Business

University of Iowa-born IDx lands $33 million venture capital support

Artificial intelligence company that helps identify diabetic retinopathy is looking to go public

Michael Abramoff is the founder of IDx, a Coralville-based medical diagnostics company that first began at the University of Iowa. The company developed an artificial intelligence device to diagnose diabetic retinopathy that was approved by the U.S. Federal Drug Administration. (University of Iowa Photo)
Michael Abramoff is the founder of IDx, a Coralville-based medical diagnostics company that first began at the University of Iowa. The company developed an artificial intelligence device to diagnose diabetic retinopathy that was approved by the U.S. Federal Drug Administration. (University of Iowa Photo)
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IOWA CITY — After a Coralville health care technology startup, rooted in University of Iowa research, landed in April its first-ever federal permission to market a device that uses artificial intelligence to diagnose eye disease, Michael Abramoff’s phone began ringing.

On the other line were banks — big ones — and venture capital firms from coast to coast wanting in.

“I wasn’t expecting that much,” said Abramoff, UI ophthalmology professor and founder and president of IDx. “I wasn’t expecting 54 investment banks to call — and keep calling.”

But they did, forcing Abramoff and his leadership team to pick through the pile of prospects and identify those that could best serve the IDx mission: to prevent blindness through accelerated marketing and clinical use of his artificial-intelligence tool — christened IDx-DR.

“That’s overwhelming,” Abramoff said of the slate of financier options, which he whittled down by honing in on his company’s mission and compulsion toward getting providers and clinics using the AI tool quickly. “We wanted strategic partners.”

Months of discussions with interested investors manifest last week in an announcement that IDx had secured $33 million in financing — led by venture capital firm 8VC, with participation from Optum Ventures, Alpha Edison and Heritage Provider Network.

The venture capital investment — among the biggest reported in Eastern Iowa — will allow IDx to further develop additional diagnostic systems for its AI platform and accelerate market adoption of IDx-DR, which uses software, artificial intelligence and a retinal camera to take images of patient retinas to determine whether they have diabetic retinopathy.

If not caught and treated early, the disease can lead to blindness.

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After the U.S. Food and Drug Administration in April granted IDx permission to market the new tool, UI Hospitals and Clinics in June became the first to employ the technology, which doesn’t require a physician to interpret the results — making it accessible and affordable through routine doctor visits.

The UI’s use over the summer marked the first time patients in the United States received a medical diagnosis from an autonomous AI system.

On the heels of last week’s investment announcement, Abramoff on Wednesday told The Gazette his company is in active discussions to get the technology in several other health care systems — including hospitals and academic medical centers — before the end of 2018.

He didn’t disclose names of those organizations, but Drew Oetting, a founding partner at 8VC, said in a news release that “some of the biggest companies in the world are trying to implement AI in health care.”

“But IDx is leading the way in real-world execution,” he said. “The company leveraged Iowa’s ophthalmology expertise to develop a clinically inspired AI — not a black box. This innovated, biomarker-based approach has separated IDx from the hype.”

Abramoff told The Gazette he expects the $33 million to be the “first and last round” of “smart money” investments — as the next step, likely, will be to take the company public either next year or the year after.

“This should launch us into getting it accessible to a vast number of people with diabetes,” he said. “It needs to get to patients. Otherwise, why are we doing this?”

He also foresees the technology migrating to providers around the world, including in third-world countries where health care accessibility and affordability are paramount.

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“We want to do that, but we first wanted to pass the most rigorous test with the FDA,” he said. “We want this to be safe for patients and have the highest standards. … Now we can roll this out to everywhere that people with diabetes are, and prevent blindness in them.”

IDx is also developing AI-based diagnostic systems geared toward macular degeneration, glaucoma, Alzheimer’s disease, cardiovascular disease and stroke risk, according to the company.

The company had been funded by private angel investors since its founding in 2010, before it moved to the UI Research Park in Coralville from Iowa City. Abramoff told The Gazette in 2017 he hoped IDx would “become ground zero for AI medicine.”

In a news release, IDx vice chairman Stefan D. Abrams noted the careful process the company went through in picking investment partners that will provide the most “strategic value” going forward.

“We expect this investment to accelerate the adoption of IDx-DR, a unique and much-needed solution for the 30 million people with diabetes in the U.S. alone,” Abrams said.

Optum Ventures, one of the chosen investment partners, is the investment arm of Optum, an information and technology-enabled health services business that is part of UnitedHealth Group. That, according to Abramoff, will connect IDx with tens of thousands of providers.

“We are confident that IDx will transform health care by increasing patient access to early disease detection,” said Sarah London, senior principal at Optum Ventures, “which is why we look forward to helping build a bridge between IDx and the physicians and patients who would benefit.”

l Comments: (319) 339-3158; vanessa.miller@thegazette.com

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