32 Pear patents. Amwell $644M IPO.

Issue 069

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Digital health research from Brian Dolan.

Welcome to E&O.

Last week I wrote about how “breakthrough” is “too breakthrough” to secure CMS reimbursement under its latest proposed rule. Plus — continuing on the “break” theme — I posted the numbers related to Teladongo merger break-up fees. Finally, I dug into how some think about the regulated and unregulated components of digital therapeutics.

But, yea, that’s in the past. Here’s what’s happening this week:

Following a subscriber’s request, I’ve been researching Virgin Pulse for the next long-form report. I think it’s a somewhat under-the-radar market leader in digital health, probably because it spent so many years as an employer-focused, step-counting rewards program. VP is owned by private equity firm Marlin Equity Partners these days, and it’s really built itself up (and more deeply into healthcare) via acquisitions over the past few years. Hit reply to this email to send questions, tips, rumors my way… I’ll aim to have this published in two weeks.
Swedish specialty pharma company Orexo has tapped GoGoMeds to help with the distribution of vorvida and deprexis, its digital therapeutics for alcohol use disorder and depression, respectively. GoGoMeds will distribute the digital offerings “through various complementary addiction services at the US state level, including court systems, as well as through private sector employers and other partners.”
You probably already read about this Zocdoc lawsuit. The company’s original CEO is suing his cofounders and another early employee over the way they ousted him five years ago. Most interesting to me was this detail from the court document: “During his eight-year tenure, Mr. Massoumi defined the company’s mission, developed strategy, supervised the management team, and oversaw day-to-day operations. He helped Zocdoc achieve $71 million in revenue and 120 percent year-on-year revenue growth.” Now, based on the way it’s written, I can’t figure out if the $71 million is the annual revenue figure for 2015 (Massoumi’s last year at Zocdoc) or the cumulative revenue he helped the company bring in over eight years.
Truepill, the white-labeled online pharmacy that powers DTC telemedicine services like Hims and Nurx (and, at one time, Ro), tells TechCrunch it expects to bring in $200 million in revenue this year.
This discussion on Twitter was great: Lantern, a mental health-focused digital health company that shut down operations two years ago, just saw results from its cluster randomized clinical trial publish in JAMA.
Rock Health put together a worthwhile, free report on Aging in Place that is also chock full of links for further reading.
Bunny Ellerin’s always great annual report on digital health in NYC is out this week too. Among other findings, the report shows that 70 NYC-based digital health companies raised $1.5 billion during the first seven months of 2020. Read the free report right here.
One More Thing… Livongo sent a letter to its employees asking them to be patient and not contact their future colleagues at Teladoc just yet, but also shared that all “Livongans” now have full access to Teladoc’s virtual care as a benefit. (This reminds me I need a catchy/cringe-y name for E&O readers to help instill loyalty. E&Opies? E&Ofers? E&Oceans?)

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Boehringer Ingelheim’s (maybe, someday) $500M deal with Click Therapeutics for schizophrenia

Click Therapeutics announced its second big customer win: Boehringer Ingelheim.

(This story reminds me of Issue 025 of this newsletter, which included my best headline “Are digital therapeutics unicorns real?” and worst GIF — a unicorn with a disappearing horn. In it, I explained how Click’s habit of announcing potential deal values led some industry analysts to mis-value the company at north of $1B, aka “unicorn” status.)

Anyway, this latest announcement is another big win for Click Therapeutics.

The companies will co-develop a novel mobile application, codenamed CT-155, for now, which will combine “multiple clinically validated therapeutic interventions to help schizophrenia patients modify their behavior to achieve positive clinical outcomes alone and in combination with pharmaceutical therapy options.” Here’s how the companies described their respective roles in the agreement and the deal’s total potential value:

“Click Therapeutics will receive under the terms of the partnership agreement an upfront payment and funding for research and development activities as well as clinical, regulatory and commercial milestones representing a total deal value of over USD 500 million. Additionally, Click Therapeutics will receive tiered royalties on annual net sales of CT-155 worldwide.”

Click’s deal with BI looks very similar to the one it inked with Otsuka America in January 2019 for a DTx focused on major depressive disorder (MDD). Otsuka was much more willing to disclose how the dollars could breakdown for that deal, however:

“Otsuka has agreed to commit capital to fully fund development of Click’s novel mobile application ‘CT-152’ for MDD, and to commercialize this application world-wide upon achievement of regulatory approvals. Otsuka will pay Click up to $10 million in upfront and regulatory milestone payments, along with an estimated $20 million in development funding. An additional $272 million in commercial milestone payments are contingent upon regulatory approvals. In addition, Click will receive tiered, double-digit royalties on global sales of the software and the digital therapeutic applications that result.”

While the Boehringer Ingelheim announcement didn’t break out as many dollar figures as the Otsuka deal, I think it is fair to speculate that the numbers are similar.

Keeping in mind that Click also counts Sanofi as an investor, it joins a small cadre of digital health companies with major deals across multiple pharmaceutical companies.

Finally, a full list of Pear Therapeutics’ 32 patents

When I published The Pear Therapeutics Report one year ago this week, a reader noted that the company’s IP strategy maybe deserved more attention. For some reason, I had trouble pulling together a definitive list of the company’s patents at the time.

When Pear entered into a $50 million credit facility with Perceptive Credit Holdings, the agreement spells out all of Pear’s patent holdings, which are part of the collateral for the financing. You can read that part of the agreement here.

The total holdings include 32 patent registrations or applications that name many different countries and regions around the world as jurisdictions: USA, European Union, Singapore, Australia, Denmark, Japan, China, Israel, Canada, and the 153 countries and states that are part of the Patent Cooperation Treaty (PCT).

Amwell updates IPO filing: Hopes for $644M, re-emphasizes two CEOs maintaining control

I was surprised to find so few changes between the original draft filings of telemedicine company Amwell’s S-1s and its most recent, amended filing, which has filled in the expected dollar amounts.

Amwell expects its IPO to raise as much as $644 million, which includes the $100 million that Google has agreed to chip in.

Emphasized risk of founders’ control: Besides filling in dollar amounts related to the IPO, the only other section the company changed was the area that explained that the company’s two CEOs will continue to hold onto 51 percent of the voting power even if they convert and sell some of their (Class B) stock. The section also notes how the co-founders could accrue even more than 51 percent of the voting power.

It’s a little dry, but here’s the section the company added to the “Risks” section on page 61 of the updated S-1:

“Even in the event that one of our Founders converts all or a portion of his shares of Class B common stock into shares of Class A common stock, the Class B common stock held by one or both or our Founders outstanding after such conversion would still be entitled to 51% of the voting power of the voting stock of the Company for so long as any Class B shares remain outstanding, subject to the conditions in our amended and restated certificate of incorporation, while the Founder who converted his shares into shares of Class A common stock, together with the Class C shares in the case of votes other than for directors, would dilute the relative voting power of existing holders of Class A common stock as his Class A common stock would be entitled to a pro rata portion of the 49% vote to which the Class A common shares, together with the Class C shares in the case of votes other than for directors, are entitled. In this circumstance, the Founders would be entitled to more than 51% of the voting power of our common stock.”

Quick links: E&O research reports and databases

The links below aim to make it easier for paying subscribers to find the long-form research reports and databases on the E&O site:

The Virgin Pulse Report (Subscribers-only Link)
The Evidation Health Report (Subscribers-only Link)
Database: Rx-only Digital Therapeutics Pipeline of Pipelines (Subscribers-only Link)
Database: Online Diabetes Prevention Program Companies (Subscribers-only Link)
Database: Digital Health PPP Loans (Open Access)
The Proteus Digital Health Report (Subscribers-only Link)
The Hinge Health Report (Subscribers-only Link)
The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 069 of E&O.