Alphabet's Verily, Sanofi Launch $500 Million Onduo, Joint Venture to Open New HQ in Kendall Square

Alphabet's Verily, Sanofi Launch $500 Million Onduo, Joint Venture to Open New HQ in Kendall Square September 12, 2016
By Mark Terry, Breaking News Staff

Paris-based Sanofi and Verily Life Sciences, formerly Google Life Sciences and now part of Google ’s Alphabet umbrella company, announced a joint venture called Onduo. Onduo will be based in Kendall Square in Cambridge, Massachusetts, and the two companies state that “Onduo’s mission is to help people with diabetes live full, healthy lives by developing comprehensive solutions that combine devices, software, medicine, and professional care to enable simple and intelligence disease management.”

Like many of Google’s moonshot companies, specifics are hard to come by. Verily’s new name was announced in December 2015, and it has indicated that various projects will include developing a contact lens that can monitor a diabetic’s blood glucose level, as well as other small devices to monitor health metrics. The contact lens project is with Swiss drug company Novartis .

For its part, Sanofi probably needs all the help it can get in keeping its hold on the diabetes market. It is one of the dominant players in developing and marketing diabetes drugs, but the competition in the area is fierce. Other players include Novo Nordisk , Bristol-Myers Squibb and AstraZeneca . And Sanofi’s deal with Valencia, Calif.-based MannKind Corporation to market Afrezza ended in failure at the beginning of this year when the inhaled insulin product never took off in the marketplace.

Sanofi, in response to the sagging diabetes market, is pushing into other areas, such as oncology, marked by its latest failed hostile takeover bid of oncology company Medivation , losing out to Pfizer . Sanofi is also in the midst of a five-year cost-cutting plan to slash $1.63 billion in spending.

In a statement, Onduo’s newly appointed chief executive officer, Joshua Riff, indicated that Onduo will utilize Verily’s expertise in miniaturized electronics, analytics, and consumer software development. It’s not clear that this experience is specifically Verily’s, but rather various other of Google’s analytics and consumer electronics. Verily often talks about what it intends to do in lofty, general terms, but rarely gets specific and to date doesn’t have any actual products.

Riff indicates as well that what Sanofi brings to the table is clinical expertise and experience with the diabetes market.

Riff was formerly senior vice president of prevention and wellbeing with Optum, the health services unit of UnitedHealth Group.

“My experience as a physician and in leading consumer health initiatives has shown me the daily burden of living with diabetes,” Riff said in a statement. “From monitoring food intake to testing glucose levels to actively seeking medical care, the challenges both on the physical and mental well-being of a person living with diabetes are incredibly difficult. We want to develop solutions that allow people living with diabetes to focus on the things they love and enjoy in life by providing tools to make dealing with their diabetes less burdensome.”

The joint venture will begin by focusing on type 2 diabetes. Although financial details are not specified, BloombergTechnology reported that each company will invest about $248 million each.

“The beauty of the joint venture in a way is that we don’t rely on the typical 10-year development cycle of a pharmaceutical asset,” said Stefan Oelrich, senior vice president and head of Sanofi’s global diabetes franchise, in a statement. “We start to innovate today.”

A Sanofi spokeswoman indicated that “products on sale would include connected objects such as insulin pens and online services,” Fortune reported.

“This is an innovative collaboration that spans the healthcare continuum and benefits from deep and cross-functional expertise, giving us unique potential to create tools and solutions that could have a positive clinical effect,” said Jessica Mega, Verily’s chief medical officer, in a statement. “Our goal is to connect the dots for health care providers on the ‘moments of truth’ that happen outside of the clinical setting, and to help people manage diabetes on a daily basis. Our collaborations with health networks like Sutter Health and Allegheny Health will help bring that vision to life.”

There is no doubting Verily’s ambitions and the deep pockets and expertise of its parent company, Google/Alphabet, or Sanofi’s deep experience and expertise in drug development and diabetes management. To date, however, Verily seems to be all sizzle and no steak, while investors and consumers wait for an actual product.

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