Issue 033. Get E&O weekly. | Subscribe |
Digital health research from Brian Dolan.
Welcome to E&O.
The last newsletter, Issue 032, had a 55 percent open rate. Here’s what’s happening this week (and the week or so before):
- Over the holidays, the FDA published a fairly lengthy list of medical devices that will no longer be subject to 510(k) premarket notifications. While the move was mandated in 2016’s 21st Century Cures Act, the list has some surprises: Glucose meters, for one. Stethoscopes, some body composition analyzers, and some computerized cognitive assessment tools also made the list. Read it here.
- Missed this one: Early in December, Congresswoman Suzan DelBene of Washington state introduced a bill that would instruct Medicare to automatically cover medical devices designated as Breakthrough Devices by the FDA. Just a bill, but it would mean big things for companies like Cognoa, Pear, Dthera, and NightWare.
- Actually, add one more to that list: Eko and the Mayo Clinic just received breakthrough designation from the FDA. Powered by Mayo’s machine learning and cardiovascular database, the device can detect heart failure when used as a stethoscope during a routine physical exam.
- Omada Health announced results from a claims analysis that IBM Watson Health did on a cohort of 2,000 Dow employees enrolled in Omada’s diabetes prevention program. The study found Dow saved $1,169 in medical spending per enrolled employee in the first year. The company saved an additional $650 per enrolled employee in year two.
- This overview of business models for digital mental health startups is well worth a read. Covers Direct-to-consumer, Self-insured employer benefits, Fee-for-service, Value-based reimbursement, and Device-like reimbursement models. Written by Limbix product manager Gabe Strauss.
- Voluntis announced a collaboration with Novartis to evaluate its digital therapeutic platform, Theraxium Oncology, for breast cancer patients. Separately, Voluntis announced a new offering will go live in Q2 that will help its customers take advantage of the (relatively) new CPT codes for remote monitoring.
- Finally, Medtronic announced last month that it had acquired Klue, a company that uses “gesture sensing via activity trackers combined with analytics technology… [to create] fine motor artificial intelligence software that can detect meals and provide insights into user eating behaviors.” Medtronic will integrate Klue’s software into its personalized closed loop insulin pump system, which also has breakthrough designation from the FDA.
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When will prescription digital therapeutics go DTC like Ro or Hims?
After Pear Therapeutics and Sandoz broke up last fall, one source told me Pear might follow the lead of fast-growing companies like Ro and Hims, and use remote visits with their own provider network to prescribe reSET and reSET-O to patients online. At the time the prediction sounded far-fetched.
Companies like Ro and Hims have found health issues that are particularly embarrassing (ED or STIs) and/or appeal to the patient’s vanity (hair loss or skincare). While Pear and other early prescription digital health companies are focused on more serious medical conditions with high unmet needs, like opioid use disorder and PTSD.
What’s more, the prescription digital therapeutics’ companies more conservative route to market — the biopharma way — is, in part, an effort to legitimize digital health in the eyes of payers and providers. Every DTx 101 presentation begins with an intro slide about the supposed 300,000 health apps out there and the confusion around what is and isn’t an efficacious digital intervention.
So, doing an end-run around the existing healthcare infrastructure for prescribable products would be exactly counter to the longterm strategy of using the existing pathway to build the best possible case for building trust with those paying for and prescribing the products.
Still, for some prescription digital therapeutics currently in development, a virtual provider network that can meet consumer demand for a prescribed DTx may be the model that makes the most sense in the end.
Pure speculation: A company like Cognoa, which is developing both a digital diagnostic product for autism as well as a digital therapeutic for the medical condition, because of the pent up demand for earlier diagnosis of autism and the likelihood that many parents would pay out of pocket for on-demand digital treatment.
I’d be surprised if any prescription DTx company went the Ro and Hims route in 2020, but I think we’ll see this model in 2021 as it will enable prescription DTx companies to own their full value chain or go “full-stack”. One motivating factor may be the fear that Amazon/PillPack will get their first.
Pear’s early revenue predictions plus phase II of its MS study begins
In mid-December, Pear Therapeutics announced that the second phase of its Multiple Sclerosis (MS) study enrolled its first patient. Pear is developing Pear-006, a digital therapeutic that addresses depressive symptoms in people with MS, with longtime partner Novartis. Here’s more from Pear’s write-up:
“The randomized controlled trial will enroll approximately 30 patients with Relapsing MS for eight weeks treatment with digital therapy and evaluate dosing, patient use, engagement, and other clinical outcomes. Pear-006 is designed to deliver specific cognitive behavioral therapy, cognitive restructuring, and other neurobehavioral mechanisms of action, to address depressive symptoms in people with MS. Pear Therapeutics is developing Pear-006 in collaboration with Novartis under the terms of an agreement announced in March 2018.”
Phase one of the feasibility study began in May 2019.
This week a few interesting documents crossed my desktop: Some of Pear’s old slide decks and one-pagers from its (very) early days. This section below included the company’s initial predictions for its business model and revenue — keep in mind this was pre-seed:
“We are building a multi-product company with diverse, scalable, recurring revenue streams. Our first series of products will generate $2M-$6M per product per year without requirement for clinical data or FDA approval. After demonstrating incremental clinical benefit, we will command premium pricing, allowing for per product revenues in excess of $200M per year. Moving beyond branded generic products, our novel eFormulations would benefit from market exclusivity and offer even greater upside with potential US sales mirroring large market pharmaceuticals, in excess of $800M/year. All revenue models are complementary, creating a uniquely low risk/high reward commercial opportunity.”
Pear’s reference to its first series of products was likely its digital supplement offering, which it developed for its early partner The Vitamin Shoppe.
Quick links to E&O research reports
The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:
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)
There you have it. Issue 033 of E&O.
