Today we’re pleased to announce that Scale has led the $50 million Series C funding round for OM1. Founded in 2015, OM1 uses machine learning to stitch together valuable data assets detailing clinical outcomes for a growing list of conditions. Their technology gives insurers, pharmaceutical and medical device companies, and governmental agencies fast access to data that wasn’t available even 5 years ago.
OM1 is a textbook case in how a young company can position itself to benefit from industry-wide trends — in this case, the entire healthcare sector’s increasing use of real-world evidence (RWE) data as a tool to drive down costs throughout the system while generating better patient outcomes.
Everyone Wants Healthcare to Be Better and Cheaper
Though mostly invisible to healthcare consumers, the U.S. healthcare system is in the midst of a transition from a fee-for-service to a value-based model. For insurers, ever-rising healthcare costs have led to increased scrutiny of prescription drug pricing. They want to better understand the efficacy of treatments before agreeing to bear the costs of those treatments.
Pharmaceutical and life sciences companies are themselves battling rising costs in new drug and device development. They continue to pursue label extensions — the term for the FDA approving the use of an existing treatment for a new condition — to drive incremental revenue and improve returns on the often multi-billion price tag for new drugs. They’re also interested in data showing whether already approved therapies are working as intended.
This state of affairs naturally creates a tension on both sides of the market though there’s common ground on the need to drive down costs wherever possible. OM1 sits right in the middle, providing real-world evidence data that both sides value and need.
Demand for Real-World Evidence Growing Quickly
The second tectonic shift here is on the regulatory front. Clinical trials related to FDA approvals have historically been immensely costly for developers of new drugs and medical devices in terms of both time and expense. A Johns Hopkins study that examined 138 trials for 59 drugs found that clinical trial costs ranged from $2 million for a four-patient trial for drug to treat a rare metabolic disorder to $347 million for a large study of a heart-failure drug. That’s just the clinical trial costs, with the total outlay for new therapies often running into the billions.
With the passage of the 21st Century Cures Act, the FDA is mandated to accept real-world clinical evidence in certain regulatory decisions, including label extensions. Where before Pfizer, for example, might spend $100M on a Phase 4 clinical trial for a new drug, OM1 can help them instead spend just a few million dollars to access relevant RWE data. There haven’t been many cases of this yet, but this is the direction the FDA is moving and OM1 is well positioned to be a go-to provider of that data.
The cost savings are hard to ignore for pharma and medical device companies. Before, drug discovery and device development were seen as one giant monolithic expense. After with OM1, those companies can reduce the clinical trial portion of that lump sum without harming their chances at the FDA.
RWE is yet another area where machine learning capabilities are rapidly advancing the availability and speed at which data can be made usable. Machine learning lets OM1 stitch together massive, disparate datasets and generate predictive insights like understanding comorbidities across a large patient population. The $1.9B Roche acquisition of Flatiron in 2018 (which primarily focused on oncology) showed that RWE data assets are seen by the consumers of that data to be hugely valuable.
By wrapping all aspects of aggregating, normalizing, and linking very large and disparate data sources into a unified and highly differentiated platform, OM1 has grown rapidly and is poised to continue to do so.
The company has already built a rich data set around chronic conditions like lupus, cardiovascular disease, rheumatoid arthritis, and certain cancers. The Series C capital allows them to expand into other conditions and further develop their machine learning platform–and continue helping to drive down costs throughout the healthcare system.
OM1 is fortunate to have as its founder and CEO Dr. Rich Gliklich, the former CEO of Outcome (acquired by Quintiles) and a world-leading authority in healthcare outcomes and analytics. His background lets him move seamlessly from laboratory science to data science to the intricacies of the FDA review process.
We look forward to working with Rich and everyone at OM1 in the years ahead. Congratulations on today’s milestone.