Issue 201

Welcome back to E&O Fridays, a paying subscribers-only weekly newsletter focused on the world of digital pharma products and FDA-regulated digital health.

 E&O Fridays.

Here are a few quick happenings in FDA-regulated and pharma-focused digital health…

• Correction: Well, maybe a clarification or update is a better term, but: MedRhythms CEO Brian Harris wrote me last week to make clear the company is not building out a nationwide virtual clinic like Swing Care or Vita Health. I noted in my piece last week, MedRhythms posted a job description that included this line: “MedRhythms recently launched a national tele-therapy platform, where they can treat clients in any geography.” Harris explained that this line is not describing some ambitious new virtual clinic initiative (which is what I speculated) but rather a new layer to the company’s longstanding, small-scale care services. Harris wrote: “Our small team of [Neurologic Music Therapists] provide 1:1 services to patients in hospitals or in-home. The teletherapy option is for them to treat people directly who are not able to do the in-person services, but still want the 1:1 treatment with the clinician.” Apologies for reading into the job posting — E&O regrets the error (and much else).
• CMS posted its proposed Physician Fee Schedule for 2024 and it includes a number of tweaks to (or mostly clarifications about) the Remote Physiologic Monitoring and Remote Therapeutic Monitoring CPT codes. The section that caught my eye, however, was CMS’ requests for comment about digital cognitive behavioral therapy and prescription digital therapeutics. It starts around page 305 of the document (CTRL-F your way through it here). Example questions from CMS: “What are effective models for distribution/delivery of digital therapeutics, such as prescription digital mental health therapy products to patients? What best practices exist to ensure that patients have the necessary support and training to use applications effectively?”
• There’s more (and bigger) news on Better Therapeutics below, but I also noticed that the company quietly switched up its R&D pipeline this past week ahead of its announcement. BT-002 is now its NASH/NAFLD-focused digital therapeutic. BT-003 is its hypertension-focused effort and BT-004 is its hyperlipidemia-focused digital therapeutic. Previously, NASH/NAFLD was number four. Just speculating: Does this indicate that the company expects to launch NASH/NAFLD as its second commercial product now? All three are still in the pilot stage of development.
• No clinical trial round-up this week as I got caught up digging into the Big Health-Limbix deal and the AspyreRx De Novo. More trials intel next week.

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Sleepio-maker Big Health acquires Limbix, developers of adolescent depression DTx SparkRx

Big Health announced yesterday that it had acquired Limbix Health, makers of the prescription digital therapeutic SparkRx, which treats adolescent depression. The companies haven’t shared any financial details about the deal.

Limbix anxiety: In a video accompanying the announcement, Big Health CEO Arun Gupta shared that the deal includes other adolescent-focused digital therapeutics under development at Limbix, including one focused on adolescent anxiety.

For the kids: Since Big Health’s programs are for adults (18+), this acquisition gives the company at least two complementary programs focused on a younger cohort. Remember: Big Health’s Sleepio is a trojan horse for depression treatment. Daylight is explicitly focused on treating anxiety.

Pipeline: Limbix is one of the few prescription digital therapeutics companies that has not published its R&D pipeline, so while it’s not a surprise, Gupta’s mention of a Limbix program focused on adolescent anxiety is the first I’ve heard of it.

FDA? The question as to whether or not Big Health will seek FDA clearance for its programs remains unanswered. Big scooped up Limbix before it secured FDA market authorization for its flagship program, SparkRx. Like Big Health’s programs, Limbix has marketed SparkRx during the public health emergency thanks to the FDA’s enforcement policy for psychiatric digital health devices. Now, Big Health has another product that it will need to either submit to the FDA or roll back its marketing claims to position it more as a wellness product.

Provider authorization required: Interestingly, Big Health’s disclaimer language notes a key distinction between its homegrown products (Sleepio and Daylight) and its acquired product, SparkRx. SparkRx requires authorization from a healthcare provider: “During the COVID-19 public health emergency, Sleepio and Daylight are being made available as treatments for insomnia disorder and generalized anxiety disorder (GAD), respectively, without a prescription. SparkRx is available as treatment for major depressive disorder (MDD) with health care provider authorization.” That suggests that SparkRx might require a different go-to-market, right? Can Big Health sell SparkRx into employers if it tweaks its enrollment sequence to include a step for provider authorization? (Not sure I’ve seen that before.)

Team: Gupta also said in the video announcing the deal that Big Health would welcome “many of the wonderful teammates from the Limbix organization” to the company. So, this wasn’t just an asset purchase. (However, I noticed that at least one high-profile Limbix exec, Chief Medical Officer Benjamin Alouf MD has changed his LinkedIn to reflect that he left the company in July following the acquisition.)

Final thoughts: Limbix was pre-revenue/pre-FDA and hadn’t raised since December 2021. Since this transaction occurred so soon after Pear Therapeutics’ bankruptcy auction, I am curious about the valuation. This acquisition makes a lot of sense for Big Health though and I wish I had predicted it. (Also, probably a good time to plug this: Be sure to read E&O’s Big Health Report from May for the best deep dive on the company.)

FDA grants Better Therapeutics De Novo clearance for AspyreRx. Details: IFU, pricing, GTM plan.

Better Therapeutics, a prescription digital therapeutic company that went public via a SPAC in late 2021, announced that the FDA had granted it market authorization for its first product, AspyreRx. While the summary documents related to the De Novo clearance for AspyreRx aren’t available on the FDA site yet, the company shared a good amount of detail on a call with investors following the announcement:

IFU: Here is AspyreRx’s Indication for Use:

Initial target patient pop: Better said it would initially focus on “uncontrolled patients across the disease continuum,” which it said included newly diagnosed patients and those about to step up to insulin. Those two groups are “the most motivated patients,” according to Better.

Initial go-to-market strategy: Better described its commercial launch approach as a “sequenced geography by geography build” that will include about 50 full-time employees. That group will include some Better employees focused on payer coverage and some salespeople focused on generating prescriber demand. Better will focus on the top 20 regionally dominant payers in 5-6 initial geographies. It expects to go live in Q4 but payer contract negotiations will begin immediately.

Pricing: Finally, Better shared some of its pricing research, which suggests one 90-day prescription for AspyreRx should be priced between $500 and $800 net. Better used $600 as a test price in its payer survey and found that about 71 percent of payers would be likely to cover it at that price. (The company’s research consultants polled 15 payers in the survey.)

Expectations: Better told investors that AspyreRx has “substantial potential” to generate more than $2 billion at its peak in net revenues. It got to that number by assuming future coverage for 75 percent of half of the US population’s diagnosed T2 adult patients x 25 percent market penetration x 2 prescriptions per patient x a 55 percent fill rate x net price (assuming a 30 percent gross to net discount) to get to more than $2 billion net revenues at peak. Better said it could get to that number by hitting 5 percent utilization of all patients diagnosed with T2D, as calculated above, or with 11 percent of uncontrolled T2D patients in the country.

Thoughts?

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