Digital pathology: Proscia raises $23 million for cancer diagnosis tech; AdaptHealth in $2 billion deal
California venture capitalists lead investment in Center City automation and AI developer
Proscia, a six-year-old Center City-based start-up that says its cancer-finding Concentriq software is used by 3,000 pathologists and scientists, has raised another $23 million from investors led by California-based Scale Venture Partners and Japan-based electronics giant Hitachi Ltd.’s venture capital arm.
The company’s “digital and computational pathology solutions” uses artificial intelligence and machine learning to get more information from tissue samples and other materials to diagnose cancer and infectious diseases. It has now raised a total of $35 million from investors.
Proscia compares high-resolution images of cancer biopsies to millions of similar images, to find tumors or note other medical anomalies. The company employs 40 worldwide, with most working at its 1635 Market St. Philadelphia offices. It plans to use investors’ cash and rising sales to double the workforce by next year.
Its backers say Proscia is automating one of the last medical fields to be subjected to software-based analysis. “Digitization has swept through almost every domain of health care, and we are now seeing its revolutionary impact on pathology,” partner Alexander Niehenke at Scale Venture, now the company’s lead investor, said in a statement.
Pressure to speed up automation-assisted diagnosis has followed the explosion in digital imaging as hospitals and stand-alone clinics expand testing for cancer and other conditions in the aging U.S. population.
Niehenke said Proscia was moving early “to capitalize on a multibillion-dollar market opportunity” to move pathology “from analog to digital.”
Proscia was set up in 2014 by three recent college graduates, who continue to run the company.
The trio included two St. Joseph’s Prep grads — chief executive David West, who graduated in biomedical engineering from Johns Hopkins, and chief technology officer Coleman Stavish, who put himself through Pitt as a computer programmer — and chief product officer Nathan Buchbinder, also a Johns Hopkins-schooled biomedical engineer.
The new money will be used to add sales and customer-facing staff, and to “expand our data assets and artificial intelligence application portfolio,” starting with Proscia’s DermAI application, which compares skin cancer images to find “insights that were previously unseen by the human eye,” and to win U.S. Food and Drug Administration clearances for new software uses, the company said in its statement.
Proscia lists Penn, Johns Hopkins, and the federal government Joint Pathology Center, which has been collecting disease and injury images since the Civil War, among its clients.
“Our market has been accelerated by COVID, as digital pathology is the only practical way for laboratories to operate remotely and continue to serve patients,” the company said in a statement.
Last spring’s pandemic-driven shutdown of many clinics that focused on walk-in and elective procedures has accelerated pressure for automation in the traditionally “manual and subjective” field of pathology, the company said in its statement.
Before Scale and Hitachi, earlier Proscia investors included a string of small East Coast venture capital firms: Philadelphia-based RobinHood Ventures, Emerald Development Ventures of New York, Virginia-based Razor’s Edge Ventures, and Boston-based Flybridge.
Another AdaptHealth deal
Shares of AdaptHealth, the Plymouth Meeting-based home-health-equipment giant that has been on an acquisition binge, soared 15% to an all-time high of more than $35 in Nasdaq trading early Tuesday after it announced plans to buy Orlando-based AeroCare Holdings for $2 billion in company stock and borrowed cash. The stock price was virtually unchanged Wednesday.
AeroCare, founded in 2000, delivers home breathing ventilators and other home health supplies.
AdaptHealth, which has yet to post an annual profit, is buying AeroCare from private-equity owners led by Peloton Equity. CEO Steve Griggs and Peloton’s Ted Lundberg will be joining AdaptHealth’s board as part of the deal. AdaptHealth boss Luke McGee said the deal puts the company in 47 of the 50 states.