Body scanner startup Q Bio raises $27 million

Body scanner startup Q Bio raised $27 million in funding from existing investors, including Khosla Ventures, Andreessen Horowitz, and Founders Fund, my colleague Mohana Ravindranath reports. The funding will be used to manufacture Q Bio's scanner, which uses a proprietary imaging technique known as "tensor field mapping" that the company says can generate more analysis faster than traditional technology.

Q Bio hopes to sell its scanners to health systems as an alternative to MRI machines, but it's also among a crop of companies rushing to sell elective full-body scans despite uncertain evidence of the benefits.

Deals

Privacy startup raises $30 million to help providers

Privacy startup Freshpaint raised $30 million led by Threshold with additional investment from SignalFire, Intel Capital, Zero Prime, and Y Combinator. Freshpaint is among a new wave of companies promising to help health care organizations keep up with online privacy regulations. The company's platform strips identifiable information about website visitors before the data is sent to advertising middlemen such as Meta or Google.

As Mohana reports, a series of recent investigations have revealed that health tech startups and hospital systems have employed sloppy practices with patients' health information, spurring class action lawsuits and updated guidance from federal regulators. While it remains unclear what rules will be in place when all the legal wrangling is done, at least some organizations would try to do the right thing if it was easier. Startups like Freshpaint, and their investors, see an opportunity in the regulatory confusion around protecting sensitive health data.

Fundraising

Did the valuations go up or down?

Just a week after we got a look at one set of numbers about health tech investment from the first half of 2024, HSBC released its own report. Among the takeaways is an analysis of how company valuations have changed by series stage. Without getting too much into the weeds, one interesting finding is that, of 23 later stage deals analyzed, nine were down rounds, meaning new investment came in at a lower company valuation. HSBC notes that many of these companies were coming off very high previous valuations attained during the pandemic when investor sentiment was upbeat and interest rates low, "so flat or slightly decreased valuations were considered a relative success."

Nevertheless, for many category leaders that raised money in the first half, overall valuations fared pretty well, as shown in the chart above.

Data

New trial illustrates improving DTx evidence

For years, digital therapeutics companies have had to live with the long legacy of early companies in the sector who produced less-than-ideal evidence backing their novel interventions.

But as the industry has matured, so have clinical trials, especially of treatments that will be submitted to Food and Drug Administration review for marketing authorization. A good example is the the trial supporting Stanza, a treatment for fibromyalgia developed by Swing Therapeutics, which was cleared by FDA in 2023. The company recently published the study in The Lancet revealing a number of details that suggest the increasing sophistication of clinical trial procedures for DTx companies, including the use of a strong sham control and robust reporting of engagement and attrition.

What we're reading

How Colorado's largest health system creates and integrates technology into patient care, npj Digital Medicine
Plugging public health data into the health IT ecosystem to protect national health, NEJM Catalyst
Broad Institute, facing end of Microsoft cloud contract, shuffles data science leadership, STAT