11.08.19
17 min. read

The Google Health Report

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

For the past eight years, Google Health has been shorthand for tech’s hubris in healthcare. A cautionary tale. The search giant’s failure to drive adoption of Google Health, the name of its unsuccessful and untethered personal health record (PHR), was a topic the industry mulled over for years.

One common conclusion was that Big Tech just didn’t get healthcare.

In the years since Google Health’s demise, Google launched a biotech company called Calico. It spun up a life sciences company named Verily, which, in turn, helped create various new entities, including a joint venture with Sanofi named Onduo. It has grown its Google Cloud for healthcare business substantially. And yet, it wasn’t until recently that the company began to reclaim the old Google Health brand.

While it has had a couple of cringe-worthy, hyped projects (like glucose-sensing contact lenses and noninvasive, optical sensor-based cancer diagnostic devices) for the most part, Google’s health initiatives have been quiet R&D projects. Instead of splashy consumer health launches, Google has worked closely with academics, medical researchers, and clinicians. They’ve focused on the cloud.

You might argue that — at least in some parts of the company — Google found a little humility since announcing the shuttering of their PHR in 2011.

This recent resurrection of Google Health as a business unit is a sign that the company is ready to go-to-market again with some ambitious products. This report will focus on one that has yet to be announced by the company, but it has been years in the making.

I predict Google’s next big health product is being built around a previously unrevealed acquisition that Google made a year ago — well before it had its eyes on Fitbit. While the transaction was a few orders of magnitude smaller than the $2.1 billion Fitbit deal, this one will open up a new front in its competition against Apple and Amazon for digital health dominance.

Google Health is back. This report will give you a better sense of what happens next.

Executive summary: Google Health is building a health-sensing, camera-equipped monitor under its Nest brand.

In September 2018, Google Health acquired a San Francisco-based startup called Knit Health, which had developed a smart baby monitor, called the Knit Monitor, and recently pivoted to focus on physician-referred, pediatric assessments of sleep and respiratory issues in kids of any age. Most of the Knit team joined Google Health, which also acquired its IP.

Google was already working on a similar product at the time of the acquisition with contributions from Nest’s CTO and the founder of Senosis, a health startup the company acquired in 2017.

Google Health’s forthcoming product is likely to be positioned as the first health-focused device and service from Nest. I predict that while it will offer a number of features for monitoring infants and young children, the device will offer health-monitoring for people of all ages, including seniors.

Project lead: Yoky Matsuoka, VP of Google Health, resigned last month.

As with any pre-market product at a Big Tech company, there is a good chance the one described above won’t see the fluorescent overhead lighting of CES. An exciting patent from a Google engineer is not enough to build a case that a product launch is imminent. (If it was, we’d have seen that Google’s heart sensing toilet seat by now.)

While I think the case for this project is strong, one red flag popped up while I was pulling this research together: Google Health’s Vice President Yoky Matsuoka, who happened to be leading this project, resigned in October to take an executive role at Panasonic. Few media outlets besides Reuters and The Japan Times covered her recent move, but her past job changes have been well-documented:

  • Matsuoka was a co-founder of Google X.
  • She was the VP of Technology at Nest for years and through its acquisition by Google.
  • She was a CEO at (now out-of-business) Quanttus, the health-sensing wearable startup that fed a lot of talent to Apple.
  • Like many of her coworkers, she then joined Apple’s health team.
  • She then boomeranged back to Google as Nest’s CTO before changing her title to VP of Google Health when Google folded Nest into its new health unit last fall.
  • After less than two years, she left to join Panasonic in October 2019.

We’ll get back to Matsuoka, but first:

A brief history of Knit Health, the startup Google secretly acquired.

David Janssens, Paul Silberschatz, and Evan Shapiro — three alums from well-known design consultancy, IDEO — founded Knit Health in February 2015. About 18 months later, Janssens described the company’s product as the “world’s first human health sensor using a camera, deep learning, computer vision, and human-centered design.” Here’s how Janssens saw Knit’s opportunity, which went well beyond simple sleep tracking or basic baby monitoring:

Human sleep is an uncharted frontier of health information, and a camera is the perfect sensor for studying health during sleep. Sleep is a natural barometer of our bodies. When we’re stressed, we don’t sleep well. Days before the obvious symptoms arrive, our sleep patterns can reveal the onset of illness. With the right camera, breathing and heart rate can be measured, even through a down comforter. Those measurements can help determine short-term issues like a cough, or long-term chronic issues like asthma. Sleep itself has a major impact on our short-term and long-term health. When we sleep well we have more energy to exercise and eat better. We are also less likely to be obese, have hypertension, diabetes and mental health issues like depression. Sleep is the perfect opportunity to capture continuous data about our health every day.

Knit Health’s device eschewed the cloud computing trend for edge computing.

Most connected baby monitors or wearables stream video feeds and data to a parent’s smartphone locally over their home WiFi network. If the monitor includes any kind of service for analyzing the video feed or crunching the data coming off an ankle-worn baby monitor, that data is likely sent to the cloud for remote analysis.

Knit Health’s hardware strategy bucked the cloud computing trend in favor of a smarter device that analyzed the data stream in real-time on the device itself. Pricing and processing power of chips have come down enough to enable the Knit monitor to work this way, but it also wouldn’t have worked otherwise.

Knit’s co-founder and CTO Evan Shapiro explained during a podcast interview in 2016 that if the device compressed the video feed and transmitted it via the average home WiFi network, the compression artifacts that would have been added to the data would make the company’s sensitive computer vision algorithms useless. Knit needed to analyze the raw, uncompressed video right on the device itself, or it couldn’t detect the signals it needed to for its analysis.

Keeping this sensitive data and video stream out of the cloud also makes security and privacy issues less of a concern. Longterm, the local neural network embedded in the user’s personal Knit device might become increasingly tuned into their child’s individual habits and possessions — the company hoped.

During that same podcast interview in November 2016, Shapiro explained how embedding the intelligence in the camera enabled Knit’s computer vision-powered analysis to be incredibly sensitive to tiny motions:

We can see respiration through swaddles, blankets, sleep suits. We have had kids bury themselves in piles of stuffed animals and we have been able to detect their respiration signal. So, we are pulling out signals that are in the video that are really too small to see with the unaided eye. With a bit of signal processing and the context of knowing exactly where that child is and which features in that video are which parts of the child, versus a stuffed animal, part of the crib, or surroundings, we can actually extract that information.

Crowdfunding the Knit Learning Health Monitor to $100,000

Knit launched a Kickstarter for their original baby monitor offering in November 2016, and that resulted in a successful campaign that cleared $100,000, which was the stated goal. The device was named the Knit Learning Health Monitor in the campaign and it was bundled with one-year of insights via the Knit Assist subscription service.

The crowdfunding campaign’s video opened up with a pitch to parents: If your baby gets a good night’s sleep, so do you. And that makes you a better parent. The original mission of the company, according to the video, was to solve human needs around parenting and sleep. Janssens, beta customers, and other early Knit team members explain the offering like so:

It’s a camera that goes on the wall above your child’s crib or their bed. It connects to an app on your phone. The camera has a brain. It can actually think and process what it sees. Like whether they are asleep or awake. We can detect crying or coughing. It can track tiny motions associated with them breathing in their chest. And what we provide to you when you wake up is a sleep graph of their night. We provide sort of the story behind it. Tied to that, I think more importantly, are video clips that let you know what happened when they woke up. The thing that you want to know from your monitor at night is whether your baby is breathing. You can actually see the movement because of a color processing change, and you’re like ‘ah, question answered. I can go back to sleep now.’

Knit’s co-founder and COO Paul Silberschatz says in the video that the service also provides parents with suggestions for how to help their children get better sleep. That might include changing the temperature, the light level, and maybe even whether they sleep better with a particular stuffed animal. Early testers of Knit’s service say that when they check their child’s sleep graph from the night before and find that they didn’t sleep well, it might change what they had planned for the day given their kid might be more emotional and tired during the day. They called Knit’s data “the single best predictor for how [our kid’s] day is going to be, which is huge for us.”

Anna Shaw, an early Knit employee focused on user experience, explains in the video that Knit wants to grow with parents and help explain their child’s sleep habits as they get older. Janssens goes on to hint at Knit’s ambitions beyond babies and says that what Knit is developing “could be used in a variety of ways to help a lot of people”.

Evan Shapiro, Knit’s CTO and co-founder, concludes the video pitch by explaining why they wanted to do a crowdfunding campaign. It boiled down to a need for a larger dataset to fine-tune Knit’s algorithms and user experience. Shapiro said the device is complete from an engineering perspective and has already been tested in “users’ homes for months on end” as of October 2016. “This product is ready to go,” he said.

While the Knit Monitor’s crowdfunding campaign was successful in reaching its $100,000 goal, repeated delays in shipping the products over the course of the following year led to many refunds. Ultimately, Knit announced that it was changing its focus from monitoring babies.

Knit’s “difficult decision” and a pivot to 14-day pediatric sleep assessment service.

In May 2017, Knit sent an email to its backers announcing that it had made the “hard decision” to broaden its focus for the Knit Learning Health Monitor, which meant it would no longer be focused on infants exclusively. The company offered refunds because its Kickstarter promised a one-year subscription to Knit Assist, the analytics service portion of its offering.

By September 2017, Knit articulated its new focus as “helping assess sleep issues in children to help families get the help they need.” Its marketing materials shifted from testimonials from parents of infants or toddlers to parents of kids aged 7-, 11-, and 13-years-old. Knit began to position its offering as a way to help parents ensure their kids got enough sleep to enable them to grow and develop into healthy adults. Knit’s blog began to focus on how it can help with issues related to ADHD, screen time, jet lag, circadian rhythms, poor diet, acting out in school, tonsil removal, fear of the dark, dentist-recommended oral appliances, bedtime routines, and more.

Knit Health began to position its device and service as an alternative to a professional sleep lab. One blog post boasted:

The Knit Health technology is completely unique in the field of sleep health assessment. Understanding the science behind Knit reveals why it is the only in-home pediatric sleep assessment solution that can signal the presence of potential sleep issues and provide daily feedback necessary for improving long-term sleep health.

Knit Health no longer sold its product as a longterm monitor, but rather as a 14-day guided assessment:

Our intelligent camera detects motion, breathing and sleep stage, generating the caliber of data only available in a sleep lab — even when your child is under their blanket. With computer vision technology Knit can capture the moments that matter, making discovery of sleep issues possible, anytime during the night.

In order to fully analyze your child’s sleep, we need to capture 14 nights of sleep data. This enables our technology to evaluate routines, breathing, quality of sleep and more. During that time you’ll have access to the Knit Sleep Assistant app where you can track nightly sleep metrics, and a dedicated Knit Sleep Guide in the event you have questions.

At the end of your assessment, you’ll receive a personalized sleep report that includes in-depth, actionable insights and easy to implement recommendations from our sleep experts. The comprehensive report is yours to keep and share with pediatricians or other providers.

Knit’s website asked visitors to type in the name of the physician who referred them before the company would send them a device. For visitors without a referral, Knit invited them to join a waitlist.

The pivot was first announced in May 2017, and a little more than a year later, Google acquired Knit in September 2018.

Knit’s monitor always worked for people of any age, but just one at a time.

Before we transition to Knit’s move into Google Health, a few areas are worth digging into a little. The first is that Knit’s technology worked with any aged human from the beginning. Even as the startup was in the midst of its crowdfunding campaign for its baby monitor, CTO Evan Shapiro acknowledged that it worked on people of all ages:

It works on humans in general. It works on adults. The constraints right now are that we don’t handle more than one person or person and pet per bed. If you put it on an adult, which we’ve done — teenagers, 10-year-olds, young toddlers, young infants — it is smart enough and has a generalized sense of what a person is to work. It is really designed for babies — maybe newborns until about three-years-old. That’s kind of the starting target market. But we definitely have users who have older kids who use it for various reasons and it will work on anyone really.

Knit recognized that pointing a camera at an infant was already an accepted behavior for parents. Paying a company to record and analyze your health as you — an adult — slept might be harder to accept from a privacy standpoint.

Knit Health’s anti-wearable ethos.

Considering Google’s ongoing $2.1 billion acquisition of Fitbit, it’s worth pointing out here that a key marketing message for Knit was that its offering required no wearables. The most obvious sign of the importance of this messaging was in Knit’s crowdfunding campaign’s title: “Knit Monitor —Tracks Sleep & Breathing w/o Wearables.”

One way to think about Knit’s anti-wearable ethos is to consider its competition. Knit could easily dismiss competition from basic baby monitor cameras, but some of its baby-focused, health-sensing competitors — like Owlet — used wearables to track infants while they slept. Knit CEO David Janssens fleshed out the company’s anti-wearable strategy in a Medium post that coincided with the company’s Kickstarter campaign. In it he also admitted he had stopped using Fitbit devices (oops):

The data sounds exciting, but this stuff is so frustrating. The day my Fitbit lost its first charge was the day I stopped tracking my steps. A wearable asks too much of us: remember to charge it, remember to wear it, remember to turn it on. And don’t get me started with wearables for kids (imagine cleaning a wearable after a diaper blowout). What if a device existed that helped you understand your overall health, but you didn’t have to wear it, charge it, or turn it on? It could provide more context, more accurate personal data AND remember everything for you. Enter cameras.

Knit Health’s two patents.

In addition to the majority of Knit Health’s team joining Google Health as new employees in September 2018, Knit Health also assigned its patents to Google in October 2018.

At the time of the acquisition, the Knit Health team was working on two related patents, which named the inventors as the three Knit co-founders mentioned above as well as Knit Health’s lead engineer Adam Carlucci. Knit’s first patent was entitled, “Remote biometric monitoring system“. Its second patent was titled, “Subject detection for remote biometric monitoring,” and included the same four inventors. Knit’s second patent seems to have been in the works prior to the acquisition but filed with the USPTO following the deal.

Meanwhile, Google’s Nest team develops its own health-sensing baby monitor.

A few weeks after Knit Health concluded its successful crowdfunding campaign, Yoky Matsuoka rejoined Google as the new CTO of Nest, which was an Alphabet company at the time and not yet rolled into Google Health. By the time Knit Health was processing its last refunds to its crowdfunding backers, Matsuoka and her team were busy filing patent applications for similar technology that monitored infants and seniors in the home.

The first of these patents was entitled “Thoughtful Elderly Monitoring in a Smart Home Environment”, which Matsuoka filed in October 2017 with one of Nest’s lead engineers, Mark Stefanski. Matsuoka next filed a patent solo in December 2017 for a way to launch a one-way visual communication session from a tactile user interface, which sounds like a way to start a video call to a senior. In February 2018, Matsuoka is named on three patents related to health-sensing and infants: Enhanced visualization of breathing or heartbeat of an infant or other monitored subject; infant monitoring system with video-based temperature baselining and elevated temperature detection; and infant monitoring system with observation-based system control and feedback loops. The patents could just have easily been describing much of what Knit Health was building at the time.

Matsuoka’s team for the infant-related patents included Nest engineers Mike Dixon (all three patents) and William Greene (just one). The other name on all three of the patents might be a familiar one to diligent digital health readers: Shwetak Patel.

How Nest’s 2017 acquisition of Senosis factors in.

Shwetak Patel is a research at the University of Washington who founded a health algorithms startup called Senosis. Rumor had it that Google had quietly acquired Senosis from Patel and his employer, the University of Washington, in mid-2017. Because of the school’s government funding, journalists at Washington state-based GeekWire were able to use a Freedom of Information Act request to learn more about the acquisition when they received the documents in September 2018. GeekWire could then reveal that Nest had actually acquired Senosis, but didn’t want the school, Patel, or anyone else to discuss the deal until after a Nest health product went to market. According to GeekWire, here’s what a lawyer from Google told the school right before the acquisition was finalized:

“If a Nest health product doesn’t use the licensed technology, an unrelated press release regarding Nest’s acquisition of (Senosis) could again negatively affect our product rollout.”

As GeekWire explained, “Senosis aimed to turn smartphones into monitoring devices that collect health metrics to diagnose pulmonary function, hemoglobin counts and other critical health information.” Its apps included SprioSmart, SpiroCall, HemaApp, and OsteoApp. Senosis also had an algorithm that detected jaundice in an infant.

What’s ironic about the timing of that GeekWire report is that September 2018 was the same month that Google acquired Knit Health. Since Senosis was acquired by Nest in mid-2017, that also means both Knit Health and Senosis were acquired under Yoky Matsuoka.

Whether or not technology from Senosis makes its way into Google Health’s device is an open question, but it is clear that Senosis founder Shwetak Patel was working on the product with Yoky Matsuoka and Nest’s engineers.

Google Health and Knit Health both saw the senior market as an opportunity.

In June 2017, just before Nest acquired Senosis, Yoky Matsuoka said during an interview that Nest’s mission statement indicates that the company should move into home health. Nest’s mission statement at the time was “to create a home that cares for the people inside it and the world around it.” Matsuoka said the reason she rejoined Nest and Google was to pursue this idea of creating Nest products that care for people in their homes. Given that we spend so much time in our homes, and a lot happens in our homes, Matsuoka said it made sense to focus there, “whether that’s for the elderly, or younger people, or people with disability.”

Matsuoka goes on to hint that Nest would not create a product that specifically targets the elderly population:

Elderly specific technology doesn’t sell because as we get older we will never admit that we’re getting older. We would never buy something that’s tuned for the elderly because we don’t believe it true. So I think that’s another reason that I bet the way we enter the elderly market is to not build something very tailored for the elderly but [that works] for everybody. [It] just turns out to be really really helpful for the elderly.

A year later in the summer of 2018, CNBC reported that Nest was in discussions with senior care facilities about how smart home products may be helpful in caring for the elderly and enabling independent living.

Knit Health’s CTO Evan Shapiro also said that the senior market was one vertical that Knit had pegged as a potential future market.

How this might fit into Dr. Feinberg’s vision for Google Health.

In November 2018, Geisinger Health’s CEO Dr. David Feinberg joined Google as Head of Google Health, a new business unit that would bring together various health-related businesses under Google, including Nest, Google Fit, and Google Brain. At the big HLTH event in Las Vegas a few weeks ago, Feinberg gave a short presentation titled, “Meet Google Health” that promised to reveal what Google was working on today and its vision for the future. The presentation was short on details for anything patient or consumer-facing, but — while it’s a stretch — one general framing from Feinberg caught my ear:

We think of hospitalization by and large as a failing of outpatient care, and outpatient care is a failure of home care. And, fundamentally, home care is a failure of community care. So, you’ll see, and we look forward to sharing with you, ways we can move patients in that direction.

What Knit Health built is the beginnings of a bedside monitor. Google Health may take a similar approach to Knit’s initial tack and begin selling these devices as a health-sendings baby monitor under the Nest brand, but they could be useful for anyone in a bed.

As Feinberg’s presentation made clear, Google Health has a ton of seemingly disparate health initiatives underway. He spent a good amount of time on the various conditions and medical issues Google Health has been able to detect from eye scans. I mentioned the algorithms from Senosis above, but there are many other projects like these in Google Health and Verily’s R&D teams. You have likely heard about many already. Just to make the point, here’s one example you might not have come across yet:

Jeffrey Rogers’ secretive Project Prime work for Google (2014-2015)

Project Prime was a two-year project lead by Jeffrey Rogers, a director of engineering at Google from 2014 to 2015, who is now a research lead at IBM Research. The project ended up finishing early in about 20 months, and it produced a dozen patents that named Rogers as an inventor. A few of the patents name Verily’s Brian Debusschere. One names a different ex-Verily engineer, Paul Reid, and another names Google self-driving car engineer Paul Karplus.

Here’s how Rogers described Project Prime on LinkedIn:

Executive 2-year position to define and demonstrate a new business opportunity at convincing scale. Created Project Prime; an internal start-up focused on healthcare/medical technologies. Defined vision (including target disease), technical approach, business opportunity, and secured funding. Formed and lead diverse skilled team balanced to meet 2-year timeline; hiring direct reports and external contractors. Key Accomplishments—Defined criteria to predict acute cardiac events from validated clinical data early enough that they could be avoided (up to 30 days in advance). Successfully met 24-month goals in 19 months. Developed 6 sensors to measure needed physiological signals, validated sensors met requirements, developed software and analysis backend, and deployed system to 4 hospitals. Defined commercialization roadmap and established needed partnerships. Attained FDA clearance for clinical use of 1 of the developed sensors.

Conclusion: Google Health’s Island of Misfit Toys problem

Ten years ago if you said the words Google Health, most people working in health IT knew you were talking about the tech company’s PHR. Google had an almost singular focus at the time for its health initiatives. As we move into 2020, Google has the opposite problem. Its decade of medical and health-related R&D has created an Island of Misfit Toys problem within the company. A big part of Feinberg’s job over the past year had to be focused on deciding which to kick off the island.

Considering the acquisitions of Knit Health and Senosis, Yoky Matsuoka’s two years working on the project, and the Knit Health team mostly sticking around to continue working at Google Health, I think it’s a fair prediction to say that Google will roll out a health-sensing home monitor under its Google Nest brand in 2020. While Matsuoka’s departure last month might indicate that Feinberg canceled the project, I think it’s more likely she left because much of the R&D work had been completed and her track record isn’t to stick around in one gig for too long.

Will we see a Google Nest Health Monitor at CES in January? I’ll update this section then.

×
10.25.19
5 min. read

Scoop: Stealthy OSA acquisition. Fake DTx unicorn?

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It's a good one, too.
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Issue 025.

Get E&O weekly. | Subscribe | Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a sky-high 69 percent open rate. Here’s what’s happening this week:

  • What long-form reports would you like to see in the coming months? I’m here to serve, friends, so submit your requests by hitting reply to this email. I’ve heard from other readers already, but why not you?
  • AliveCor quietly raised just shy of $6 million.
  • Massachusetts Governor Charlie Baker offered up a new healthcare proposal that aims to prioritize preventative care, early intervention, and managing chronic conditions before patients end up in the ER. Read the one-pager here.
  • Amazon acquired a digital health startup named Health Navigator. This company reminded me of iTriage, which Aetna acquired years ago before shutting it down in 2018. As it happens, both HN and iTriage were founded by ER docs.
  • This MobiHealthNews writeup of the therapeutic VR panel at an event in Boston is worth a read for a high-level overview of the topic.
  • Finally, telemedicine biggie American Well inked an ambitious deal with Cleveland Clinic to launch a joint venture, called The Clinic, to provide virtual care services to people worldwide.

Did this get forwarded to you? You can sign up as a paying subscriber and get full access to E&O by clicking this very inviting link.

 

Are digital therapeutics unicorns real?

Silicon Valley Bank published a report on digital health that mainly focused on trends in financing. It’s worth a quick read. I was surprised that SVB repeated a mistake I’ve seen in other similar reports over the past year. It counted Click Therapeutics’ $300 million (multi-year, milestone-dependent) deal with Otsuka as $300 million in straight funding. Such an investment would boost Click Therapeutics into unicorn-status (valued at north of $1B) among digital health companies.

I wrote the author of the report at SVB, and he quickly confirmed it was an error. He also noted that I was the second person to ask him about it. I wonder if this oft-repeated mistake is a mixed blessing for Click. It certainly gets the company’s logo out there more, but it can’t be a positive thing in the long run, can it?

I don’t think the fault over this misunderstanding lies with Click. As far as I can tell, they never spun the $300 million figure as straight funding. Here’s how Ostuka and Click explained the deal when they announced it back in December 2018:

“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.”

Of course, Proteus Digital Health is the only unicorn-status company operating in digital therapeutics — for now.

Scoop: Philips-Respironics acquired a disposable, sleep apnea Dx sensor startup. FDA just cleared it.

The FDA just cleared the SomnaPatch, a disposable, peel-and-stick sensor meant to be worn on the forehead and nose that can diagnose sleep apnea, as a Class II device. While it hasn’t been reported elsewhere yet: Philips-Respironics quietly acquired Somnarus, the startup that developed the SomnaPatch, in October 2017.

While media mentions of SomnaPatch went quiet in 2017, back then, reports indicated the sensor weighed less than one ounce and was able to record: nasal pressure, blood oxygen saturation, pulse rate, respiratory effort, sleep time, and body position.

Somnarus CEO and Founder Maria Merchant Ph.D. cryptically mentioned the acquisition on her LinkedIn profile:

“Development and commercialization of an innovative sleep apnea diagnostic device and service. Patented a technology for diagnosing sleep disordered breathing. Raised investor funding and secured grants from National Institute of Health. Conducted US multi-center clinical trials to validate the technology and to test user experience. Developed and managed corporate partnerships. Completed the sale of Somnarus to a global health technology company.”

The FDA clearance links to a non-randomized study Somnarus conducted that included 190 people. Of those, 12 were excluded because of poor quality sleep data, and so 178 people were analyzed in total. Each participant spent one night in a sleep center and were each diagnosed by the SomnaPatch as well as standard of care polysomnography (PSG). The results showed 87.1 percent agreement between the two diagnostic devices. More here.

Propeller launches COPD clinical trial in Europe, sponsored by Novartis

On its recent quarterly results, Propeller Health parent company, ResMed’s CEO Mick Farrell announced that Propeller had launched a clinical trial focused on COPD in Europe that is sponsored by Novartis. Farrell also noted that Propeller now has 100,000 people enrolled in its various programs. Here are the relevant block quotes from the call with analysts:

“Our team at Propeller also continues to grow their business as we move from pilot trials to commercial partnerships with leading respiratory pharmaceutical companies. The team was recently at the European Respiratory Society Annual Congress in Madrid. It was great to see Propeller represented at multiple pharma booths, including live demonstrations of Propeller’s solutions for physicians. Propeller was also featured during several scientific presentations during ERS, including the public announcement of a new large, COPD outcomes trial that is sponsored by Novartis. The trial will compare Propeller plus COPD standard of care to COPD standard of care alone. The trial has already begun enrolling patients during this quarter.”

“As we outlined when we acquired Propeller in January, the digital health opportunity with respiratory medicine adherence will take time to build into critical mass. This quarter we passed a significant milestone with more than 100,000 people enrolled into the Propeller ecosystem. Let’s be clear, we are still in the early days of market development here. The analogy is that we are just lacing our shoes for the digital health ultramarathon in both COPD and in asthma. So, there is lots of terrain ahead.”

Farrell’s presentation slides from the call are available here.

Cognoa begins pivotal study of its diagnostic aid for autism spectrum disorder

Cognoa, a digital therapeutics and diagnostics company focused on pediatric behavioral health, announced that it had begun its pivotal study to demonstrate the effectiveness of its diagnostic aid for autism spectrum disorder (ASD). The company plans to submit the results of the multi-site, prospective, blinded, active comparator study to the FDA sometime in 2020. Cognoa hopes its digital diagnostic becomes the first cleared medical device that helps pediatricians diagnose autism, and it intends for it to be used as a diagnostic aid with children as young as 18 months.

Cognoa is also developing a digital therapeutic that uses a smartphone and augmented reality to help treat autism spectrum disorder, and the company aims to have that FDA-cleared and in the market following the diagnostic aid’s launch. Further out, the company sees an opportunity to help treat ADHD, which is the most common comorbidity for people on the autism spectrum.

Quick links to E&O research reports

Previous newsletter editions are available on the E&O website so that newer subscribers can browse through past issues.

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

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)

And so ends Issue 025 of Exits & Outcomes. Which of your colleagues should be reading this? Don’t be afraid to hit that forward button…

×
10.18.19
7 min. read

Pear-Sandoz’s conscious uncoupling. W. Virgina wants DTx.

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 024.

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Welcome to E&O.

Last week’s newsletter had a 66 percent open rate, which, considering all the new enterprise subscribers, is A-OK by me. Here’s what’s happening this week:

  • The “bomb cyclone” of a Nor’Easter that hit the Boston-area Wednesday night slowed things down a little, but the only real casualty around here was one of the more promising branches I grafted to my apple tree this spring. Such are the trials and tribulations of backyard orcharding.
  • Fitbit continues its (probably quixotic) quest to transform its business into a behavior change company focused on helping people manage serious medical conditions before its low stock price gets it acquired. On-stage at Time’s healthcare conference, CEO James Park announced a deal with the Bristol-Myers Squibb-Pfizer Alliance focused on atrial fibrillation.
  • A reader pointed out the weird timing this week of Diplomat’s sale of certain EnvoyHealth assets to Diligent Health Solutions. The assets involved in the transaction were not related to digital therapeutics. Envoy, of course, is the hub Pear Therapeutics uses to onboard patients for its reSET and reSET-O products.
  • Astellas is conducting a study with Pack Health to figure out if digital coaching has a positive effect on patient outcomes for men with prostate cancer. The study will include 500 men in the US, but won’t get going until 2022. Is that a surprising amount of lead time?
  • This is still in the lab: Pfizer is developing a system that use a wearable to help quantify scratching and sleep disruption in a patient population with atopic dermatitis.
  • Bayer announced small deals with 11 digital health companies, including Wellthy Therapeutics and LiteSprite. The program is an evolution of the pharma company’s startup accelerator G4A.
  • Missed this last week: SilverCloud tapped Microsoft to improve its CBT-based mental health programs via the tech giant’s AI and machine learning expertise.
  • Google has hired former HHS National Coordinator for Health IT Karen DeSalvo as its new Chief Health Officer. CBNC reported this as Google’s “first” chief health officer, but all digital health OGs know that was Roni Zeiger, who is now leading health strategy at Facebook. Correction to my correction: Zeiger was, in fact, Google’s Chief Health Strategist. (#Humbled.)
  • Finally, learn a little about digital therapeutics in Korea from this interview with cancer-focused DTx company LifeSemantics CEO Song Seung-jae. (Heads up: Noticed a few factual errors in there, including calling reSET a cancer DTx, so reader beware on other claims made therein.)

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Last thoughts on the Pear-Sandoz break-up

Quick note: I have to say, I did not anticipate writing so much about Pear in the weeks that followed my deep dive into the company in September. Pear has dominated many of the E&O newsletter issues since, and while I don’t expect the company to remain quiet following this week’s developments, I’m also going to make an effort to diversify here.

The news: Unless you’ve spent this week in a window-less room hashing out your next de novo clearance with the FDA’s digital health team, you’ve likely heard all about the Pear-Sandoz break-up. If not, here’s a quick recap.

  • Sandoz and Pear jointly announced that Pear would take over responsibility for the commercialization of reSET and reSET-O.
  • The move was attributed to Sandoz’s leadership change in the spring, and the company’s desire to focus on its core business.
  • Sandoz agreed to support Pear on a transitional basis. Sandoz’s parent company Novartis remains an investor in Pear, and its other division, NIBR, is still working with Pear on digital therapeutics for MS and schizophrenia.
  • That covers it, but you can read the full statement here.

Analysis: I discussed the Pear-Sandoz conscious uncoupling with about a dozen people — both on the record and on background — and the reactions and takeaways have been mixed. Overall, they tipped more towards this being a positive development.

The Officialese: Sandoz attributed the break-up to its change of leadership. In all likelihood, this is the macro cause of the split. Digital health is difficult and the prescription digital therapeutic path to market is arguably the most fraught. Losing buy-in from the C-suite is a plausible reason for an innovation project like this one coming apart. The difficulties outlined below may have been well-known and accepted by Sandoz’s prior leadership, but the new exec didn’t want to devote the resources necessary to overcome them.

Broad indictment of DTx? Pear Therapeutics is a pioneer with the first FDA-cleared digital health product that makes a treatment claim in its label. On the face of it, the failure of this partnership could be seen as a failure of Pear’s first stab at commercialization. That could be construed as a signal to payers, providers, other pharma companies, and other digital therapeutics companies that Pear’s path to market was the wrong one. Nobody I talked to agreed with this broad indictment assessment.

Propeller Health’s Chief Commercial Officer Chris Hogg asserted on Twitter that Pear and Sandoz calling it off was not a broad indictment but rather a uniquely bad situation:

“I’m not sure this is a broad indictment. This was uniquely a bad situation. It’s a very tough indication to market, and it was a new commercial team from a non-commercial (generics) company. This was overblown from the beginning in importance.”

By implication, Cognoa CEO Brent Vaughn also disagreed with the “broad indictment” conclusion and reaffirmed Pear’s go-to-market strategy, which is similar to Cognoa’s. Vaughn via email:

“It’s hard being first — Pear forged the way for many companies in the DTx space. As our industry is rapidly maturing, it’s narrowing the number of real commercial pathways. It’s obvious that companies need to utilize the existing healthcare infrastructure to ensure the routine ordering and reimbursement of prescription digital therapies and medicines—just like a pharmaceutical or device company does—so that digital medicines can be easily adopted into the provider workflow and payer system.”

Will this scare away investors? A common theme that came up in these discussions was whether this news would hurt future investment dollars in digital therapeutics companies, especially since the submarket saw an uptick in capital following Pear’s breakthrough FDA clearances. Most people raised this concern to make clear that they didn’t think it would scare investors. More than a few mentioned it though, which suggests there is some anxiety here.

Confusion over Novartis’ support: Some headlines covering the news painted with an overly broad brush. They gave the impression that Novartis had walked away from all facets of its partnerships with Pear, which is not true — as explained above. Still, this narrative is taking hold in some pockets on social media.

Sandoz was always the wrong partner: As Propeller’s Hogg noted above and a few others stressed in my exchanges this week, Sandoz was never the right partner for Pear. The generics division had no experience securing reimbursement for any novel therapeutic, let alone a digital therapeutic. Some chalked up the original decision to pair Pear with Sandoz to Novartis not knowing what to do with Pear’s addiction-related products. Novartis doesn’t have a salesforce in that therapeutic area. It was not strategic — just a pairing of convenience.

Rumor has it that Pear celebrated the news: Multiple people told me that Pear’s team actually breathed a sigh of relief when the partnership with Sandoz was called off. It may be counterintuitive to outsiders, but the partnership with Sandoz had frayed considerably in recent weeks. And there was a growing belief internally that Pear would have more success commercializing reSET and reSET-O on its own. Like all big companies, Sandoz was slower than a nimble startup like Pear, and the company might have come to the conclusion it would move faster alone. Some evidence of Pear’s celebratory spirit was on display in Pear CEO’s Corey McCann’s LinkedIn post yesterday:

“In the words of Bachman-Turner-Overdrive, ‘B-b-b-baby…you ain’t seen nothin’ yet!'”

Pear should share details on commercialization progress to date: McCann’s LinkedIn post also promoted an interview he gave to BioCentury. In it, he revealed that the company’s reSET and reSET-O products had been prescribed to 4,000 patients to date, which I believe is the first time the company has revealed specific numbers publicly. To turnaround this negative press cycle, I expect Pear to release more details on its progress. Time to convince the payers it has signed to put out an announcement. I predict McCann will make some news on the stage at the CNS Summit in Florida that’s coming up.

What does this mean for DTx-pharma commercialization partnerships? I am curious how much of a cautionary tale this proves to be for DTx companies looking to partner with pharma on commercialization. While others still have regulatory (and other) hurdles to get through before getting to market, it seems like most of the first wave of digital therapeutics will be self-commercialized now.

Omada’s big Abbott deal and Intermountain investment

Omada Health announced a big deal this week: The tech-enabled disease management company is offering Abbott’s Freestyle Libre continuous glucose monitor (CGM) to its members with Type 2 diabetes. Data from the device will help Omada’s certified diabetes educator (CDEs) coaches work with Omada members to self-manage. While Omada’s business is still dominated by its digital diabetes prevention (DPP) program, Type 2 diabetes management is among the other areas the startup has moved into following its Livongo-like platform strategy.

While CGMs have historically been a device for people with Type 1 diabetes, the Libre’s lower price point has made it more accessible to some people with Type 2. According to the article linked above, Abbott’s CGM has a lower price — $900 to $1,800 a year — than traditional devices, which can run between $3,000 and $5,000.

Curiously, Intermountain also invested an undisclosed amount in Omada Health earlier this month. That builds on the $73 million it raised this summer.

Dartmouth researcher that helped create reSET and reSET-O shares her lab’s current projects

Dr. Lisa Marsch, a professor at the Geisel School of Medicine at Dartmouth, whose research and IP formed the basis for Pear’s reSET and reSET-O digital therapeutics, recently gave a lecture that included a list of her lab’s current projects:

  • A smartwatch that can detect cocaine use
  • Computational jewelry for mobile health
  • Smart earpiece to support healthy eating
  • Mobile sensor in open label treatment trial of cannabis use disorder
  • Digital phenotyping of depression

Here’s a link to the last few minutes of the lecture where Marsch discusses these projects, but the whole hour may be worth a listen to better understand Marsch’s lab’s work.

West Virginia’s substance abuse plan for 2019 includes digital therapeutics

The state of West Virginia published its latest strategic plans for mitigating the opioid epidemic, and digital therapeutics factored into it. Here’s the background for the section that mentioned DTx:

“Substance use disorders affect people of all ages and demographics seeking care in West Virginia hospitals and health care system facilities. While there are models for providing care for people who have complex substance use disorders and other behavioral health and/or medical conditions, additional approaches are needed. Establishing team approaches fostered by integrated care systems and supported by the effective use of technology will help to further address the substance use disorder crisis in West Virginia.”

Among the strategies listed (on page four) for expanding “points of access to substance use disorder treatment through health care system integration,” the document reads:

Strategy 3 – Address barriers to treatment by expanding digital therapeutics, mobile service delivery and telehealth.

Read the whole thing here.

Quick links to E&O research reports

Previous newsletter editions are available on the E&O website so that newer subscribers can browse through past issues.

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

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 024. Hopefully, you learned a few things?

×
10.11.19
6 min. read

Roche-Genentech to develop in-house digital therapeutic. UHC. Livongo.

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 023.

Get E&O weekly. | Subscribe | Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 71 percent open rate. Here’s what’s happening this week:

  • A warm welcome to all of the new E&O enterprise subscribers! And a reminder: If your company has an enterprise subscription, any and all of your coworkers are entitled to an E&O membership. So feel free to have your colleagues send me an email if they’d like full access. For those of you looking to make E&O available to your entire team or company, head on over to the E&O pricing page here for more info.
  • Better Therapeutics published its fifth study: This one assesses economic impact of the company’s digital therapeutics for type 2 diabetes and hypertension. Read this summary or the full study here.
  • Biofourmis announced a second FDA 510(k) clearance (first one was in May), this time for its Biovitals Analytics Engine for remote monitoring.
  • Pharma Exec has an interview up with Pear Therapeutics CEO Corey McCann. He predicts that prescription digital therapeutics will be standard of care across all CNS conditions in the next five years. Within five to ten years he believes that will include: cardiovascular, metabolic and musculoskeletal conditions as well as anti-infectives and oncology.
  • One Drop inked a big deal with Wal-Mart to get its connected blood glucose meters onto store shelves. The devices bundle in one-year of access to certified diabetes coaches 24/7. This deal follows a similar one between One Drop and Apple Stores earlier this year.
  • The cynics on Twitter are arguing that startup insurer Devoted Health is only offering its Medicare Advantage plan members subsidized Apple Watch devices in an effort to skew their risk pool toward affluent, tech-savvy, fitness-focused seniors.

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Roche/Genentech to develop digital therapeutic for autism in-house

Roche/Genentech posted a job opening this week for a newly created position: Head Digital Therapeutics, Product Development Innovation Neuroscience. What’s unusual about the gig is that it tasks whoever gets it with creating the company’s first digital therapeutic. The “first focus area” is autism spectrum disorder. Here’s the pitch:

“Drug development for behavioral diseases has been a challenge. There is a good reason for this. It is simply that pills don’t teach skills. If we want to change behaviors detrimental to health, we will need something else.”

“This something else is digital. Today most people are connected to devices. This digital transformation of our lives has opened up new opportunities to understand and provide behavioral therapy that would not have been impossible just a few years ago. This creates new possibilities for how we tackle behavioral disease.”

“This newly created position will lead Roche’s first effort in developing digital therapeutics (DTx) to address neurological diseases. The first focus area is to design and develop a DTx for autism spectrum disorder.”

The effort may mark the first in-house effort a pharmaceutical company launches to compete with the many CNS-focused digital therapeutic startups in the market today. I’m curious to see who ends up getting hired for this.

This news also gave me a chuckle because at least two high-profile digital therapeutics companies have, on occasion, pitched their longterm aspiration as becoming the “Genentech of Digital Health” (Omada) or the “Genentech of Digital Therapeutics” (Pear).

Turns out… that may actually be Genentech.

Livongo wins big federal customer, loses Chief Growth Officer

Livongo announced that it had signed a two-year customer agreement with the Federal Employee Health Benefits Program (FEHBP), marking the company’s largest customer win to date. Livongo had been teasing the customer announcement for months. Livongo expects the deal to add 25,000 new members to its diabetes program 2020 and as many as 45,000 by the end of 2021. Livongo believes the deal will bring in between $20 million and $25 million in revenue for 2020.

In related news: Naomi Allen, Livongo’s Chief Growth Officer, announced yesterday that she was leaving the company after 1.5 years to start her own.

“I’m thrilled to announce my new business venture, Emilio Health. I am leaving a wonderful role at an incredible company, Livongo, to be the CEO and co-founder of Emilio Health, partnering with an exceptional team of serial entrepreneurs and backed by Oak HC/FT’s Annie Lamont. Emilio Health is building the world’s first technology-enabled Behavioral Health Home for children and their families.”

Proposed changes to anti-kickback law benefit digital health for value-based care

Digital health companies are rightly optimistic about the proposed changes to the Stark Law and the Anti-Kickback Statute that HHS released for comment this week. The proposal includes specific references to smart pillboxes and remote monitoring technologies.

Last year the law firm McDermott, Will & Emery published an overview of how these two regulations have slowed down the commercialization of digital health. Here’s a quick excerpt:

“Value-based payment models and the digital health tools on which they rely often implicate the Stark Law and the AKS because by design they are focused on managing the volume and value of services provided to patients. The Stark Law prohibits a physician from making a referral for ‘designated health services’ to an entity with which the physician has a financial relationship unless an exception applies. Designated health services include, for example, hospital services and certain imaging, laboratory and other services. The AKS is a criminal statute that prohibits paying or offering anything of value to induce, or reward for, items or services payable by a federal health care program. The Stark Law RFI and the anticipated AKS RFI are thus critical opportunities to address the need for clear pathways for leveraging digital health technologies to facilitate the development and implementation of alternative payment models and promotion of care coordination.”

UnitedHealthcare looks to expand Motion program into digital therapeutics

UnitedHealthcare plans to develop its employee wellness offering, Motion, into a platform for a portfolio of digital therapeutics, according to a recent job posting from the health insurance company. UHC is hiring a Product Direct for Digital Therapeutics in Minnesota.

Here’s what the job posting reveals:

“This role will be the go-to expert for all aspects of the Digital Therapeutics and UHC Motion product and market strategy within UHC E&I. This individual will forge, foster, and maintain strong relationships with key external partners. Additionally, this individual will partner with other key internal functions such as UHG R&D, Optum and others to develop and oversee the strategy and capabilities required to effectively launch a portfolio of Digital Therapeutics products and services to the market. A key dimension of this role will be the extension and evolution of the current UHC Motion product. The UHC Motion product will serve as both a product and technical foundation supporting the overall Digital Therapeutics strategy.”

As E&O exclusively reported in Issue 010, earlier this year United bought full ownership of its Motion program from the private equity group that acquired its partner Qualcomm Life.

Thoughts on designing digital therapeutics

One of the funnier but also surprising moments that occurred on-stage at the DTxEast event in Boston a few weeks back happened during the investor panel. Arkitekt Ventures’ Investment Associate Pavan Choski noted that many of the entrepreneurs leading the high-profile digital therapeutics companies today did not come from the tech world. Choski said:

“For us, when we think about de-risking the investment, it really is about an investment in the team. I’d love to hear about Zack’s thought process when backing [Pear CEO] Corey [McCann] or [Akili CEO] Eddie [Martucci]. These were people who understood the biopharma side of things. They weren’t tech entrepreneurs who had built a beautiful product but…”

Zack Lynch, Managing Partner, Jazz Venture Partners then jumped in: “Have you seen reSET?”

The audience laughed.

“It works though,” Lynch added once the laughter faded.

Pear Therapeutics started out with a strong focus on engagement and believed it could use game developers to create digital therapeutics, but as E&O readers know well the company’s strategy shifted dramatically.

Pear also started out by acquiring the licensing rights to digital interventions that had already demonstrated efficacy in RCTs. The company could use those studies to get to FDA authorization quicker. I imagine that limited how much it could change the digital interventions look and feel.

In any case, celebrated design firm IDEO has a somewhat lengthy read out this week on designing digital therapeutics. It is worth a skim.

While the design firm mentions Headspace and Click, it doesn’t reveal them to be clients. The post also talks about how it took inspiration from LEGO to help a biotech client in the diabetes space make it easier for patients to connect to their meters over Bluetooth. Read the full post here.

Quick links to E&O research reports

In recent weeks I’ve managed to upload each previous newsletter edition to the E&O website so that newer subscribers can browse through past issues as they see fit.

This quick links section aims to make it easier for paying subscribers to find the long-form research reports on the E&O site:

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 023. What should I look into for next week?

×
10.04.19
15 min. read

Building digital therapeutics studies for the FDA vs. payers

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Acacia Parks, Ph.D., the Chief Scientist at digital therapeutics company Happify Health, recently gave a presentation in Boston that focused on strategies and approaches to clinical studies for digital therapeutics companies.

Parks broke down how, in Happify’s experience, the expectations and demands of the FDA and differ from what payers and employers would like to see in outcomes studies.

Given how popular this talk was at the event and the feedback from a number of attendees who told me it was the highlight of the event for them, I’ve written up her talk in full with a transcript of the session. Read on below for Parks’ talk in her own words:

 

This slide (below) shows results from a clinical trial that my team and I published that has been appealing to the payers we have worked with. It’s a randomized control study for a group of people using Happify. We have people using a comparison group. A sham digital intervention. We call it a psychoeducational comparison group. So they are learning about wellbeing but they are not being told how to improve it. We are looking at symptoms of depression and anxiety. We are looking at an index of resilience. We are looking at both statistical significance and clinical significance and they were reported on in this study. It was published, and in general, I would say when we give a sales presentation to a payer and we are trying to make the effectiveness piece the argument, not the cost savings but the part where we convince people what we are doing is working, this kind of clinical trial has been suitable for that purpose.

Things are quite different when you start talking to the FDA. There was this idea in the last presentation that you might do some work in the payer space and then submit what you have learned so far to the FDA. But that is sort of like an inside joke, right? Because unless you are gearing what you are doing to the FDA, the likelihood that what you were doing is going to meet their standards is slim. Arguably, the FDA likes to hear what you are going to do in advance, anyway. To say, well, we already did this and we are hoping you’ll say OK, might not necessarily set a good tone for an FDA conversation. I have published multiple studies but what the FDA wants is so completely different that we have to do different studies.

This talk will cover four particular design features of digital therapeutics studies. I am going to infuse in that the difference between when you are thinking about payers and employers vs. when you are thinking about the FDA. But also to infuse some of the lessons we have learned by working with the FDA and some of their opinions on these topics.

As others at this conference have mentioned, at some point, progress needs to move forward. We can’t all be learning little snippets and then hiding them in our little cookie jar and not sharing them. We need to share with each other so we can all make progress quickly.

Clinical endpoints. One key difference between the payer space and the employer space — I sort of lump those two together — where we are talking about per person per month (PPPM) type licensing models — in that study I showed you all the outcomes were self-reported. There was no problem publishing that. We don’t typically get serious, earth-shattering concerns about using self-reported scales with payers, but in the FDA world there is some suspsicion about self-report scales. Which is a problem in a digital therapeutic where we are often trying to track people’s outcomes. How are we getting those outcomes from people every couple of weeks? By self-report. We are asking them to fill out a mood scale. There are other ways to do it, but I’d say that is a pretty typical approach.

When you speak to the FDA and your primary outcome is self-report you are going to get pushback, because they want to hear clinician reports. They want to hear that a clinician has interacted with the patient and verified what the self-report is saying. You can have a fully formed clinical trial that is publishable — and that you can use with a variety of audiences — but when you try to bring it to the FDA, [it won’t work because] there is no clinician report. So that kind of thing, it is preferred in the clinical psychology world and that has allowed us to sort of serve the payer space, but in the FDA world the clinician rating is really important, particularly with psychiatric initiatives.

Psychometrics is also a thing in clinical psychology. I was always trained that when you do a study, you should always look at what other studies have done and do your best to do what other studies have done. Do your best to find one or two ways to be different but you don’t want to reinvent the wheel. So if you are picking measures for a study, you pick a similar study and you use the same measures that they used. No so much, necessarily, in the digital therapeutics case.

Many of us are in different therapeutics areas. So I can’t look at a predecessor and do exactly what I am trying to do. We wouldn’t be trying to do it, if somebody was already doing it. In clinical psychology, I might be studying depression and I’ll say, ‘oh what measures did this other person use?’ Many of our comparison cases are in pharma studies where they study drugs.

The test that is going to best measure the impact of a digital therapeutic from a psychometric perspective might not be the same test as the one that is going to do that best for a drug. It might address different aspects of the disorder. There’s a whole set of considerations that you want to add when you are thinking about measures. It goes beyond just what was in the most recently published study. You also have to think about whether it is going to serve you because what you are going to be doing as a digital therapeutic is fundamentally different from whatever the similar drug trial might have done.

I don’t publish papers without clinical significance because I believe clinical significance is important, but if I kept searching for the right journal I think I could get away with publishing an efficacy trial that doesn’t include a clinical significance index. I haven’t done that, but I expect it to be possible. In the FDA world, they kind of only care about clinical significance. That’s been my impression. Statistical significance is nice, but you have to show that the amount of change people are experiencing is enough that we care about it. They have particular opinions about how they want you to look at clinical significance, depending on your outcome. It might be hard to know what that is without meeting with the FDA first. It is high-priority to have clinical significance, and it is something that they have some strong opinions on.

So when it comes to clinical endpoints, when I first started off in research psychology, it was very much looking at previous research and trying to do what they are doing. That is not necessarily the case here because it’s about what is going to work for you. If there is one lesson I’ve learned here, it is that the FDA is making sure that what you test, the way you test your solution, is going to demonstrate that it is safe and effective. Meaning if it says your solution is effective, they will believe it. That does not mean that they are advising you on the best possible way for your study to work. That is not their role. So you might pick a measure that is not going to yield good results for you, and the FDA is not going to comment on that necessarily. It is your role to pick something that is going to maximize your chances of success. They want to see a measure of clinical significance, but it is up to you to figure out what the best measure is going to be to make that strong argument to them.

OK, comparison groups. I wrote a whole paper about this. I could talk all day about this. I’m going to try not to get lost down this rabbit hole. The main point I want to make here is that, although the published paper above and all the other papers that we have published use an active control group, there are many solutions in the digital health space that use things like: no comparison group at all, comparison groups where the groups aren’t randomized and people get to choose what they want to do, or a waitlist control group where people just receive nothing (which the evidence shows makes people worse). These are comparison groups that exist all over clinical psychology and all over the wellness space.

You will note that I particularly chose to not use those types of comparison groups, even though comparison groups like this can make an effect look quite large so they are appealing from an experimental design perspective. Compared to nothing? In some cases treatment as usual really is nothing. Lots of people, about two-thirds of people with a mental disorder get no treatment for it. So there is an argument to be made that offering a person nothing is, realistically, what they would really get. For example, if it were something like an employer setting, they might not choose to use any of the mental health services offered to them.

I’m not bad-mouthing these approaches. There are reasons people use them, but in the FDA world there is just no chance. This cannot stand.

The two types of comparison groups we have heard bandied about in conversations with the FDA are treatment as usual, which could mean so many different things. It could mean in-person treatment if you are doing something like a digital adaptation of an in-person therapy, which is what we hope we are doing. It could be psychoeducation. A doctor might explain to you about your heart condition and what things you could do to improve your heart condition, but that is the end of the treatment that you would get. It could be a medication. It could be all sorts of things. Treatment as usual typically requires some kind of physician oversight, and it is a much stronger comparison group in the sense that your intervention is equivalent to — if that is what you are looking for — or better than treatment as usual, you feel really compelled that that’s real vs. if you find something that is superior to a waitlist group, you might think, well, if I have them read Harry Potter books and they could also have that level of improvement. You don’t have any sense of comparison for just being asked to do anything or any of those placebo effects.

That leads me to the last thing, which is my impression, the FDA has become pretty passionate about the use of placebo and sham interventions in digital therapeutics, which can be daunting because there is not really guidance about what those should look like. Two years ago you didn’t need it. Now you do. At some point the FDA made the decision that a digital therapeutic has to be compared to a placebo or a sham. There has to be something that looks and feels like the digital intervention you are testing, but contains inert content. It has to be used at the same frequency, people using it can’t have the sense this isn’t real.

There are all sorts of reasons this is great. It lets you have blanket experimenters. They are getting a digital intervention but you don’t know which one. It’s also complex because there is a whole R&D process it might have to go into designing a faux-digital therapeutic. But if there is one thing I tell you that you might not have known today, because we learned it from the FDA in the past year, it is that you have to use a placebo or a sham.

That is definitely something that is not true in clinical psychology generally. That is not something I’d get as feedback from a payer: ‘Oh whoa, you used psychoeducation and not a sham? Get real!’ That kind of feedback doesn’t come, at least to me, from the payer side but the FDA is pretty passionate about it.

Of course, the appropriate comparison group comes from what you are trying to make a claim about.

If you want to know, for example, if you have a digital CBT, you might want to know whether it is not worse than in-person CBT. A non-inferiority type claim. In that case, a comparison group is going to be in-person CBT, treatment as usual comparison.

If you are trying to argue just that your digital therapeutic is safe and effective, you would have some more wiggle-room there. You just want some kind of comparable condition where you are monitoring safety and effectiveness. It could be many different things.

If you want to know if your digital intervention adds anything on top of standard care, you have to be pairing it with standard care. And then comparing it to standard care with a placebo — not alone. The not alone part is key. The FDA wants to know about placebo effects now is kind of my summary of that slide.

But it is a moving target. That has changed in the last year or two. Chances are it will change again — what they expect when it comes to comparison groups. That’s always a part of the puzzle.

I’m running out of time, so I am going to fast-forward a little bit. I want to talk about engagement for a minute because, especially if you get into non-inferiority trials and you are trying to show that your digital intervention is just as good as something else, it is important that you consider especially as you get to talking to payers that you show how it is better.

If it is equivalent (or, the FDA’s formal term is non-inferior), what that means is on primary outcomes they are not different. You want to make the argument that your intervention may not be better on primary outcomes, but it is better on engagement, accessibility, cost. Although the FDA isn’t necessarily asking you to think about those factors, you probably want to be thinking about those factors.

Engagement can be a potential differentiator if you have two studies and they have an equally-sized effect on the primary endpoint, you want to be able to show something like engagement as the differentiator.

The last one, and I think this has been a theme of the conference so far, is innovation. Two years ago, the thing that the agency changed was the type of control group or comparison group we were expected to have. We have had a lot of conversations about digital clinical trials at this conference. In general, when you are talking to a payer, the tolerance for innovation is a little bit higher in the sense that if a journal will publish it then you have an argument. If you go too far off the rails in the payer situation they may not believe it.

Everybody is nervous because the FDA can only absorb so much innovation at once. There is a lot of conversation about, well, people use these things digitally so should the trials be digital? Isn’t that more realistic? Here’s the thing, if there is another lesson I took away from the FDA it is that they care about realism — in the abstract — a lot. They don’t want to be doing things that don’t generalize to the real world.

If you ask me, despite the fact that the FDA can only tolerate so much innovation at once, sometime in the next few years, the digital clinical trial thing is going to happen. Somebody is going to convince them, and then that is what the rest of us are going to be expected to do. That is my personal opinion because that is the realistic direction of testing things in their natural environment. While the FDA can only handle so much innovation at once, this is probably an area we should be prepared to innovate in. That might not be all at the same time. It might start with hybrid trials with remote visits, and then the FDA may suggest we do the remote visits at pre- and post. No one has declared that they are going to be the ones that make this leap, but we are going to need to do it I think.

There are many ways to do this. One is just to say we want to use self-report measures in our digital therapeutic, we understand the FDA doesn’t trust them but what about validating them against clinician measures? That’s a very tiny step for making a positive direction for making digital modalities more acceptable.

As I said, there are remote visit options and someday we are going to get to the point where the FDA will be looking at fully online trials and taking them seriously.

The FDA didn’t say that to me — just so we are clear.

This is just a summary slide.

The last thing I want to say here is I am talking about the FDA, but there are other regulatory bodies in other countries and when we design products, it is important we don’t just think about our immediate little situation and the sample we are working with right now.

So this is just an example of some work we’re doing with our consumer database. Seeing whether the dose-response curve of Happify, which is just the more activities that you use the more you respond in terms of wellbeing, whether that works in a version that we translated into German and marketed to people in Germany. A version that we translated into Canadian French and made available in Canada. And so on. We are starting to see some generalizations of that dose curve, but it is important to check! What if I looked at this data and realized, ‘this doesn’t work in China’! It is easy for us to get excited and think about digital as something that is very easy to disseminate, to just assume we can. It is important to check and make sure that is the case.

While I am all about progress and moving forward as quickly as possible, also some guardrails should be there to make sure we are being responsible as we aim to take over the world with digital therapeutics.

I love being here because of the cooperation between all the companies, so here is a picture of my husband and me cooperating as we scuba dive. Thank you for the opportunity to speak and to listen to me and now we have a couple of minutes for questions.

Q&A

Moderator Edward Cox, Founder 0f Dthera: To start, I am going to agree with you on one point and disagree with you on another, to bring a little edge to the discussion. You said that maybe the most important thing is that before you start your clinical trials, go sit with the FDA. That’s right. Don’t be dumb. Don’t go spend millions of dollars — and the problem is, there is an arrogance or ignorance that happens that is harmful to our entire industry. If you roll up to the FDA and say, hey I’m this cool tech company from San Francisco and you, the FDA, should be fine with this, right?

Parks: That is a good point because we are making an impression as an industry. What one company does will impact all of the other companies as well.

Cox: Absolutely. The part that I am going to push back on is the control groups and shams. The FDA is not a hive-mind. It depends on your indication. What we are seeing is it depends on what indications and what medical claims that it is you are trying to do. There are medical devices approved all the time with passive controls. If what you are doing is slip-streaming behind them in a 510(k), then that might be exactly what you do.

Parks: What I was talking about [with shams] is what happened during a discussion about a 510(k).

Cox: I agree with you, but I think this is one of the things we should bring back to what we agreed on before — go ask the FDA. Each of our indications is going to be different and will be reviewed by different groups at the FDA. Your friend at one company who says, ‘this was my exact interaction with the FDA so follow these steps, beat-by-beat,’ and then you go to the agency and have a wildly different experience. It’s because diabetes and Alzheimer’s are different. They are different groups and they are going to interact with us in different ways. This is, effectively, a false pushback, but I do think it reinforces your point that shams are the way of the future — they are — but also to ask the FDA before you run your studies.

Parks: This may be a little controversial, but — depending on whether your goal is speed or accuracy, in other words, if you wanted to do the leanest most experimental design possible — you could go to the FDA and not offer a sham and find out if they say, ‘well, what about a sham?’ And then you make a sham. But here is the problem with that. Then you have to design a sham and come back to the FDA, which adds another several months to your timeline in addition to the actual sham. So you kind of have to do a risk management assessment there and think, ‘well, should we just use a sham so maybe we can go to the FDA and they will say this sham is acceptable and we can move forward?’ or maybe they will say you don’t need a sham and you can move forward. But if they do, you will have that setback.

Athena Robinson, Chief Clinical Officer at Woebot Labs: I’m curious about payer expectations and FDA expectations in terms of follow-up. Meaning: Follow-up on timepoints sustained, clinical efficacy, etc.

Parks: I have been shocked by the general lack of requirement for follow-up everywhere. In clinical psychology, I would say, there is the expectation that you follow-up at one-year and no one wants to hear about your intervention if you haven’t done that. I have not found that so much in any of the contexts that we have discussed here today. It is much more about the immediate effect and safety during the active intervention period. I’ve never been asked to do longterm, but I do it anyway because I want to know but in the context of an FDA study that is not an area we have gotten pushback.

Cox: Thanks we are out of time!

×
6 min. read

Senate bill mentions DTx. Pear lobbying. FDA vs payers.

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Issue 022.

Get E&O weekly. | Subscribe | Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a lucky 77 percent open rate. Here’s what’s happening this week:

  • Excited to announce that these past seven days were E&O’s best week ever for new subscribers! Thanks to all the current readers who have encouraged colleagues to sign up. If you are new here: Feel free to reply to this newsletter to send feedback my way. Don’t be shy, it makes this better for everyone.
  • Seed investor Rock Health announced that funding for digital health startups slowed down in Q3, which saw $1.3 billion flowing into the sector after two quarters that averaged $2 billion each. Current funding for the year stands at more than $5.5 billion.
  • Meanwhile, the digital health moon shooters over at StartUp Health have tracked $10.4 billion in digital health funding so far this year. They did, however, note a “typical post-summer dip” in funding this past quarter.
  • CB Insights debuted its list of 150 “most promising” private digital health companies, which included a section on digital therapeutics-focused startups to watch. The research firm also published a map of the US with the most-funded digital health company in each state.
  • Sleep Data raised $6 million for its BetterNight platform, which monitors sleep apnea and is developing CBT-based digital therapeutics programs for insomnia.
  • NOCD raised $4 million for its OCD identification and management offering. Livongo-backer 7Wires Ventures was among the investors.
  • Novo Nordisk announced a deal with Noom to offer the company’s behavior change and coaching platform to its patients with obesity. The deal follows a successful 8-month pilot study that included 1,000 people.
  • Proteus Digital Health published results from a “prospective, single-arm, open-label, multicenter study across 18 clinics” in the US with 288 adults at-risk for non-adherence to their oral meds for Hepatitis C.

Did this get forwarded to you? You can sign up as a paying subscriber and get full access to E&O by clicking this part of this sentence. C’mon don’t miss the next one…

Take different approaches to clinical studies for the FDA vs. payers

By many accounts, one of the highlights of the recent DTx East conference in Boston was a presentation given by Happify Health’s Chief Scientist Acacia Parks. Her talk focused on strategies and approaches to clinical studies for digital therapeutics companies, and it included insights about how the FDA thinks about these studies vs. how payers do.

Given the popularity of her talk, I wrote it up nearly word-for-word over at the E&O site so click here if you have access.

Here’s a quick excerpt:

“Things are quite different when you start talking to the FDA. There was this idea in the last presentation that you might do some work in the payer space and then submit what you have learned so far to the FDA. But that is sort of like an inside joke, right? Because unless you are gearing what you are doing to the FDA, the likelihood that what you were doing is going to meet their standards is slim. Arguably, the FDA likes to hear what you are going to do in advance, anyway. To say, well, we already did this and we are hoping you’ll say OK, might not necessarily set a good tone for an FDA conversation. I may have published multiple studies but what the FDA wants is so completely different that we have to do different studies.”

Milestone: US Senate’s first mention of “digital therapeutics” in a bill

Two weeks ago the Senate’s Appropriations Committee included language in one of the 2020 appropriations bills that mentioned “digital therapeutics”. I believe that is the first time ever that term has been in a bill.

This is a small but important milestone because Congress will need to act to open up reimbursement pathways for digital therapeutics via CMS. The fact that the Senate now recognizes “digital therapeutics” as existing is a requisite first step. (The bill may very well have to pass before we count these chickens, I guess.)

Here’s the language from the markup bill:

“Evidence-based Therapeutics.—The Committee notes that FDA has cleared a prescription digital therapeutic and a prescription mobile medical application to deliver cognitive behavioral therapy in conjunction with outpatient treatment of substance use disorder and opioid use disorder patients. The Committee requests SAMHSA include a report in the fiscal year 2021 CJ on how these new prescription technologies could be used by the behavioral health field as a tool to combat substance abuse and the opioid crisis by expanding patient access to treatment and recovery support services.”

The passage above obviously refers to Pear Therapeutics’ FDA clearances for reSET and reSET-O. As far as I can tell after searching the lobbyist databases, Pear is the only digital therapeutics company that is actively lobbying Congress itself — and not through a trade group like, say, AdvaMed.

Pear spent $40,000 in 2018 on lobbying efforts, and the company has spent $20,000 so far in 2019. According to government filings, during these past two years Pear’s lobbying efforts have focused on just two issues:

  1. Increase awareness of clinical use of FDA cleared prescription digital therapeutics.
  2. Medicare coverage of FDA cleared prescription digital therapeutics.

Number two is a long road, but it is clear that this Senate markup bill is an early victory on the first. Read the appropriations bill here and find the “digital therapeutics” mention on page 145 of the PDF.

Worth noting: Pear is the only company that has disclosed lobbying efforts at the US federal level on an issue that includes the term “digital therapeutic”.

What Amazon’s IP lawyers imagine Amazon Care might offer someday

Trademarks can be a helpful source of information about a company’s future plans, but, like patent claims, they are often stuffed to the gills with any and every permutation of a company’s product roadmap. Given all the interest in Amazon’s big announcement around its Amazon Care service, which is initially just for a select number of its employees, here’s a rundown of all the health services and products the company’s trademark legally protects:

  • software for providing medicine, medical care, healthcare, telehealth, telemedicine, remote care, and virtual health care services; downloadable mobile application software for providing medical and healthcare services
  • software for messaging and chat for medical and healthcare purposes
  • mobile application software for use in locating doctors, physician’s assistants, nurses, nutritionists, healthcare professionals and healthcare service providers
  • software for use in scheduling of medical and healthcare services
  • software in the nature of a mobile application for allowing doctors, medical specialists, nurses, nutritionists, healthcare professionals and healthcare service providers to be dispatched to consumers
  • software for use in providing medical diagnosis, consultation, treatment recommendations, and medical care
  • mobile application for enabling remote diagnosis and consultation with physicians
  • Appointment scheduling services; physician referral services; hospital referral services; scheduling medical appointments for others; providing physician directories and hospital directories; processing of online orders of prescriptions; supply prescription drugs to telemedicine participants

The last section of the trademark filing covers pretty much all of healthcare via remote visits, so here is just a sampling:

  • telemedicine and virtual health care services for the diagnosis, consultation, and treatment of cardiovascular, cardiopulmonary, dermatological, endocrine, gastrointestinal, hematological, hepatological, metabolic, musculoskeletal, neurological, ophthalmic, otolaryngological, reproductive, and respiratory conditions;
  • providing chronic care management services… in the management of complex and chronic diseases, namely, diabetes, high blood pressure, high cholesterol, thyroid disorders, heart disease, asthma, and arthritis;

And the list goes on. Read the full trademark claims here if you’re into that sort of thing.

Digital nutriceutics: Will digital wraparounds for supplements find a market?

After documenting Pear Therapeutics’ failed direct-to-consumer product line with The Vitamin Shoppe in last month’s research report, I was surprised to hear about a similar effort at the DTx East conference in Boston. Brain training company Cognifit and global consumer health and hygiene products company, RB, launched a digital wraparound for a supplement earlier this year.

Dave Evendon-Challis, Vice President of Innovation at RB briefly discussed the company’s work with Cognifit to create a digital wraparound for RB’s Neuriva supplement, which is made from an ingredient found in the fruit of the coffee bean (among other things) and claims to boost cognition. Neuriva launched in April. Here’s how the companies described the digital component at the time:

“The Neuriva Brain Gym app offers a customized brain training experience, using personal assessments to identify specific cognitive improvement areas. It then selects from 14 brain games and five training programs based on individual needs. The app also includes insights and analyses on scores, tracking cognitive fitness progression in tandem with the supplementation, and benchmarking against other users.”

At DTx East, Evendon-Challis stressed that because RB partnered with Cognifit for the launch of Neuriva, it took less than one year to develop it and get it to market.

Handy links to E&O research reports

In recent weeks I’ve managed to upload each newsletter edition to the E&O website so that newer subscribers can browse through past issues as they see fit.

Starting this week, I’ll also start including this quick links section at the bottom of each newsletter so the longform research reports are more easily accessible for paying subscribers:

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 022. What’s missing? Which issues in clinically-validated, regulated digital health need more attention here? Hit reply and let me know…

×
9.27.19
8 min. read

Trouble in Pear-adise? More details on ESI’s digital formulary.

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This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 021.

Get E&O weekly. | Subscribe| Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a balmy 70 percent open rate. Here’s what’s happening this week:

  • I spent the past few days at the Boston-based DTx East conference, which was squarely focused on all things digital therapeutics. The event had a handful of standout panels and presos on-stage, but — as always — the conversations between sessions proved more informative. Scroll down for my initial writeups, and I’ll relay more from the event in next week’s note.
  • You likely saw this already but here are quick links for the four FDA guidance documents (updates and mulligans) that the agency posted this week. Their publication coincides with AdvaMed’s big MedTech conference. Just so you have the links handy: Here’s the updated guidance on mobile medical apps, the updated (after 20 years) guidance on using off-the-shelf software in medical devices, policy for low-risk, general wellness devices, revisions to MDDS, draft guidance on (the always-controversial) clinical decision support, and guidance on how the FDA is applying the software exclusions found in the 21st Century Cures Act.
  • The self-described “largest, family-run hospital group in Germany”, Schön, has acquired depression-focused digital therapeutics company Aurora Health for an undisclosed sum. Aurora offers an app called Moodpath, which has been downloaded 1.8 million times. Schön will bundle the app with its remote visits, telemedicine offering. More here in German, but Google Chrome’s translate gets you the gist.
  • While you’re translating German, here are recommendations from two Germany-based DTx companies for improving and clarifying the recently drafted Digital Supply Act legislation, which — among other things — is intended to drive reimbursement for digital therapeutics in that country.
  • Three financing deals of note: FeetMe, which has developed wearable gait assessment technology, raised a €9.4 million Series A. Eko, which offers a smart stethoscope for AFib and heart failure screenings, raised a $20 million Series B. Proteus Digital Health alums founded a virtual pharmacist company, called Arine, last year and Rock Health just announced its an investor but funding details were undisclosed.

Did this get forwarded to you? You can sign up as a paying subscriber and get full access to E&O by clicking this word or this one — any of these right here would get you there. One more chance.

Trouble in Pear-adise?

Pear’s ongoing commercialization efforts with its partner Sandoz, a subsidiary of Novartis, was a common and consistent discussion topic during coffee breaks at DTx East. It’s also more or less where E&O’s The Pear Therapeutics Report ended, so this article picks up where the report left off…

By all accounts (on the sidelines of DTx East, anyway), the rollout has put a strain on the Pear-Sandoz partnership, but some characterized the pair’s struggle to convince payers and detail docs as bleaker than others.

Contrast these private conversations with what was said on-stage. Pear Therapeutics’ Chief Commercial Officer Alex Waldron described the rollout with Sandoz as going “extremely well”, but he made no mention of any particular payer as having signed on. This was pointed out to me by two people at the event: If Pear-Sandoz had inked a payer contract for either reSET or reSET-O by now, wouldn’t they have announced it?

Sandoz’s Head of Digital, Andre Heeg spent much more time on-stage discussing early lessons learned from his partnership with Pear, and he never echoed Waldron’s “extremely well” characterization. Here’s what Heeg said about early efforts to figure out the best way to deploy a salesforce to get reSET and reSET-O to market:

“To be quite frank, I’m not going to sit here and say it was easy. At the end of the day, this is really messy. It requires determining the right resources, the right talent, all of these types of levels requires a very specific kind of talent that is different from the pharma sales team’s core. You need to be more flexible, more entrepreneurial, more persistent, right? You also need to enjoy the failings [and think of them] in terms of learnings. It’s a huge learning curve for us.”

Heeg was on-stage with his colleague Joris Van Dam, who leads digital therapeutics at Novartis. Novartis’ deals with Pear are for digital therapeutics that are not yet at the commercialization stage. When asked about how difficult it is for a big, conservative pharma company to deal with the “fail fast” mindset typical of smaller digital companies like their partner Pear, Van Dam deftly turned the premise on its head and explained that failure is a key part of any big research-focused company’s process:

“We actually had the opposite experience with Pear. We said ‘You know, let’s take three or four shots at this. It’s OK to fail.’ And they said, ‘No, no, we can’t fail that often!’ But this also depends on what stage of the [digital therapeutic] you are at, and I think we benefited a lot from the perspective of our research partner on that. We are — not only at Novartis but as an industry — use to failure but also using it to our scientific advantage to study what failed. Research is all about learning.”

When the moderator, Akili’s VP of Market Access and Trade Jeffrey Abraham, asked Van Dam to comment specifically about learning and iterating from failures at the commercial stage, the Novartis executive half-jokingly, half-icily said thanks for the “forewarning” on that question. He briefly commented:

“At the later stage and with commercialization it is different. Especially with pharmaceuticals. With digital therapeutics, the costs are different, so failure at that stage is not as costly [as they are with pharmaceuticals]. It’s a good question and ‘I don’t know’ is the short answer.”

Sandoz’s Heeg jumped in:

“On the commercial side, it is probably a little bit different because there you necessarily don’t want to fail too often. My observation from the second half of last year and the first half of this year is that the hype around commercialization of digital therapeutics was huge, but now it’s the phase of ‘yea, show me the outcome’ — ‘show me what is the path to revenue’. The reality is — the perfect model — in my experience, no one has figured that out.”

Heeg then listed off open questions about digital therapeutic commercialization around prescription, payers, and direct-to-consumer strategies. Then Heeg continued:

“It’s interesting that we are still in this phase where we are still figuring this out. A few years from now a couple of people will have failed a lot, a couple will have learned, and we will have a few successful models out there. Right now it is still in the trial phase.”

Heeg also discussed more specifics around sales force strategies for digital therapeutics products. His general take is that DTx requires a new kind of sales rep, so the ideal route is to build one from scratch. That said, if a pharmaceutical company already has a sales force with presence in the field around the digital therapeutic’s medical condition, the likelihood Sandoz would use their own salesforce would be “pretty high”. Sandoz did not have a salesforce focused on addiction before building one for reSET, Heeg said.

“The other thing is the calls are very different from the calls in traditional pharma. Imagine: You have to address how the patients actually get access to this. How do they install it? And, oh, by the way, there is a new version now. The button is no longer green, it is blue now. It is very different. You need reps who have an entrepreneurial mindset and are able to explain something that the doctor does not know at all. But also [the rep] has to have some technical understanding… to be able to explain the technical aspects in very simple words.”

One final remark from the stage at DTx East that may or may not have had anything to do with Pear’s Sandoz partnership came from longtime Pear investor and board member Zack Lynch from Jazz Ventures. Lynch was speaking on a panel of investors about trends in the industry. He also has made investments in multiple digital therapeutics companies, so it is unfair to assume these remarks were entirely Pear-inspired:

“I don’t think we really know the true go-to-market strategy. Every other year it goes from partnering, back to self-commercialization, back to partnering, and back to self-commercialization. I think the jury is still out and that will [also] depend on the indication. This week, for me, it’s self-commercialize.”

Apple’s under-appreciated regulatory feat

During a handful of discussions over coffee at DTx East this week, I was surprised to find a number of attendees who did not fully understand what made Apple’s FDA clearances for its ECG SaMDs unprecedented.

The odd, seemingly coordinated timing of the clearance is widely known, but the Apple clearances also marked the first time that the FDA regulated ECG software while ignoring the sensors that acquired the electrocardiogram. The agency essentially ignored the Apple Watch’s hardware — specifically its PPG sensors — in the clearance process.

I’ve been waiting and watching, but so far no company has managed to use Apple’s clearances as predicates to push something through the agency. The move by the FDA to give Apple a pass on its medical sensors has left SaMD regulatory experts scratching their heads. Which company is likely to follow Apple’s lead and be the first to use them as a predicate? It will likely happen soon.

More details on Express Scripts’ digital formulary plans for 2020

At the DTx East conference Express Scripts’ VP of New Solutions, Mark Bini shared more details on his company’s plans to launch a digital health formulary in early 2020. Bini said he believed digital therapeutics belong in pharmacy benefits, and ESI’s digital formulary will enable that. However, the company plans to be flexible and work with its payer clients to cover digital products as they see fit.

Bini also argued that the pharmacist should take a lead role in the last mile of digital therapeutics:

“It is the pharmacist’s role to understand the medication’s chemical makeup, the side effects, limitations, etc. It is an opportunity from the digital standpoint to expand the pharmacist’s role — and pharmacy’s role — and have the pharmacist understand the algorithm. Have the pharmacist understand how this digital therapeutic metabolizes in the brain and can stop your anxiety or depression. There is an opportunity there to expand the pharmacist’s role and to provide coverage as a pharmacy benefit, which we can do today. We can do it pretty turnkey.”

Bini also explained that the digital formulary initiative aims to help overwhelmed HR benefits offices figure out which digital health solutions are worth deploying. ESI has the capability to vet and manage some of that process, Bini said.

“We have taken everything we know to work well in a medication formulary process, and we have applied as best practices in the digital health space. We have assembled a panel of doctors, specialists, pharmacists, researchers in accessibility and usability, as well as health services researchers who are looking at methodologies of [the digital products’] studies, and they are evaluating those solutions through the lens of clinical sufficiency, clinical viability, clinical effectiveness, as well as usability and engagement, and then and only then, are we looking at value. Notice, I didn’t say price. To our clients, it is really about the value of their return on investment.”

Bini stressed how flexible ESI would be in its approach to digital coverage:

“One of the nuances of this formulary is that it is not blanket coverage, it is an opt-in approach. Clients will have the optionality to choose a la carte which solution works best for them. That’s something, personally, I think we can all celebrate in this room: We are getting to a point where clients see value in creating such a formulary where, even if it is opt-in and not blanket coverage, it is a step in the right direction.”

As expected, the digital formulary will handle adjudication too. It will likely go live during the first half of 2020. While ESI has existing relationships with digital health companies like Livongo and ResMed/Propeller, the company is applying the same application and review process to all digital products interested in securing a spot in its digital formulary.

That’s a wrap on Issue 021. More from DTx East in next week’s newsletter.

×
9.19.19
5 min. read

Omada hits 275K cumulative users. More on Pear, Limbix, ATX.

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 020.

Get E&O weekly. | Subscribe | Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 64 percent open rate. Here’s what’s happening this week:

  • I’ll be at the DTxEast event in Boston next week, and I’m excited about the lineup. Let me know if you’ll be there.
  • Missed this last week: Trialcard acquired medication adherence startup Mango Health. When Mango’s founder and CEO Jason Oberfest left to join Apple’s health team in December, it was a fair assumption that the company was looking for a buyer.
  • Germany-based digital therapeutics company Kaia raised $8 million in a round led by UnitedHealth Group’s Optum Ventures. Kaia offers programs that address back pain and COPD. The company says it has enrolled 275,000 people into its programs. It just raised a $10M round in January led by Balderton Capital.
  • Sequoia-based digital therapeutics company Limbix, which markets a VR kit for various mental health conditions is currently pursuing an FDA clearance for its VR-based digital therapeutic, called Spark, for adolescent depression. It’s working with Stanford and TrialSpark on the prescription digital therapeutic, which is currently undergoing a feasibility study. Check out its full pipeline of PDTs here.
  • A former Walgreens exec, Adam Falat, just announced the launch of his new digital therapeutics startup ATX Therapeutics. The company’s initial strategy is to try to sell digital therapeutics directly to consumers. No specific focus is revealed in the launch announcement, but the company does hint at a few areas of interest: “many chronic diseases are caused by a short-list of risk behaviors, such as tobacco use, poor nutrition, lack of physical activity and excessive alcohol use.”
  • At Health 2.0 in Santa Clara, Omada Health’s CEO Sean Duffy said the company has had 275,000 people enroll in its programs. Omada typically uses the cumulative number of people instead of a real-time one. The latest figure makes for about 25,000 new users since the last update, which was 250,000 in May of this year. At this current rate, Omada is currently adding about 7,000 or so new users each month. It also added 50 new customers (600 now) since it announced its funding in June, when it had 550 customers.
  • This study concluded that diabetes prevention programs should take measures to address depression and anxiety issues in their patient populations: “Both depressive symptom burden at baseline and change in this burden are associated with a graded reduction in the effectiveness of diabetes prevention programs at increasing physical activity in primary care.”

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Livongo, Omada, Kaia, Healthvana, Propeller user numbers: 100,000 – 300,000

It just struck me after compiling the quick links above that a number of companies I’m tracking have disclosed users numbers in this range. While they’re not apples-to-apples since some talk only of cumulative users, it’s striking how each of these companies count users in the low hundreds of thousands now:

  • Livongo: 192,000 members.
  • Propeller Health: >100,000 patients enrolled (as of May).
  • Kaia: 275,000 users enrolled.
  • Omada: 275,000 cumulative users.
  • Healthvana: >250,000 users.

Follow-up thoughts on Pear Therapeutics

In the days following the publication of The Pear Therapeutics Report last week, I’ve had conversations with a few of you about the findings. While Pear only recently launched its first product commercially, the company has managed to move quickly since its founding five years ago. Of all the twists and turns in Pear’s story thus far, the tactics that continue to pop up in conversations have been related to the company’s licensing strategy.

  • License others digital interventions: First off, Pear’s “roll-up” strategy in its first year of operation (2014-2015) to gather up (somewhat) exclusive rights to dozens of digital interventions that have proven their efficacy via RCTs with solid control arms, has allowed the company to skip a few steps. Most digital therapeutics companies begin with an idea for a digital intervention that they need to build and prove-out with a randomized control trial. Pear acquired the rights to interventions instead, and it did most of this licensing work early on, and quietly before the digital therapeutics trend had received much notice.
  • Use the interventions’ existing efficacy data for FDA: Pear has also managed to secure FDA authorization for at least one of its prescription digital therapeutics by referencing the efficacy data related to the early, academic version of the PDT. Pear still refines and evolves these digital interventions with its own team, but the advantage of showing up to the FDA with a mostly-baked, RCT-proven digital intervention has helped Pear get to market sooner. That same strategy will help it get future PDTs to market faster than the competition, too.

    In many of Pear’s known licensing agreements to date, the company has attained exclusive rights to use the inventor’s digital intervention as part of a combination product with some kind of pharmaceutical. In most cases, the inventor has retained the right to develop their digital intervention as a stand-alone offering or, at least, not as part of some combination product with a drug.

    A couple of the academics whose research is critical to Pear’s various digital therapeutics have banded together to form their own digital therapeutics company called eQuility. That startup includes various Pear Therapeutics inventors and licensors like Eric Leuthardt M.D., Roy Levien, Walter Greenleaf Ph.D., and Dror Ben Zeev. eQuility is working on digital therapeutics focused on depression, bipolar disorder, and sleep currently. It also has designs on anxiety, RA, IBD, and other inflammatory diseases. This slide deck from July is a good introduction to eQuility (slides 5-24).

Digital Pharma/Medtech deals: Sanofi-Happify, Bayer-One Drop, Medtronic-Novo, and more

This week saw an unusual number of deals between medtech/pharma and digital health companies. Here’s a quick rundown:

Sanofi inks 10-year deal with Happify Health: Happify Health will develop a version of its digital platform specifically for people with multiple sclerosis and plans to submit the co-developed digital therapeutic to the FDA for clearance as a medical device. Prior to this deal Happify has been focused on a direct-to-consumer and payer-facing offering that uses CBT to reduce anxiety and depression in the general population. Happify has managed to attract 4 million users for its consumer programs.

Bayer leads $40M investment in One Drop: One Drop, a diabetes-focused digital health company, which recently secured shelf space at Apple’s stores, just announced a $40 million Series B round led by Bayer. Perhaps more interesting: Bayer also inked a global commercial licensing agreement to use One Drop’s platform in areas beyond diabetes, including oncology, cardiovascular disease, and women’s health.

Medtronic-Novo Nordisk and Sanofi-Abbott: Medtronic partnered with Novo Nordisk in a nonexclusive agreement integrate insulin dosing data from future Novo smart insulin pens into Medtronic’s CGM devices, like its Guardian Connect system. Novo’s new smart pens are set to launch in 2020. Sanofi and Abbott inked a similar deal this week: The two plan to co-develop “tools that combine the revolutionary FreeStyle Libre technology with insulin dosing information for future smart pens, insulin titration apps and cloud software.”

That’s a wrap on Issue 020.

×
9.13.19
17 min. read

The Pear Therapeutics Report

In this article:

In this 4,500-word report, E&O digs into the strategic moves, challenges, and successes that the Pear Therapeutics executive team has navigated since its founding five years ago. The report covers dozens of Pear’s therapeutic areas of interest; financial details from licensing agreements the company has forged with academic researchers; why it acquired a small tech startup in its early years; its failed direct-to-consumer products and more.

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Fresh from vacation, ex-McKinsey analyst and then-venture capitalist Corey McCann M.D. Ph.D. stepped up to the mic at the first-ever NeuroGaming conference in 2013 and asked a question. Well, three actually: “Who’s going to pay for this? How much? And why?”

In his retelling of the episode, the room fell silent. The panelists, who were all dabbling in healthcare applications for neurogames, had no good answers.

A year later, while still working as a principal at MPM Capital, McCann returned to the conference, sat on a similar panel, and introduced himself as the CEO of a new startup named Pear Therapeutics. Software plus drugs were better than either alone, he argued. Pear Therapeutics was bornStephen Kennedy Smith, a scion of the Kennedy family, also helped incubate Pear via his holding company New Frontier Bio. .

Pear Therapeutics has come a long way in the past five years. Pear might be the first digital health company to operate as if it were a biotech company. McCann has referred to his company as the Genentech of digital therapeutics. It is, in fact, the first digital health company to secure FDA approval for software that claims therapeutic benefit in the label just like a pharmaceutical.

It has licensed an unknown but likely sizeable number of digital interventions from academics to populate its pipeline prescription digital therapeutics (PDTs). Pear has also raised $134 million and boasts a valuation close to half a billion dollars. The company has managed to secure a de novo clearance from the FDA, 510(k) clearances, and entry into the agency’s exclusive, Pre-Certification pilot program.

Most impressively, Pear has landed paying customers. Both Novartis and its generics division, Sandoz, have signed on to develop and launch digital therapeutics with the company. And two have already launched commercially.

This report will cover Pear’s progress to date along with lesser-known product failures and challenges. Here’s a table of contents for the sections that follow:

  • Pear’s therapeutic modalities and therapeutic areas
  • Current product pipeline
  • Pear’s 2016 direct-to-consumer debacle
  • Key struggle: Hiring tech talent to build digital therapeutics
  • Pivot to prescription-only
  • Pear’s asset licensing strategy: “Not in the content business”
  • Two examples (with financial details) of Pear’s licensing agreements
  • How and when Novartis pays Pear
  • Regulatory strategy, accomplishments to date
  • Pear’s funding and investor strategy
  • What’s next for Pear Therapeutics

Pear’s therapeutic modalities and therapeutic areas

At first blush, Pear appears to be a digital therapeutics company focused on central nervous system (CNS) disorders, but its longterm ambitions are wider in scope. Pear believes that any medical issue or condition that could be improved via behavior modification is a potential target for a prescription digital therapeutic. Here’s how Pear sees its market opportunity.

Over the years, Pear has pointed to more than 20 therapeutic areas that it believes could benefit from a prescription digital therapeutic.

As the list above shows, the areas of interest include: major depressive disorder, general anxiety disorder, post-operative pain, MS, Parkinson’s, tremor, stroke, hypertension, chronic heart failure, diabetes, irritable bowel syndrome, Crohn’s, ulcerative colitis, asthma, COPD, rheumatoid arthritis, psoriasis, overactive bladder, incontinence, and contraception. There are behavioral components to each of these conditions that are currently not addressed by pharmaceuticals today.The original slide had a copy-paste error in the oncology section so the specifics there remain undisclosed.

Pear’s therapeutic modalities include ones beyond cognitive behavioral therapy. Contingency management, cognitive remediation therapy, and cognitive control therapy are other neurobehavioral modifications the company is exploring along with various real-world data collection modalities and dose optimization.

Pear’s product pipeline

Pear Therapeutics’ current product lineup has been well-covered elsewhere, so here’s a brief overview of its current digital therapeutics:

Pear Therapeutics: reSET
  • reSET: A 90-day prescribable digital therapeutic program for adults already enrolled in outpatient treatment under the supervision of a clinician. This version of the program is approved for substance abuse disorders but excludes opioid use disorder. The clinician dashboard includes: “patients’ use of reSET, including lessons completed, patient-reported substance use, patient-reported cravings and triggers, compliance rewards, and in-clinic data inputs such as urine drug screen results.” The program is based on the work of Dartmouth’s Lisa A Marsch Ph.D. The product has made it through the FDA and Sandoz’s sales team is currently selling it to clinicians around the country.
  • reSET-O: An 84-day prescribable digital therapeutic program for adults that aims to increase the retention of patients in outpatient programs for opioid use disorder that include transmucosal buprenorphine and contingency management. It’s also based on Marsch’s work at Dartmouth. Like reSET, this product has already made it through the FDA and Sandoz’s sales team is selling it to clinicians right now.
  • Somryst: A prescribable digital therapeutic program for people with insomnia and depression. Pear has submitted Somryst to the FDA and it may end up being the first medical device to make it through the agency under its Pre-Cert program. Somryst offers “tailored neurobehavioral interventions… and sleep restriction driven by learning algorithms to reduce the severity of insomnia and symptoms of depression.” Somryst could also be the first product Pear uses its own sales force to bring to market without a pharma partner.
  • Thrive or Pear-004: Thrive, which the company also calls Pear-004, is a prescribable digital therapeutic for people with schizophrenia. Novartis has signed on to help Pear commercialize Thrive, which not yet through the FDA. Thrive is based on the work of University of Washington’s Dror Ben-Seev Ph.D.
  • Pear-oo6: Novartis has also partnered with Pear on a prescribable digital therapeutic for people with multiple sclerosis. This deal is markedly different from the Thrive deal since Pear-006 is still in the development stage. Pear is tapping Novartis’ in-depth understanding of multiple sclerosis to create the digital therapeutic.

Pear Therapeutics keeps an updated chart of its pipeline on its website here. This is what the status of its pipeline looks like today:

Pear’s internal timeline for launching particular interventions has shuffled over the years. For example, in March 2015 McCann said the company planned to first launch a digital therapeutic related to addiction (which ended up being split into two reSET and reSET-O) followed by one for PTSD. As the pipeline above shows, Pear’s PTSD offering, called reCALLAt one time reCALL was a virtual reality-based program that worked with a VR headset, but the company has not mentioned this therapeutic or its current iteration in recent years. , is now half a dozen products down the pike. Back in 2015, McCann expected depression, general anxiety, and sleep to follow, but it seems likely Pear’s insomnia therapeutic, Somryst, will be its third on the market as it currently awaits FDA approval in early 2020.

Pear’s PTSD VR-based digital therapeutic reCALL

Pear’s longterm strategy is to develop into a platform that serves up 50 to 60 digital therapeutics. It aims to have five more prescription digital therapeutics on the market within the next four years. Once that milestone is reached it aims to accelerate its launches and scale up with multiple PDTs advancing on parallel tracks.

Pear’s 2016 direct-to-consumer debacle

Perhaps more than any other digital therapeutics company today, Pear stresses that its products are all prescription digital therapeutics, and it has even pushed the abbreviation PDT along with that messaging.

At a neurogaming conference in 2014, Pear’s CEO Corey McCann teased the launch of a direct-to-consumer line of products, which — as it turned out — was still two years away:

“The first quick and dirty category for us is in the supplement and food space. We are in the process of launching a family of products into one of the supplement chains you are all familiar with. This would create a suite of supplement software combinations.”

Pear’s first product launch was for a line of digital wraparounds packaged with a line of supplements co-branded with the big supplement retail chain The Vitamin Shoppe. Starting in mid-October 2016, the digital supplement product line was available online and at any brick-and-mortar Vitamin Shoppe.

The vita+apps experiment included digital supplements for mood, sleep, memory, stress, vision, and attention. Here’s what they looked like:

“vita+apps, powered by Pear Therapeutics is a mental/behavioral training tool used in conjunction with matched dietary supplements. All of our apps and games are based on clinically validated and tested therapeutics. As a novel approach to address vision, memory, mood and more, vita+apps combines digital applications with supplements to create a short-term, goal-oriented approach that helps patients modify the thoughts and beliefs that may underlie distress and behaviors.”

A year later the apps went offline and the vita+apps homepage just featured a thank you note that announced the apps would no longer be supported. Apart from the archived homepage, a passing mention on Pear Therapeutics’ Facebook page, and a tweet on The Vitamin Shoppe’s Twitter account, there is no other mention of vita+apps online. During the two years that the Pear worked with The Vitamin Shoppe to develop and launch vita+apps its strategy changed. In 2014, McCann talked about its three revenue streams coming from digital wraparounds for supplements, digital therapeutics paired with generic pharmaceuticals, and digital therapeutics paired with branded pharmaceuticals.

Key struggle: Hiring tech talent to build digital therapeutics

In the beginning, Pear believed that its digital therapeutics would need to be built by people who had experience creating games because the company predicted that engagement would be all-important. One of Pear’s first key technical hires was its first CTO, Rabah Shihab. Pear actually didn’t hire Shihab, it acquired his mobile engagement SaaS startup, AppBarbecue/IndieYardThe startup had just one investor: James Hong, co-founder of Web 1.0 viral sensation Hot or Not. , which was a mobile game promotion service for indie developers.

Shihab and Pear’s founders then hired a tech team that favored candidates with gaming experience, and while that team likely was well-suited to build Pear’s ill-fated direct-to-consumer products, the company ultimately realized game developers are not ideal developers for the regulated world of software as a medical device. Here’s McCann in 2018 looking back on the early tech hires:

“So we hired a bunch of people who had been successful game designers and game coders, and that’s not a crazy approach. If you look at Akili Interactive, which is the other player in the space, this is exactly what they have done. It has worked for them. It didn’t work for us at all.”

Pear found that its best developers were ones who had prior experience building electronic medical records or, failing that, developers with experience building in highly-structured, regulated industries, like fintech. FDA regulatory submissions required the software team to abide by quality management systems (QMS) and to make sure every line of code adhered to general manufacturing principles (GMPs). No game developers thrived in an environment that might include check-ins three times a day to ensure compliance, McCann said, adding: “There is a lesson there that we learned the hard way. And, in full candor, we learned it many times over.”

Pear’s tech team looked very different before the company’s vita+apps launch vs. after the line of consumer products was shuttered in late 2017.

One final note on Pear’s hiring: From the outset, Pear has been adamant about its dual-headquarter strategy with offices in both San Francisco and Boston. The company believes the best talent for tech is in the San Francisco area and the best biotech talent is in Boston. Rather than compromise, Pear decided to have a footprint in both locations.

Pivot to prescription-only

By September 2017, Pear had removed all mentions of its old supplement partner, The Vitamin Shoppe, from its website and refreshed its branding to emphasize its focus on prescription digital therapeutics. It’s likely no coincidence that September 2017 was the same month Pear secured a de novo clearance from the FDA for its reSET prescription digital therapeutic. It’s also the month that the FDA announced Pear was one of the very few companies to get into its Pre-Certification pilot. Did the FDA suggest that Pear cut ties with The Vitamin Shoppe and steer clear of the supplement industry?

Pear Therapeutics is now focused on three types of asset-based deals with pharmaceutical companies:

  • discovery deals where an asset doesn’t yet exist but it can by leveraging Pear’s platform;
  • development stage deals that already have some clinical data backing an intervention but they require more to get FDA approval;
  • and commercial-stage deals that already have enough clinical data to get approval (or are already approved by the agency) and now just need to be sold.

Pear’s mandate is to prove that its platform can support all three flavors of asset-based deals.

Pear’s asset licensing strategy: “Not in the content business”

One of the tactics that sets Pear Therapeutics apart from most of the other companies operating in the digital therapeutics space is that Pear licenses digital interventions from academic researchers instead of building their own from scratch. Pear has a close relationship with controversial patent clearinghouse Intellectual VenturesNoted neurosurgeon Dr. Eric Leuthardt, whose intellectual property Pear licensed at the very beginning in order to have freedom to operate, has said he introduced McCann to IV. , but the company has also signed contracts directly with individual scientists and smaller holding companies.

McCann has referred to the company’s asset licensing as a “roll-up” that Pear spent most of its time on during its first year of existence in 2014 and 2015. While the exact number of licensing deals has never been disclosed, the company’s executives have implied their portfolio is sizeable and likely includes dozens of interventions.

During their first year, McCann and his team combed through the medical literature and other sources to create a list of between 1,500 and 2,000 digital interventions. Because Pear believed early on that obtaining regulatory clearance or approval for these digital therapeutics would be their most formidable bottleneck, they prioritized digital interventions that already had good quality data backing them up.

In particular, Pear sought out interventions that had already gone through randomized control trials where patients in the control arm received an active comparator, which could make for an existing approvable endpoint in the eyes of the FDA. Those criteria winnowed the list down to about 500 after excluding any without RCTs. The list got much smaller after factoring in the control arm. Fine-tuning for clinically- and statistically-significant effects left the team with their initial list of targets. In the final analysis, Pear focused on interventions that targeted patient populations with significant unmet needs, which might include areas where clinician consolidation make access to care particularly challenging.

Two examples (with financial details) of Pear’s licensing agreements

Pear signed a licensing agreement in late 2014 with a small Canadian company called ehave, which had developed a web-based intervention for ADHD. Here are the basic terms of that deal:

On December 9, 2014, we entered into a software license agreement with Pear Therapeutics, Inc. (“Pear”) pursuant to which we will provide Pear with a world-wide, non-transferable perpetual license to the Company’s products for Pear to create, commercialize, distribute and sublicense a combination product using our Megateam software applications for treating mental health conditions including ADHD. The license will be exclusive with respect to a combination product subject to Pear obtaining rights to sell with an acceptable drug and non-exclusive with respect to any other rights.

Pear will pay us a royalty of 2.5% of any net revenues from the license of our products, to be paid quarterly. We may terminate the agreement if Pear has not paid us $4,000,000 in annual royalties for each of 2022, 2023 and 2024 and Pear has not obtained regulatory approvals to commercialize combination products and integrated products (our software imbedded within the source code of Pear branded products) within eight years. Either party may terminate the agreement for a material breach by the other after notice and a 30-day cure period. Pear may terminate the agreement upon a change of control of the Company, the Company becoming insolvent or upon 60 days’ prior written notice.

Notably, ADHD is not on Pear’s disclosed pipeline as detailed above, but the ehave agreement does allow Pear to use its intervention for other mental health conditions. Still, the 2022 deadline is just three years away, and an ADHD prescription digital therapeutic does not appear to be a priority for the company right now.

A more interesting example is the licensing agreement Pear struck with Dror Ben-Zeev, Ph.D., a professor of psychiatry and behavioral sciences at the University of Washington and licensed clinical psychologist, for an intervention focused on schizophrenia.

After Pear announced its deal with Novartis to commercialize a prescription digital therapeutic focused on schizophrenia (called THRIVE) that was based on Ben-Zeev’s intervention called FOCUS, he sued the company alleging they breached the agreement. I won’t get into the specifics of the lawsuit here, but suffice it to say the two settled out of court. Still, it must have been a tense few months for Pear whose new partner Novartis must have raised an eyebrow or two over the suit. Here’s how payments were structured in Ben-Zeev’s original April 2015 agreement with Pear:

  • Pear agreed to pay Ben-Zeev 5 percent royalties on net revenues within 90 days of receiving the revenues itself.
  • Pear agreed to pay $30,000 as a licensing fee when the agreement began and additional payments of $15,000 on that date each year the agreement remained in effect.
  • Pear agreed to pay $200,000 when the prescription digital therapeutic that included Ben-Zeev’s intervention secured regulatory approval.
  • Pear agreed to pay another $200,000 when it made the first sale of the commercial product.
  • Ben-Zeev agreed to provide 30 hours of consulting during the first year. Any consulting beyond that would be billed at $200/hour.

These two agreements alone show that Pear’s licensing terms vary from intervention to intervention.

How and when Novartis pays Pear

While specific numbers and percentages have not been publicly disclosed, payments in Pear’s February 2018 agreement with Novartis are similar in structure to the terms outlined in its contract with Ben-Zeev.

  • Novartis paid Pear an upfront fee and has agreed to pay additional amounts once the THRIVE prescription digital therapeutic reaches certain milestones related to the clinical trial and FDA approval.
  • Novartis will also pay Pear royalties on later commercial sales of THRIVE.

Pear’s regulatory strategy, accomplishments to date

McCann has long said that getting Pear’s first digital therapeutic through the FDA was the company’s primary bottleneck. It took Pear two years of discussions and meetings with the FDA before the agency announced it had cleared Pear’s addiction therapeutic, reSET in September 2017. That same month, Pear won a coveted spot in the FDA’s Pre-Certification pilot for companies developing software as a medical device. More than a year later, in December 2018, Pear announced the FDA had granted it a clearance for reSET-O, which was cleared for use in opioid use disorder. In early 2019, Pear announced that it had submitted its insomnia digital therapeutic Somryst to the FDA, but it claimed the digital therapeutic would be the first medical device to be cleared via the FDA’s Pre-Cert program in early 2020.

Back to Pear’s first meeting with the FDA back in 2015. Five of Pear’s early employees attended the meeting, which Pear set up to explore how the agency would regulate its digital therapeutics in the future. Here’s how McCann described how he thinks about the agency in 2018:

“I know people are afraid of the agency, but they get a bad rap. Their mandate is to make patients better.”

Besides buttering up the FDA from industry conference stages (never a bad tactic), McCann’s strategy was to approach the agency with its addiction digital therapeutic first since the opioid epidemic was in full swing. Pear recognized the agency had few, if any, pharmaceuticals in its pipeline that might address the problem:

“If you look at that mandate in the context of brain-related conditions, and specifically in the context of addiction-related conditions, there is almost nothing in the pipeline. There are 30 million Americans that suffer from these conditions, and we are in the midst of an epidemic. So it would be a good thing if the FDA is able to make a positive contribution in treating this set of patients. The first strategy for approaching the agency is to make the conversation sufficiently specific.”

McCann believed that had the Pear team approached the agency with vague questions about how it might regulate digital therapeutics in general, the result would have been a “nebulous regulatory conversation” that could make one of their investors or partners antsy. McCann also made clear from the first slide of his presentation to the FDA that Pear had a huge pipeline of digital therapeutics. This wasn’t a one-off conversation but rather a discussion about an approach Pear would take with the agency for many years to come.

Some news that has not been reported elsewhere yet: Pear just lost its VP of Regulatory Affairs to Apple a few weeks ago. David Amor is now listed in the FDA’s registry as the main contact at Apple for regulatory matters. Amor has shepherded Pear’s regulatory strategy for more than two years. He joined Pear in July 2017, which was just a few months before the company’s first FDA clearance. The job ad Pear posted to recruit Amor’s replacement shines a little light on the company’s regulatory strategy moving forward. Pear is seeking someone with experience in, not just SaMD, de novo, and 510(k) clearances but also:

“Substantial experience in all aspects of regulatory affairs, including successful NDA/MAA submissions, Commercial support, CMC, Clinical, Device 501(k) submission; experience with drug/device and 505(b)(2) product submissions strongly preferred.”

In its early years, Pear explained that it would first seek an FDA clearance for its software via either the de novo or 510(k) pathways. Once that was secured, the company planned to submit the software and drug as a combination product via a 505(b)(2) application.

The job posting also seeks candidates with regulatory experience from Asia, EU and other international markets, which suggests Pear has plans to go international soon.

One closing note for this section: McCann likes to tell the story of how the FDA notified Pear about its de novo clearance just minutes before the agency published its own press release celebrating the novel therapeutic’s approval. The FDA’s press release caught Pear off-guard and caused it to scramble to put together a media strategy that morning. It’s an interesting detail considering almost exactly a year later the FDA seemed to coordinate with Apple on its de novo clearances, which the FDA allowed Apple to announce first at the company’s World Wide Developers Conference.

Pear’s funding and investor strategy

Pear Therapeutics has raised $134 million across three rounds. Here’s a quick summary in reverse-order:

  • January 2019: Pear raised $64 million in its Series C round led by Temasek with other return backers: Novartis, 5AM Ventures, Arboretum Ventures, JAZZ Venture Partners, The Bridge Builders Collaborative, and Singapore-based EDBI. New investors included Blue Water Life Science Fund, Trustbridge Partners, and an undisclosed major diversified hedge fund.
  • January 2018: Pear raised $50 million in its Series B round led by Temasek with participation by 5AM Ventures, Arboretum Ventures, JAZZ Venture Partners, Novartis, Singapore-based EDBI, and the Bridge Builder’s Collaborative.
  • February 2016: Pear raised $20 million in its Series A led by 5AM Ventures, Arboretum Ventures, and JAZZ Venture Partners with participation from Bridge Builders Collaborative and several unnamed investors.

In the early years of Pear, McCann took meetings with other investors outside the ones mentioned above and he concluded that many biotech-focused funds were hesitant to invest because they believed the barriers to entry in digital therapeutics were too low and the IP would prove difficult to protect. Meanwhile, many tech-focused firms believed Pear’s biotech-like approach to building the business was too slow. In the end, McCann assembled a group of investors whom he had worked with personally in the past. The early investors brought skill sets and valuable insights from each of the major industries that Pear would meld together.

5AM is a biotech-focused venture fund. Arboretum is a medtech-focused venture fund. Jazz is a tech-focused fund. McCann said each of these investors saw something different in Pear. 5AM was impressed by the pitch that Pear was a very rapid path to a novel pharma product with drug-like reimbursement. Jazz saw the potential in leveraging the speed and iterative properties of software and applying those to medicines. Arboretum, like many medtech-focused funds, had been burned on many medical device deals that promised reimbursement, so the work there was convincing them Pear would be able to convince payers with the right proof points.

McCann often says that Pear was built like a traditional biotech company. Its roadmap is simply: get the data, get the approval, get the market traction, get the reimbursement, get the revenue, get the profit — in that order. That order of operations is also very different from a traditional tech company approach, which would start with building an MVP, getting it to market, and improving it based on early users’ feedback. McCann’s strategy with investors was to help them see Pear was just making “one cognitive leap”. This is just a biotech company where instead of a pharmaceutical it’s software. Everything else is the same.

What’s next for Pear Therapeutics

2020 is likely to be another milestone-filled year for Pear Therapeutics. Here are a few things to watch for:

  • FDA authorization for Somryst. Pear made a surprising announcement that its insomnia digital therapeutic would be the first to secure FDA approval via the agency’s Pre-Certification program. Many believe the Pre-Cert program to be a pilot that does not have the authority to clear devices. The FDA still needs to use the de novo backdoor for these authorizations. As a result, I’m curious to see what form the FDA authorization of Somryst takes.
  • Commercialization of reSET and reSET-O. Pear’s first two products are already in the market and I’m curious if its partner Novartis subsidiary Sandoz ends up publishing any financials related to these PDTs. I’m also curious to watch how these therapeutics are delivered to patients. Pear’s partnership with Diplomat’s EnvoyHealth is focused on patient and clinician onboarding. Finally, will payers get onboard? That all needs to take off in 2020. Another related, new endeavor that will begin for Pear: Real-world, commercial insights from Pear’s analytics partner InCrowd and resulting improvements to reSET/reSET-O based on them.
  • Customers beyond Novartis/Sandoz. Pear’s first customer is a big name pharma company, but it’s worth noting that the head of digital medicines at Novartis, Jeremy Sohn, was an executive at MPM Capital along with McCann and Pear co-founder William Greene. MPM clearly had a hand in incubating Pear given that McCann worked at both companies simultaneously for most of 2014. While Sohn certainly wasn’t the only decision-maker at Novartis to sign off on this deal, his connection to McCann was likely critical to it coming together. That background raises the question: Can Pear ink deals with pharmaceutical companies outside its founder’s inner circle?
  • IPO buzz. Pear Therapeutics is on many people’s shortlists for near-term digital health IPOs, and one of its early backers, Stephen Kennedy Smith, recently said in an interview that Pear would IPO in 2019. However, Pear executives often talk about the company’s goal of getting five to seven prescription digital therapeutics commercialized as its immediate mandate between now and 2022/2023. While market conditions will obviously have a big impact on this decision, Pear would be wise to wait and IPO once it has these initial half dozen PDTs in the market.
  • Longterm success: For Pear, longterm success looks the same as it does for any life sciences company. It either needs one of its digital therapeutics to take off and reach blockbuster status or it needs to drive similar, aggregate revenues across its portfolio. Pear executives typically state that showing PDTs work across its portfolio is the company’s longterm mandate.
×
2 min. read

Excerpts from the Pear Therapeutics Report.

Paying Subscribers Only

It's a good one, too.
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Issue 019.

Get E&O weekly. | Subscribe | Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 68 percent open rate. Here’s what’s happening this week:

  • After weeks of research, I am excited to push live The Pear Therapeutics Report. More on that below, but don’t miss this one. Lots of scoops. Anyone working in, partnering with, or investing in digital therapeutics needs to understand Pear Therapeutics in depth. This 4,500-word report is the best way to start.
  • Cognoa, which is developing digital therapeutics for the diagnosis and treatment of autism, inked an important partnership with Eversana that sheds some like on the DTx company’s commercialization strategy. Eversana will act as a hub that helps with adjudication and delivery of Cognoa’s digital therapeutics.
  • Hinge Health, which offers musculoskeletal-focused digital therapeutic programs, now has 85 employers as customers. PwC is among them and often co-presents its own case study for the company. This is from May: A total of 3,389 employees started an application to participate in the program, with 2,750 (81%) completing their application, 2167 (64%) being accepted into the program, and 1,650 (49%) ultimately being onboarded and initiated. Participants averaged two to three exercise therapy sessions a week and they engaged with coaches five or more times a week.
  • Karuna Labs, which uses virtual reality-based programs to help retrain the pain to better deal with chronic pain, has raised $3 million in seed funding.
    * Much-hyped augmented reality unicorn Magic Leap has forged a number of health-related partnerships in recent months, including one with XRHealth. XRHealth’s ARHealth platform offers augmented reality-enabled programs focused on rehabilitation, cognitive training, psychological assessment, and distraction from pain.
    * London-based Bold Health just announced that its digital therapeutic for IBS patients, called Zemedy, is now enrolling 300 beta users for free.
    * Another UK digital therapeutics startup focused on inflammatory conditions, Ampersand Health, announced its acceptance into the DigitalHealth.London accelerator.
    * Did this get forwarded to you? Not yet a paying subscriber? You can sign up by clicking these very words.

 

The Pear Therapeutics Report

Pear likes to call itself the Genentech of digital therapeutics while acknowledging and embracing the hyperbole that comes with such a claim.

In this 4,500-word report, E&O digs into the strategic decisions, legal imbroglios, product launches, and the failures that Pear’s management team has successfully navigated over the past five years. Here’s the table of contents for The Pear Therapeutics Report (https://exitsandoutcomes.com/the-pear-therapeutics-report/) :

  • Pear’s therapeutic modalities and therapeutic areas
  • Current product pipeline
  • Pear’s 2016 direct-to-consumer debacle
  • Key struggle: Hiring tech talent to build digital therapeutics
  • Pivot to prescription-only
  • Pear’s asset licensing strategy: “Not in the content business”
  • Two examples (with financial details) of Pear’s licensing agreements
  • How and when Novartis pays Pear
  • Regulatory strategy, accomplishments to date
  • Pear’s funding and investor strategy
  • What’s next for Pear Therapeutics

Paying subscribers can read The Pear Therapeutics Report on the E&O site today.

That’s a wrap on Issue 019 — Send feedback on the Pear report by hitting reply here or by emailing me at b@exitsandoutcomes.com

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