Women’s health companies, battling under-investment in research, see growing opportunity

San Diego-drugmaker Dare Bioscience describes itself as the rare biotechnology company focused exclusively on women’s health, a category it says the broader industry has too often overlooked.

But that identity can create hurdles, according to company CEO Sabrina Johnson. At times, she said, investors have been hesitant to fund research presented as women’s health, citing their unfamiliarity with the space. “How do we frame the conversation so that it’s clear, at the bottom line, that this is healthcare,” said Johnson, who has run Dare since 2017.

Drug research and development for conditions only or disproportionately affecting women has long been neglected, resulting in less venture funding for new startups and, for diseases like endometriosis, few treatment options. Reproductive medicine, meanwhile, is in the spotlight in the U.S. following the Supreme Court’s reversal of Roe v. Wade’s protection for abortion and litigation challenging the Food and Drug Administration’s approval of the abortion pill mifepristone.

Challenges have brought attention, though. Notably, the Biden administration last November launched a women’s health initiative that aims to catalyze greater funding and accelerate research. Private investors have already been funneling more money into women’s health companies, although the past year’s downturn in biotech appears to have cooled activity in 2023.

“There is growing recognition of how under-invested women’s health has been historically and therefore the opportunity for innovation and significant returns,” said Erika Seth Davies, CEO of Rhia Ventures, a venture firm focusing on maternal and reproductive health equity.

Barriers to investment

The term women’s health covers a broad spectrum. Typically it refers to conditions and diseases that are specific to female anatomy or are more prevalent in women than men. Often this is interpreted as meaning reproductive health, involving pregnancy, fertility and menopause.

But it can also include gynecological disorders like endometriosis or uterine fibroids, as well as vaginal infections and urinary tract infections. Cancers of the breast, cervix and uterus are generally specific to women, while conditions like migraines and osteoporosis affect women more often than men.

“On the one hand, there’s great opportunity in calling it women’s health,” said Johnson, referring to how the term can focus attention on who the diseases affect. “But on the other hand, fundamentally these are healthcare conditions.”

While oncology receives significant attention and funding, other conditions under the umbrella of women’s health don’t, which can impact the kinds of treatments that become available. Lack of funds is often a major reason biotech companies halt research of a drug candidate, or prioritize other programs. And larger companies have chosen to pursue other areas: Bayer, previously a major player in the women’s health sector, said last year it would shift focus from women’s health to immunology, rare diseases and neurology.

“Across the ecosystem comprising academic and industry R&D, limited investment in women’s health research and development stagnates the required innovation needed to support women with these conditions and others across every stage of a woman’s life,” said Marcel van Duin, chief scientific officer at women’s health company Organon.

A lack of clinical trial data can also slow progress. Female participants have been underrepresented in early-phase clinical testing, and it wasn’t until 2015 before the National Institutes of Health established sex as a biological variable for designing NIH-funded studies. Insufficient information on sex-specific outcomes can make it harder to determine how a potential treatment’s effect may vary.

“We have a lack of understanding of female diseases, and then a lack of understanding of diseases that may affect women differently or disproportionately,” said Raysa Bousleiman, vice president of healthcare at Silicon Valley Bank, an investment firm now owned by First Citizens Bank. “And just because of that lack of data, it becomes more of an uphill battle for these life science companies that are trying to develop solutions.”

Bousleiman believes terminology plays a role. “A lot of [women’s health] has some stigma,” she said. “What I’ve seen talking to a lot of founders in the women’s health space, in biopharma and other sectors is that a lot of men don’t even know there’s an issue. So you don’t want to invest in something you don’t know.”

The numbers certainly bear that out. In 2019 across the U.S. and Europe, $122 billion was invested across 3,225 biopharma deals, according to SVB. Only $1.3 billion, across 60 deals, was invested in women’s health biopharma companies.

A 2021 analysis of NIH-backed research, meanwhile, found diseases that primarily affect men received more funding than those affecting women.

Mifepristone’s spotlight

Since last year, the FDA has been in court over its 2000 approval of the abortion pill mifepristone, which is widely used in the U.S. to terminate pregnancy. The conservative group Alliance for Hippocratic Medicine filed a lawsuit against the FDA and the Department of Health and Human Services last March claiming the agency unlawfully applied its accelerated approval process to the drug. A district court judge in Texas later ruled to suspend the pill’s approval, drawing appeals from the Biden administration and mifepristone’s manufacturer.

The initial decision sparked concern from the broader biotech sector as some saw the case undermining the FDA’s authority and potentially setting a precedent for any group to sue the FDA over controversial drug approvals. Biopharma leaders have spoken against the suit, which presents new risks for investors and companies working in reproductive health.

“The effect [of the mifepristone case] on biomedical research and development will be far bigger than women’s health,” said Davies. “No corner of the health care industry will be untouched by such a destructive act to politicize a system and processes that are supposed to be grounded in data and evidence.”

The case has now made its way to the Supreme Court, which is expected to weigh in this spring on whether the pill’s availability should be limited. (In 2016, the FDA expanded the pill’s use from seven weeks gestation up to 10 weeks. A few years later in 2021, the agency allowed prescriptions to be delivered by mail.)

While the challenge to mifepristone is particularly high profile, it’s not the first time an FDA decision in reproductive medicine has been challenged. The agency’s recommendation to allow over-the-counter use of the Plan B emergency contraception pill was overridden by Barack Obama’s Secretary of Health and Human Services in 2011. The FDA later approved OTC access after further litigation.

The spotlight of the mifepristone case can cut two ways. While it presents the prospect of new legal risks for reproductive medicine, it also shows the need for safe and effective pharmaceutical solutions, said Bousleiman.

More recently, the FDA took a similar step with the birth control pill sold as Opill, which last year the regulator approved as the first oral contraceptive available for OTC use.

“Success stories like this are important, especially when it comes to moving the needle on women’s health investment and encouraging others to pursue a new wave of innovations that will benefit women,” Duin said.

A growing market?

Among the most active areas of investment in women’s health is what’s termed “femtech.” These technology-centered companies operate within the healthcare sector, but focus on women-specific needs like fertility and pregnancy. Demand for such services soared after the Supreme Court overturned Roe v. Wade in 2022 and continued to fuel the sector last year.

Femtech’s growth could have knock-on effects for drug R&D. “A lot of these digital health companies are calling out the fact that women’s health has been so neglected,” Bousleiman said. “So it might [also] be bringing investor attention back to the R&D side, because not all women’s health issues can be solved with an app or by seeing a provider.”

R&D investment does seem on the upswing. Across women’s health, venture capital funding over the first nine months of 2023 was up by 8%, compared to the same period in 2022. Bousleiman says that, compared to the overall slowdown seen in life sciences last year, the women’s health sector experienced something more akin to a “speed bump.”

Investors are also seeing opportunities in women’s health companies that aren’t focused on reproduction. In the third quarter of 2023, these companies saw a single-quarter record of $435 million invested, according to SVB’s report. Although the amount pales in comparison to the funding typical of biotech more broadly, the data suggest a positive trend.

“Success begets success and dollars will follow that,” Johnson said.

Buy-in from investors can pay back more than some might think. While only about 1% of R&D is invested in female-specific conditions outside of oncology, Johnson says this still led to a large number of drugs that generate more than $500 million in annual revenue.

In the U.S., women make many of the healthcare buying and usage decisions, according to the consultancy Oliver Wyman. Additionally, working women in the U.S. spend about $15 billion more than men on out-of-pocket healthcare costs per year, per a report from Deloitte. The additional spending is partly due to pregnancy-related costs, but also because women are more likely to seek out treatments than men and are more likely to be misdiagnosed.

“A health care system that doesn’t work for all people is literally detrimental to U.S. economic growth and prosperity,” said Davies. “Investors, of course, are concerned with their returns on investment, and also must pay close attention to the health of the larger economic environment.”

Looking ahead

Across all sectors, venture investment in women’s health has more than quadrupled since 2018, per SVB, compared to a 28% increase in healthcare investment broadly. Acquisitions have picked up as well, with 15 companies acquired over the past two years, more than in the four prior years combined.

Still, the downturn in the life sciences market has affected the field, with less money invested and fewer “exits, such as IPOs or acquisitions, in 2023 than in 2022. Since the life sciences is a capital-intensive field, partnerships with larger companies can help bridge the gap. Organon and Dare partnered in 2022 to bring Dare’s gel for bacterial vaginosis to market, for example.

Women’s health companies, like all of biotech, also need to appeal to generalist investors who can provide more funding as companies advance. During a recent webinar, Bousleiman pointed to hopeful signs on that front. “We’ve seen some really impressive activity by these types of firms this year, and believe it’ll lead to more investor interest in the space.”

The Biden administration’s new women’s health initiative could further help. Launched Nov. 13, the program requires relevant agencies to deliver recommendations on how to advance research in women’s health within 45 days. Perhaps relatedly, one week later the FDA announced plans to hold, with the Duke-Margolis Center for Health Policy, a workshop on developing drugs to prevent preterm birth.

Organon CEO Kevin Ali has said his company is ready to contribute to the administration’s initiative.

“We’ll undoubtedly see the impact of this push — coupled with further investment in women’s health innovation involving academic scientific research, patient organizations, philanthropic leaders, VCs and industry R&D stakeholders on the overall women’s health market,” added Organon’s Duin.

Executives and investors are optimistic further investment in women’s health could be forthcoming. “It’s about time and I think all the right pieces are in place,” said Johnson.