subsidiary of conglomerate Alphabet, in September 2019 focused on improving the screening, diagnosis and management of patients with atrial fibrillation – and in financial terms – after pricing its shares at $17 for the IPO in 2016, the stock has steadily risen to close at $95.72 last Friday, giving iRhythm a market cap of $2.57bn.

It is hardly a surprise, then, that Element Science, Kumar’s new venture that is working on a wearable cardiac monitor, managed to attract another Alphabet subsidiary for its series C round: early-stage corporate venturing arm GV was among those to have put $145.6m into the company last week.

Deerfield Healthcare, a $550m vehicle run by Deerfield Management and backed by multiple universities, co-led the round with Qiming Venture Partners USA. The round also included Cormorant Asset Management, Invus Opportunities and, notably, Third Rock Ventures.

The latter is an investor and venture studio renowned for establishing companies to commercialise academic research. While there was no definitive indication that Third Rock had launched Element Science, the fact that Third Rock was named as an existing shareholder at the time of the series C round and that Kumar was an entrepreneur-in-residence between October 2012 and March 2014 seems to indicate as much.

Incidentally, GV, too, was named as a returning backer for the series C round. Yet not much more is known about the historic financials of Element Science. The company essentially emerged from stealth with the series C round, though regulatory documents show it had secured $12.5m in funding in 2014, $25m in capital in 2016 and $9.5m in debt in September 2019.

There is some overlap between the launch of Element Science and the flotation of iRhythm Technology: Element Science was founded, as Revive Defibrillation Systems, in 2011, around the same time that Kumar stepped down from his responsibilities at iRhythm.

And you cannot fault Kumar for keeping Element Science under wraps for a while. For one, the expectations must be significant after a success such as iRhythm. For another, developing Element’s technology – like the vast majority of healthcare products – has taken a while. Indeed, the series C funding has been allocated to final clinical studies and a commercial launch of Element’s device, the Jewel Patch Wearable Cardioverter Defibrillator, aimed at cardiac patients transferring from the hospital to their home.

The system detects and treats life-threatening arrhythmias – irregular heartbeats – in patients that temporarily have a heightened risk of sudden cardiac death, a condition that affects some 500,000 patients in the US each year alone.

The device is built on the Jewel platform, which relies on machine learning algorithms and a patient-focused engineering development process. Element Science expects the platform to be easily adaptable to a long list of medical needs and clinical settings – so it seems the series C round is only the beginning.

Kumar has gathered an elite group of scientific advisers to make his latest vision a reality: Robert Harrington, chairman of Stanford’s Department of Medicine, Jeremy Ruskin, founder and director emeritus of Massachusetts General Hospital Cardiac Arrhythmia Service and Harlan Krumholz, director of the Center for Outcomes Research and Evaluation at Yale-New Haven Hospital are all providing their expertise.

The board of directors is similar impressive and one of its members, William Kucheman, former chief executive of medical device maker Boston Scientific, was clearly excited about the company’s prospects when he said: “Given the seriousness of the conditions Element Science is addressing, this important level of funding is needed to support the efforts needed to scale Element Science’s manufacturing, quality and clinical infrastructure in the appropriate manner necessary for the next stage of the company’s development.

“Everyone at the company is focused on successfully completing our clinical studies and beginning commercialisation, and is looking forward to broadly providing these needed solutions to patients to help save lives.”

Christopher Shen, managing partner of Qiming Venture Partners USA, was similarly thrilled and added: “We see massive opportunities to significantly impact patient health with the proprietary Jewel platform in the US and Europe, as well as large, underserved markets such as China.

“We are excited to partner with Element Science in leading the effort to make this important life-saving technology available for patients globally.”

Kumar, who apart from serving as founder is also the chief executive and president of Element Science, declared: “Our next-generation digital wearable is a unique breakthrough in personalized digital healthcare based on years of extensive research and testing.

“The Jewel platform supports both therapeutic and diagnostic capabilities and is designed for ease of wearability to facilitate high compliance and efficacy.

“Given the broad potential for the Jewel platform to save and improve the lives of patients worldwide, we welcome the strong support of this impressive consortium of investors.”

It is always difficult to predict the success of a spinout – or indeed any company – but betting on Element Science’s progress seems a sure-fire bet if ever there was one. That is, of course, partially due to the calibre of investors but it is also because of Kumar himself. And as much as GUV focuses on venture funding and the phenomenal work that tech transfer offices do every day, Kumar is a prime example that this entire ecosystem ultimately stands on the shoulders of academics.