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Sanofi, Verily Fund Diabetes Startup With $500M

Xconomy Boston — 

[Updated, 9/12/16, 2:35 p.m. See below.] French healthcare giant Sanofi (NYSE: SNY) and Verily, the life-science group within Google’s parent company Alphabet (NASDAQ: GOOG), are each putting nearly $250 million into a new startup, Onduo, that will develop diabetes treatments.

Onduo will be based in Cambridge, MA, and run by a former big-box superstore executive, but representatives are keeping many details close.

Stefan Oelrich, who runs Sanofi’s diabetes franchise, told the Wall Street Journal that Onduo hopes to launch a product in two or three years. Sanofi spokeswoman Anna Robinson said 2018 is a target “for initial product offerings” but declined to provide more details.

Onduo CEO Joshua Riff told the Boston Business Journal that Onduo wants to give diabetics “tools to remove the friction in their lives” and “better insight” into their blood glucose levels. Riff, an emergency room doctor, was previously medical director of the Target superstore chain and has also worked for a branch of the insurance firm United Healthcare.

The firm would not say what that product would do or look like, except that it would combine Sanofi’s expertise in diabetes treatments and Verily’s work in software, analytics, and device miniaturization.

Diabetics don’t produce proper amounts of the hormone insulin, which regulates blood glucose levels. They must inject insulin on a regular basis while following careful dietary rules. Self-administering insulin is a tricky proposition, and with the burgeoning number of people with the disease—in large part due to diet and lifestyle patterns—there are opportunities to make diabetes care more manageable.

Sanofi’s experience in the field is proven; the firm’s diabetes products tallied roughly $8.5 billion in 2015 sales. But the franchise has slumped in recent years, spurring a massive shakeup by CEO Olivier Brandicourt, who took the company reins in early 2015.

[Updated with comment from Novartis.] Verily is a relative newcomer but has announced several diabetes projects with partners. It said last year it would begin working with Sanofi, and announced a specific project with Dexcom (NASDAQ: DXCM) of San Diego to produce a miniature continuous glucose monitor by 2018. Another project, contact lenses that measure glucose levels in a diabetic’s tears, was unveiled in early 2014 and is partnered with Novartis (NYSE: NOV). An article in STAT earlier this year raised questions about the feasibility of the lenses. Elizabeth Harness, spokeswoman for Novartis’s eye division Alcon, said the lenses are in “a preclinical evaluation phase of development.”

Onduo is the second joint venture with a grand vision but scant details that Verily has unveiled recently with an international healthcare firm. Last month it launched Galvani Bioelectronics with GlaxoSmithKline to explore the use of electrical implants as medicine.

Verily is also helping the U.S. government build the data infrastructure behind the national Precision Medicine Initiative, while other initiative participants have aired concerns about the healthcare ambitions of giant tech firms like Verily’s parent, Alphabet, Apple, and others.

Onduo will first aim to treat patients with Type 2 diabetes, which covers 95 percent of all diagnosed cases in the U.S., according to the Centers for Disease Control and Prevention. As of 2014, 29 million Americans had diabetes—one in 11 people. More than one-third of Americans were in danger of developing the disease.

Onduo said two health networks, one in Northern California and one in western Pennsylvania, have signed up to test the joint venture’s technology.