Fertility
“IVF has the potential to change healthcare forever, but greed stands in the way”
By Lorin Gu, founding partner at Recharge Capital
Finding common ground and embracing technology has the potential to fundamentally redefine fertility treatment, says Lorin Gu.
Reproductive technology is one of the fastest growing healthcare sectors in the country. From 2015-2020, the US in vitro fertilisation (IVF) market grew from 231k cycles a year to 326k cycles a year, representing a CAGR of 7.13 per cent.
In addition to growing demand, IVF technology is also improving, with the rate of successful pregnancies increasing from ~30 per cent to ~45 per cent over the same period.
While reproductive technology has experienced significant growth in recent years, a 45 per cent success rate at an average price of US$20-25k per cycle means that IVF remains an inaccessible option for most people who wish to conceive.
To tackle part of this problem, many start-ups have created AI solutions to further increase the success rate of IVF while decreasing the number of cycles required for fertilisation.
The offerings from these companies mainly revolve around utilising AI to provide accurate embryo selection, implantation prediction, and end to end clinical workflow software.
In short, these companies allow embryologists to make non-biased, high quality decisions, while saving them from spending precious time in the lab on laborious data entry and manual processes. The appealing new innovations of these companies have drawn in nearly US$100m in funding from top investors.
There is clear excitement and conviction around reproductive technology, and it will be very exciting to see these solutions reach their full potential once they receive FDA approval.
However, while we should be optimistic about these developments, there is an important caveat that could potentially derail the growth of fertility technology.
Although all reproductive practices claim that they want to increase their success rates, there is an intrinsic conflict of interest between fertility clinics’ profit seeking business model and technologies that promote higher success.
Over the past five to ten years, there has been drastic consolidation in the IVF space, primarily driven by the entrance of private equity groups and expansion of large clinic chains.
Looking at data from the ~450 US clinics that report to the CDC, over half are held by only eight chains. When these stakeholders are added into the mix, the end goal almost always turns to profit rather than service. There are three main factors driving this relationship.
First, we can start with whether or not clinics really need to increase their success rate in order to attract more patients. In general, the fertility treatment industry is significantly supply constrained with outsized demand.
In the US there are about 450 clinics and 1,700 reproductive endocrinologists to fulfil the demand of 10.85 million females that are infertile in reproductive age. This would equate to roughly 22,000 cycles per clinic, while in reality the average cycle per clinic is only around 700.
While there are more nuances that factor into the demand, such as cost, social acceptance, and other medical conditions, the stark disparity in these numbers makes it fairly obvious that clinics are not compelled to increase their success rate due to the supply constraints of the industry.
Second, we can look at the typical customer acquisition cost for an IVF clinic. The average CAC per cycle ranges between US$1,000-US$3,500, or 5 per cent to 17.5 per cent of revenue per an average cost of a US$20k cycle.
These numbers are significant compressors of profitability, and clinics want to keep the customer acquisition cost low. As a result, retaining an existing patient that has failed their first cycle treatment could be extremely cost efficient.
Finally, we can look at the cost associated with software integration. The average cost to integrate software at a clinic ranges between US$180k-US$370k, compared to an average annual revenue of US$9m. Conservatively, this adds up to around 2 per cent to 4 per cent of revenue.
The question then becomes whether or not this is an additional add on to existing software or this software takes over the complete clinic flow. The latter is clearly more attractive, while the former could be problematic at a profit standpoint.
Given these factors, it is easy to see the potential conflict of interest between profit seeking operating model and technologies providing higher success.
While there are many reasons to be bullish on the tech companies revolutionising workflow in fertility clinics, prices in the industry will only be reduced if technology is allowed to come in to help. In order to resolve this conflict of interest, clinics and startups must work together to find a solution that benefits all parties.
While it may cost clinics some profits in the short term, finding common ground and embracing this technology has the potential to fundamentally redefine fertility treatment across the globe.
Lorin Gu is a founding partner at the New York-based venture capital firm Recharge Capital. Prior to founding Recharge, he previously worked at Cyrus Capital, a US$4b+ hedge fund in New York, and the Blackstone Group. Lorin is also the founder of Recharge Foundation, founding chair at Peterson Institute of International Economics’ Global Future Council, and an executive board member at the Museum of Art and Design, and the New York Foundation for the Arts.
Onto Health has acquired Levy Health, a fertility software company providing precision diagnostics and patient intake for reproductive medicine.
The acquisition, fuelled by Onto Health’s US$20m Series A fundraise in April, supports its plan to build scalable, tech-enabled infrastructure for reproductive medicine.
Onto founder Roohi Jeelani, MD, called it the first of several moves in the company’s expansion strategy in a LinkedIn post, adding that there was “more coming soon”.
She said: “This isn’t just an acquisition, it’s proof of how we’re building Onto: physician-led, tech-enabled, and built to scale without losing the personal touch fertility patients deserve.”
Headquartered in Chicago, Onto Health combines evidence-based fertility care with artificial intelligence-driven diagnostics, clinical automation and longevity science.
AI-driven diagnostics use software to analyse patient information and support clinical decision-making, rather than replace clinicians.
Levy Health, founded in Berlin with US offices in San Francisco, helps medical providers identify endocrine disorders more quickly and helps clinics streamline fertility workups.
Endocrine disorders affect the body’s hormone system, which can influence ovulation, menstrual cycles and fertility.
Co-founder Caroline Mitterdorfer said joining Onto would expand Levy Health’s fertility care tools to more clinics and patients, helping physicians focus on patient care.
Onto opened its first clinic in Chicago in February, with plans for three more in the greater Chicago area.
The company said in April that it would use its new funding, led by Artis and Humania, to support additional operations in the US and expand into the Gulf Cooperation Council.
The Gulf Cooperation Council includes six Arab states bordering the Persian Gulf.
Softening ageing ovaries could help women remain fertile for longer, early animal research suggests.
Fertility declines with age for several reasons, including poorer egg quality, fewer ovarian follicles and the gradual stiffening of ovarian tissue.
Existing fertility treatments, including hormone therapy and in vitro fertilisation, mainly address hormonal imbalances or help eggs mature or become fertilised.
Scientists are now examining whether changing the physical structure of the ovaries could provide another route for future fertility treatments.
Stuart A. Cook, of the Cardiovascular and Metabolic Disorders Programme at Duke-National University of Singapore Medical School, published an accompanying commentary on the research.
Researchers led by Shixuan Wang at Huazhong University of Science and Technology in Wuhan, China, collected healthy ovarian tissue from younger, middle-aged and older women.
They also examined samples from patients with polycystic ovary syndrome, known as PCOS, premature ovarian insufficiency, or POI, and endometriosis.
PCOS is a hormonal condition that can disrupt ovulation. POI occurs when the ovaries stop working normally before the age of 40, while endometriosis causes tissue similar to the womb lining to grow elsewhere in the body.
Tests of protein levels and gene activity found higher levels of the inflammatory protein interleukin-11, or IL-11, in ageing and diseased ovaries.
In laboratory experiments, the researchers exposed ovarian fibroblasts to IL-11. Fibroblasts are cells that produce connective tissue.
The protein caused the cells to produce excess collagen, a structural material that can build up during scarring and make tissue stiffer.
The researchers then genetically modified mice so they could not respond to IL-11. The animals developed less ovarian stiffening and maintained better ovarian function as they aged.
Similar results were seen in mouse models of PCOS and POI caused by chemotherapy.
In the final part of the experiment, older mice and rats were injected with a nanoparticle treatment containing small interfering RNA, or siRNA, designed to switch off IL-11.
The treatment made the animals’ ovaries less stiff and improved fertility.
Pregnancy rates among older mice rose from 25 per cent to 50 per cent, while average litter sizes also increased.
More rats treated with the therapy became pregnant and produced larger litters.
The approach remains highly speculative and will require considerably more research before its safety or effectiveness in women can be established.
However, the researchers said blocking the inflammatory pathway could eventually form the basis of new fertility treatments.
They said: “We propose that anti-IL-11 therapy represents a promising translational strategy for delaying ovarian ageing.”
W Group has opened applications for W Accelerate with Merck KGaA and M Ventures, inviting reproductive and maternal health startups, scaleups and spinouts to pitch for direct access to global pharma partnership and strategic investment.
Selected companies will pitch on 5th October, competing for the chance to accelerate their growth through commercial partnerships, investment, or both.
This is the third time Merck KGaA, a global leader in reproductive health, has partnered with W Group on the programme, which exists to close the innovation and investment gap in women’s health by connecting the sector’s most promising startups directly with the corporates and investors positioned to scale them.
What Merck KGaA and M Ventures are looking for
This year’s call is focused on breakthrough solutions in female infertility, fertility preservation, adenomyosis, endometriosis, polyendocrine metabolic ovarian syndrome (PMOS), ovarian insufficiency, preeclampsia and pregnancy comorbidities.
New for this round, applicants choose between three pathways depending on what they need from the programme:
- The Partnership Lane, for companies seeking commercial collaborations and strategic relationships
- The Investment Lane, for founders looking to connect with investors and secure funding to scale
- The Dual Lane, for innovators pursuing both partnership and investment opportunities
How the Accelerate event works
Selected companies get a 1:1 pitch practice session ahead of time, then a private 30-minute session with Merck KGaA and M Ventures leadership on the day itself, small-group sessions with regulatory and investment strategy experts, an “Ask Merck Anything” roundtable, and a VIP networking reception.
Key dates
- Open call launches: 8th July
- Open call closes: 2nd September
- Notification of successful companies: 11th September
- Pitch day: 5th October
Applications are open now at wplatform.typeform.com/to/KGzviBQM.
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