Sermo.com, where physicians can tap “the wisdom of crowds” to help them diagnose and treat intractable illnesses, has gotten a $26.7 million infusion of cash, the company said Wednesday.
Baltimore-based asset manager Legg Mason led the latest round and was joined by New York City investment bank Allen & Co.
Launched in September 2006, Sermo.com has become the largest physician social network in the country with almost 30,000 members, said Dr. Daniel Palestrant, the company’s founder and chief executive.
But with an estimated 600,000 doctors in the country and other sites like docsboard.com, socialMD.com, and doctornetworking.com vying for attention, at least part of the latest round will go toward attracting more physicians to the site through promotions in trade journals, industry conferences, and e-mail lists.
“There’s still plenty of room to add more,” said Steve Murray, a partner at Softbank Capital, which joined Longworth Venture Partners in injecting $9.5 million into Sermo in January. All told, the company has raised about $39 million.
Sermo is free to join though membership is restricted to verified U.S. physicians. Rather than pepper its members with advertisements or charge a subscription fee, Cambridge, Massachusetts-based Sermo plans to generate income by charging outsiders for access to its community.
For instance, a pharmaceutical company might want to conduct a survey or a hedge fund might want to gauge doctors’ experience with a particular drug.
“It could be as simple as a financial investor interested in a drug they’re considering investing in,” Mr. Murray said.
Sermo, however, is primarily used by doctors to consult on difficult cases with a nationwide community of physicians whose credentials have been verified.
To further secure trust, the site, which agreed to an alliance with the American Medical Association in May, allows doctors to rank their peers with an eBay-like star system.
In one recent post, a respiratory specialist reported the puzzling case of a 68-year-old woman who was convinced she had cancer when small lung nodules showed up on a PET scan. The doctor doubted cancer because she had never smoked, appeared otherwise healthy and the nodules looked “very hazy and indistinct.” A bronchial biopsy showed “severe lymphocytic inflammation.”
Within one day, 13 doctors had responded.
Dr. Palestrant, who said he founded Sermo to tap “the wisdom of crowds,” raised $2.2 million in funding for an earlier company, Azygos, that he sold to BioNetrix (now BNX Systems) in 2001.