German tech investor leads Series A for Germany’s first medical cannabis startup

Germany just hit a new milestone in the space where venture capital and the burgeoning cannabis industry meet.

Berlin startup Demecan has completed a Series A financing round of €7 million to expand its production facility for medical cannabis and the wholesale trade in Germany. It has become the only German company allowed to produce medical cannabis in Germany.

This is a watershed moment for the country and is the first investment in this sector for the private investor network connected to btov Partners (a VC). The other half of the funding came from a single German family office, which is understood to have its roots in the consumer goods sector. Only two other companies, two of them from Canada, were awarded the contract to produce medical cannabis in Germany in May 2019.

btov Partners manages assets of €420 million and has previously invested in tech startups such as Blacklane, Data Artisans, DeepL, Facebook, Foodspring, ORCAM, Raisin, SumUp, Volocopter and XING.

The green light from Germany’s Federal Institute for Drugs and Medical Devices (BfArM) means Demecan will be able to produce at least 2,400 kilograms of dried cannabis flowers over the next four years. Demecan is also active as an importer and wholesaler of medical cannabis and can thus cover the entire value chain. Since the German government allowed cannabis to be prescribed for therapeutic purposes in 2017, demand has outstripped supply.

Jennifer Phan of btov Partners said in a statement: “Demecan operates in a very attractive market at the right time. Germany currently represents the third-largest market for medical cannabis in the world and is on a growth path. We believe that the company has a first-mover advantage in a highly regulated market environment, especially as it is the only German manufacturing and trading company in the European market.”

Dr. Constantin von der Groeben, co-founder of Demecan, added: “In recent years, we have intensively dealt with the market and reached an important milestone by winning the tender process. We are now focusing on further growth and the start of production in 2020.”

This startup just raised $8 million to help busy doctors assess the cognitive health of 50 million seniors

All over the globe, the population of people who are aged 65 and older is growing faster than every other age group. According to United Nations data, by 2050, one in six people in the world will be over age 65, up from one in 11 right now. Meanwhile, in Europe and North America, by 2050, one in four people could be 65 or older.

Unsurprisingly, startups increasingly recognize opportunities to cater to this aging population. Some are developing products to sell to individuals and their family members directly; others are coming up with ways to empower those who work directly with older Americans.

BrainCheck, a 20-person, Houston-based startup whose cognitive healthcare product aims to help physicians assess and track the mental health of their patients, is among the latter. Investors like what it has put together, too. Today, the startup is announcing $8 million in Series A funding co-led by S3 Ventures and Tensility Venture Partners.

We talked earlier today with BrainCheck co-founder and CEO Yael Katz to better understand what her company has created and why it might be of interest to doctors who don’t know about it. Our chat has been edited for length and clarity.

TC: You’re a neuroscientist. You started BrianCheck with David Eagleman, another neuroscientist and the CEO of NeoSensory, a company that develops devices for sensory substitution. Why? What’s the opportunity here?

YK: We looked across the landscape, and we realized that most cognitive assessment is [handled by] a subspecialty of clinical psychology called neuropsychology, where patients are given a series a tests and each is designed to probe a different type of brain function — memory, visual attention, reasoning, executive function. They measure speed and accuracy, and based on that, determine whether there’s a deficit in that domain. But the tests were classically done on paper and it was a lengthy process. We digitized them and gamified them and made them accessible to everyone who is upstream of neuropsychology, including neurologists and primary care doctors.

We created a tech solution that provides clinical decision support to physicians so they can manage patients’ cognitive health. There are 250,000 primary care physicians in the U.S. and 12,000 neurologists and [they’re confronting] what’s been called a silver tsunami. With so many becoming elderly, it’s not possible for them to address the need of the aging population without tech to help them.

TC: How does your product work, and how is it administered?

YK: An assessment is all done on an iPad and takes about 10 minutes. They’re typically administered in a doctor’s office by medical technicians, though they can be administered remotely through telemedicine, too.

TC: These are online quizzes?

YK: Not quizzes and not subjective questions like, ‘How do you think you’re doing?’ but rather objective tasks, like connect the dots, and which way is the center arrow pointing — all while measuring speed and accuracy.

TC: How much does it cost these doctors’ offices, and how are you getting word out?

YZ: We sell a monthly subscription to doctors and it’s a tiered pricing model as measured by volume. We meet doctors at conferences and we publish blog posts and white papers and through that process, we meet them and sell products to them, beginning with a free trial for 30 days, during which time we also give them a web demo.

[What we’re selling] is reimbursable by insurance because it helps them report on and optimize metrics like patient satisfaction. Medicare created a new code to compensate doctors for cognitive care planning, though it was rarely used because the requirements and knowledge involved was so complicated. When we came along, we said, let us help you do what you’re trying to do, and it’s been very rewarding.

TC: Say one of these assessments enables a non specialist to determine that someone is losing memory or can’t think as sharply. What then?

YZ: There’s a phrase: “Diagnose and adios.” Unfortunately, a lot of doctors used to see their jobs as being done once an assessment was made. It wasn’t appreciated that impairment and dementia are things you can address. But about one-third of dementia is preventable, and once you have the disease, it can be slowed.  It’s hard because it requires a lot of one-on-one work, so we created a tech solution that uses the output of tests to provide clinical support to physicians so they can manage patients’ cognitive health. We provide personalized recommendations in a way that’s scalable.

TC: Meaning you suggest an action plan for the doctors to pass along to their patients based on these assessments?

YZ: There are nine modifiable risk factors found to account for a third of [dementia cases], including certain medications that can exacerbate cognitive impairment, including poorly controlled cardiovascular health, hearing impairment and depression. People can have issues for many reasons — multiple sclerosis, epilepsy, Parkinson’s — but health conditions like major depression and physical conditions like cancer and treatments like chemotherapy can cause brain fog. We suggest a care plan that goes to the doctor who then uses that information and modifies it. A lot of it has to do with medication management.

A lot of the time, a doctor — and family members — don’t know how impaired a patient is. You can have a whole conversation with someone during a doctor’s visit who is regaling you with great conversation, then you realize they have massive cognitive deficits. These assessments kind of put everyone on the same page.

TC: You’ve raised capital. How will you use it to move your product forward?

YK: We’ll be combining our assessments with digital biomarkers like changing voice patterns and a test of eye movements. We’ve developed an eye-tracking technology and voice algorithms, but those are still in clinical development; we’re trying to get FDA approval for them now.

TC: Interesting that changing voice patterns can help you diagnose cognitive decline.

YK: We aren’t diagnosing disease. Think of us as a thermometer that [can highlight] how much impairment is there and in what areas and how it’s progressed over time.

TC: What can you tell readers who might worry about their privacy as it relates to your product?

YK: Our software is HIPAA compliant. We make sure our engineers are trained and up to date. The FDA requires that we put a lot of standards in place and we ensure that our database is built in accordance with best practices. I think we’re doing as good a job as anyone can.

Privacy is a concern in general. Unfortunately, companies big and small have to be ever vigilant about a data breach.