- French pharmaceutical company Sanofi struck a $30 million, five-year agreement with digital health company DarioHealth. The deal would give Dario access to Sanofi's sales teams to market its existing products, and it would also integrate Sanofi's products onto its platform.
- The funding is broken down into five phases, with Dario getting $8 million in the first year, $7 million in the second and third years, and the remainder in the fourth and fifth years. However, the exact terms are unclear.
- Dario started with a smartphone-connected glucometer and an app to help people manage diabetes. Since then, it has expanded into other conditions through a series of acquisitions, including buying devices to help people correct their posture, monitor PT exercises at home, and provide digital cognitive behavioral therapy exercises. The company currently has a market cap of $138.3 million.
DarioHealth's stock is up nearly 14% since it announced the five-year agreement with Sanofi on Tuesday. The digital health company has been operating at a net loss since it started in 2011, and is working to compete with Livongo and Omada, which offer a similar suite of services, as well as shift its business from a direct-to-consumer model to more B2B sales.
The partnership with Sanofi could help with that, as Dario will have access to dedicated sales teams at Sanofi, headed up by Sanofi's head of U.S. general medicine, Gustavo Pesquin. To start, the plan is to capture more B2B deals, such as selling into companies' health plans. Given the training and time needed to ramp up, deals from the combined effort aren't expected to start coming in until 2023, according to a research note from Craig-Hallum analysts.
By integrating the two companies' products, they also hope to create a "one-stop shop for chronic condition solutions," according to the analysts.
"The Sanofi partnership is primarily about co-promoting the Dario full platform solution and collaborating on developing new solutions on top of the Dario platform," DarioHealth President and General Manager of North America Rick Anderson said in a news release.
Anderson added that there are not specific milestones related to these development activities, but there are some sales and enrollment milestones for the five-year agreement.
"Our collaboration with Dario is another step towards accelerating Sanofi's mission of reversing the course of chronic diseases through the integration of healthcare and technology in a way that gives people the tools to improve their health," Pesquin said in a news release. "We are excited to help payers realize the potential digital health can bring to the patient experience, and we look forward to continuing to innovate with Dario on the next generation of chronic condition therapies."
Sanofi will also have an option to invest in the company later this year. Separately, Dario raised $40 million in a direct offering of 5.3 million shares, priced at $7.49 per share.
However, specifics of how the partnership will contribute to Dario's finances are unclear.
"Nonetheless, buy-in to the broader digital therapeutic potential (and specifically Dario) from a global pharma company like Sanofi does carry weight and is only helpful to Dario's future endeavors," Craig-Hallum analysts wrote.
Sanofi has struck several partnerships over the years as pharmaceutical companies look to digital health as a supplemental offering to their products. However, not all of them have stuck. In 2019, Sanofi pulled back from a $500 million joint venture with Alphabet subsidiary Verily to build virtual diabetes care platform Onduo, saying it had over-invested. Its partnership with Voluntis to build an insulin dosage solution called Diabeo also ended in December of 2020.
But it's still striking new partnerships. Another recent example: Sanofi has been working with a company called Happify Health to build a mental health app for patients with multiple sclerosis.