Virta Health Closes $93 Million Series C, Adds Six New Advisors, Including Drs. Martin Abrahamson, Francine Kaufman, and Alan Moses – January 10, 2020

More than doubles Virta’s total equity funding to date, will “enable investing in growth to meet demand”; who’s who list of prominent advisors

Early this morning, Virta Health, the “online diabetes reversal clinic,” announced an impressive $93 million Series C round, led by repeat investor Caffeinated Capital. According to the press release, the funding “will enable investing in growth to meet the demand for T2D reversal from employers, health plans and government,” suggesting Virta is continuing to see strong demand for its low-carb + continuous remote-monitoring intervention. See Virta’s presentation at the Rock Health Summit 2019 for a look at Virta’s approach to scaling.

San Francisco-based Caffeinated Capital has participated in all three of Virta’s funding rounds, making presumably its most significant investment to date in leading the Series C. Other key participants in the Series C round were Venrock, Obvious Ventures, Creandum, Playground Global, and SciFi VC. Notably absent was the prestigious Founders Fund, which participated in Virta’s $45 million Series B. Founders Fund is one of the biggest names in the tech venture capital world whose portfolio includes Facebook, AirBNB, SpaceX, Spotify, Lyft, Stripe, Postmates, Twilio, and more.

In total, Virta has now raised $166 million, putting the company in a strong position to focus on scale and execution of its care platform. Elsewhere in the digital health space, Omada recently raised $73 million in its Series D, though Omada has an arguably more challenging business model in focusing on diabetes prevention rather than type 2 diabetes “reversal.” Virta has an ambitious goal of reversing type 2 diabetes in 100 million people by 2025 (nearly half of the current global diagnosed diabetes population). We continue to perceive this goal as primarily aspirational – of course, once Virta becomes more scalable (see Dr. Alan Moses’ quote below), anything can happen, and Virta did see strong growth in 2019, with a tripling of its customer base, including wins for BCBS of California (3.7 million members) and the VA (1 million members). In November 2018, Virta began placing 100% of its fees at-risk, which is certain in our view to help drive momentum with employers and health plans. We do not have data on how many Virta members have put their diabetes into either “remission” or “reversal” - opinions vary on when “remission” or “reversal” happen. We believe each includes no medication, including metformin and we’d very much like FDA to expand the indication of metformin to include high-risk pre-diabetes that has a high chance of “converting” to type 2 diabetes (we recognize this definition needs to be refined).

  • In addition to the $93 million funding round, Virta also announced the addition of six new “key advisors,” who bring valuable, very serious experience in both diabetes and healthcare, more generally. This prominent list of advisors is a major vote of confidence in Virta and should prove incredibly valuable as Virta continues to scale. The advisors are:

    • Martin Abrahamson, MD—Associate Professor of Medicine at Harvard Medical School; faculty member at Beth Israel Deaconess Medical Center in Boston, MA; former SVP and Chief Medical Officer of the Joslin Diabetes Center

    • Francine Kaufman, MD—Chief Medical Officer of Senseonics, Inc.; former Chief Medical Officer and VP of Global Clinical, Regulatory and Medical Affairs at Medtronic Diabetes; Distinguished Professor Emerita of Pediatrics at USC; Children’s Hospital Los Angeles; former President of the American Diabetes Association

    • Alan Moses, MD—former SVP and Global Chief Medical Officer of Novo Nordisk; former SVP and Chief Medical Officer of the Joslin Diabetes Center

    • Peter Andruszkiewicz—former CEO of Blue Cross and Blue Shield of Rhode Island

    • Hassan Azar – former SVP of Total Rewards at US Foods

    • Steve Martin—former CEO of Blue Cross and Blue Shield of Nebraska

  • Virta has published very promising two-year results (n=262) on its program showing 10% weight loss and a 0.9% absolute A1c reduction – that’s particularly impressive from the low baseline of 7.7%. The comparator arm of the study showed a significant difference in A1c (+0.4% from baseline 7.9%), with no change in weight. At two years, 7% of the Virta group had achieved “complete diabetes remission” (A1c<5.7% without medication except for metformin); “partial remission” (A1c<6.5% without medication), was 18%. 54% had achieved “diabetes reversal” (A1c <6.5% and no medications apart from metformin). Cost savings for insulin-users were estimated at “nearly $5,000 annually,” partially driven by an 81% reduction in mean insulin dose among Virta participants (81.9 to 15.5 U/day).

Quotes from Virta’s New Advisors

  • “In regard to the diabetes/obesity epidemic, Virta's combination of effective dietary intervention with lifestyle changes remotely connecting a patient and health care providers offers a model that is scalable to large populations. The data so far demonstrate that a substantial proportion of the individuals enrolling in the program can actually reverse their diabetes. If this can be applied more broadly there is a strong likelihood that the Virta program can achieve something that individual practitioners have not been able to achieve for populations.” – Dr. Alan Moses, former Global Chief Medical Officer, Novo Nordisk


--by Albert Cai and Kelly Close