Issue 138
Welcome back to E&O Fridays, a paying subscribers-only weekly newsletter focused on the world of digital pharma products and FDA-regulated digital health.
E&O Fridays.
Here’s what’s going on in FDA-regulated digital health:
- This free report from Blue Matter Consulting is a great read on the current prescription digital therapeutics landscape in the US. It covers some 140 PDTs and digs into regulatory status, therapeutic area clusters, and more. Well worth a read.
- Even though Anthem isn’t sold on the medical necessity of prescription digital therapeutics, the health insurance company is working with Sidekick Health to roll out a number of care navigation tools for its members that include some digital therapeutic components. While the pair’s COVID offering made headlines this week, they’re also piloting digital health offerings focused on cancer care, Crohn’s, and chronic heart failure. Sidekick’s platform also covers Type II diabetes and high-risk maternity care, so I’m curious if Anthem taps them for those too.
- In a signal that prescription digital therapeutics company Blue Note Therapeutics is likely to go full-stack with its prescriber channel, the company filed for a trademark on “Blue Note Telehealth,” which it describes as “Telemedicine and telehealth services; behavioral health services; healthcare and medical services in the fields of psychology, psychiatry, and oncology.” Blue Note also filed for trademarks on “Serein,” “Zilient,” and “Kove.” I’m guessing those are all possible, future PDT brands. And, in a move that may raise eyebrows over at Happify, Blue Note also filed for trademarks on “Attune Ensemble” and “Cerena Ensemble”. (Happify’s anxiety/depression PDT is named Ensemble.)
- More important notes on Akili are below, but the company announced results from a small study that measured EEG data in addition to behavioral and clinical metrics of attention in children using EndeavorRx. From the company: “Data from the study show that EndeavorRx treatment resulted in increased brain activity related to attention function, as measured by EEG, which correlated with improvements in objective behavioral measures of attention.” Read the results over at PLOS ONE.
- Pear Therapeutics has made reSET and reSET-O available in Spanish.
- One more thing… According to the Minnesota VA, NightWare has been prescribed a total of 100 times to TRICARE beneficiaries: “NightWare has TRICARE insurance coverage for active-duty service members and has been prescribed more than 100 times at military treatment facilities.”
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Next week and future report ideas
As the snow finally melts up here in Massachusetts, I’m heading south next week to visit family, build a few sandcastles and ride some rollercoasters with my kids. So, your next E&O (on Virtual Clinics) will hit your inbox a week from Wednesday. I’m also working on a number of long-form research reports right now. I’ve spoken to individual E&O readers about most of these in recent weeks, but I wanted to open this up to the whole audience as I’d love to get any tips, leads, or other suggestions about these report ideas. While this lineup is likely to change, here’s what’s in the hopper:
- The Grand Rounds Report: This will be a deep dive into Included Health that mostly focuses on Grand Rounds’ history as a second opinions and care navigation company. Remember: Grand Rounds merged with Doctor on Demand last year to form Included Health. I think it’s set to IPO soon so I’d like to publish this one ASAP. Any questions about Grand Rounds? Happen to have an old pitch deck of theirs sitting on your desktop? What areas of the company should I focus on? Let me know by hitting reply to this newsletter or hitting me up on Signal (just email me for my mobile number to find me).
- FDA SaMD Report: I’ve been cooking this one at a low simmer for a while now, but it’s just about done. This report digs into a juicy story about the FDA and SaMD. That’s about all I can say about this one for now.
- The Digital Health Pricing Report: Over the past few years, I’ve published pricing info for a long list of digital health companies in individual newsletter issues, but this report will round those up along with others I haven’t shared yet. Beyond the raw pricing data, what’s worth digging into here? Claimed savings vs pricepoints and ROI guarantees are other areas I’m tracking. What else?
- Therapeutic area landscape reports: This is a classic frame for digital health research reports, which is one of the reasons I’ve steered clear of them so far. In 2022 I’d like to write a couple of landscape reports focused on a particular medical condition or therapeutic area. I think this makes sense for areas that are still relatively early and where there is no digital health company (or companies) dominating yet. Any requests?
Thanks for the brainstorming session. Curious to read your comments, suggestions, and tips — so please: Send them my way!
Akili’s valuation dipped $850M to $600M during SPAC negotiations. Plus: Other financial details
At the beginning of the week, Akili and its SPAC sponsor partner published an S-4 document with the SEC that digs into the financial details and history of the company and the transaction. Here are a few things I found interesting that I’ll dig into more below:
- How the SPAC deal came to be
- How Akili’s pre-transaction valuation fluctuated
- Akili’s executive compensation
- Akili’s 2021 revenues
- More details on SG&A expenses
How the SPAC deal came to be: Interestingly, Akili’s SPAC sponsor explored participating in Akili’s last round of funding in October 2020 but ended up not participating in the funding round. Almost a year later, on August 5, 2021, Morgan Stanley introduced Akili as a potential target company for its eventual SPAC sponsor, SCS.
“On August 20, 2021, Mr. Mehta held an introductory telephonic discussion with Eddie Martucci, Akili’s Chief Executive Officer, and Santosh Shanbhag, Akili’s Chief Financial Officer, and discussed Akili’s history, management team and clinical trials to date.”
How Akili’s pre-transaction valuation fluctuated from $850M to $600M: Because of the volatility in the stock market at the end of 2021 and the beginning of 2022, Akili’s valuation dropped quite a bit from its early talks with SCS.
Two months after Akili’s first call with SCS, Martucci and Chamath Palihapitiya discussed a pre-transaction valuation for Akili for the first time. Palihapitiya threw out the first number: $800 million pre-transaction equity value. The next day Martucci said Akili was willing to discuss a transaction if Akili was valued at $850 million instead. That same day Palihapitiya sent a non-binding letter of intent to Martucci with the $850 million figure along with “a minimum cash closing condition of $250 million and a mutual exclusive negotiation period of 45 days applicable to both SCS and Akili.”
Fast forward to early January 2022 after lots of due diligence and many calls with bankers. SCS “held a telephonic conversation with Dr. Martucci to discuss recent market conditions affecting the stock market generally and the biotechnology sector in particular, and the attendant demand for the PIPE Investment. Mr. Mehta raised the possibility of revising the pre-transaction equity value for Akili downward from $850 million, given the recent stock market environment and in light of demand for the PIPE Investment.”
SCS told Akili that the pre-transaction equity value for Akili should be closer to the $600 million end of the revised $600-$700 million range. On January 13, 2022, SCS proposed $600 million. A week later the companies finalized the draft merger agreement using the $600 million figure. They also reduced the minimum PIPE investment amount from $200 million down to $162 million. The minimum cash closing condition was likewise reduced from $250 million to $150 million.
Akili’s executive compensation: Akili was only legally required to share compensation details for three of its top executives. Those were Eddie Martucci (CEO), Jacqueline Studer (Chief Legal Officer), and Santosh Shanbhag (CFO). I’ve added these three to the E&O Digital Health Executive Compensation Tracker here, so head over to the tracker if you want to compare how Akili’s compensation stacks up to other public digital health companies. I’ll also share a few of Akili’s exec compensation details below too.
- Eddie Martucci, CEO and co-Founder, had a total compensation package of $2,802,797 in 2021. That included a $400,000 base salary and $171,000 bonus (and the rest was mostly options).
- Jacqueline Studer, Chief Legal Officer, had a total compensation package of $876,803 in 2021. That included a $367,800 base salary and $104,823 bonus (and the rest was mostly options).
- Santosh Shanbhag, CFO, had a total compensation package of $830,118 in 2021. That included a $343,419 base salary and a $97,874 bonus (and the rest was mostly options).
Akili’s 2021 revenues: E&O already published Akili’s historical annual revenues for 2019 and 2020 back in January (Issue 135), but the company only released a partial figure for its 2021 revenues this week in the S-4. Here’s what I wrote in Issue 135:
“Akili posted just shy of $20 million in revenue for 2019 and just under $4 million in revenue for 2020. But remember: The company’s prescription digital therapeutic, EndeavorRx wasn’t in the market until mid-2020. Akili secured its De Novo clearance in June of that year. Still, the majority of Akili’s revenue for both 2019 and 2020 came from its partnership with Japanese pharma company Shionogi. (The two are creating a version of EndeavorRx for the Japanese market.)”
During the first nine months of 2021, Akili posted revenue of $337,000. During those first nine months of 2021, the company also posted a net loss of $41.7 million. More details on SG&A: Akili provided quite a bit of color around its selling, general and administrative expenses in the S-4.
“SG&A expenses were $28.7 million and $9.7 million for the nine months ended September 30, 2021 and 2020, respectively. The increase of $19.0 million was primarily due to the following:
- an increase of $12.2 million in marketing and advertising costs;
- an increase of $2.9 million in consulting, legal, accounting and other professional service costs;
- an increase of $3.2 million in personnel-related costs, primarily due to the build-out of our HR, marketing and sales departments; and
- an increase of $0.5 million related to various other expenses such as software subscriptions and rent expense.”
SG&A expenses dipped in 2020 compared to 2019 largely because the company paused its marketing activities while waiting for the FDA to make its decision and while trying to figure out COVID’s impact on its launch of EndeavorRx.
“SG&A expenses were $13.5 million and $18.9 million for the years ended December 31, 2020 and 2019, respectively. The decrease of $5.3 million was primarily due to the following… a decrease of $3.1 million in marketing costs as the Company paused marketing spend during the first half of 2020 while waiting for regulatory feedback and assessing the business impact of COVID-19.”
Read through Akili’s full S-4 here. And let me know if I missed anything important?
Clinical trial updates from Apple, Happify, Swing Therapeutics, Wise Therapeutics, and more
This is a recurring feature of E&O Fridays that digs into new digital health-related clinical trials as well as updates to others E&O mentioned in previous issues.
Corrie 2.0: Apple has teamed up with Johns Hopkins again for a new trial that uses the Corrie Health platform
Starting in 2018, shortly after Apple secured De Novo clearances for its ECG software, the company partnered with iHealth and Johns Hopkins on a clinical trial focused on heart attack recovery and hospital readmissions. The software platform that the study used was named Corrie Health. The study finished up in mid-2021 and its raw results are viewable here. This week, Apple and Johns Hopkins are back (no iHealth this time but Omron is providing BP devices) for a new study that uses the Corrie Health platform. This time the focus isn’t on heart attack recovery. The study’s primary outcome is focused on lowering cholesterol.
“The Corrie Virtual Cardiac Rehabilitation Program is multidimensional intervention. It consists of the Corrie smartphone app for cardiovascular health optimization which is paired with wristband device (Apple Watch or Fitbit), Bluetooth-enabled Omron blood pressure monitor and exercise resistance bands. The program also includes individualized treatment plan development, setting health goals and communication with trained Corrie Health Coach. Furthermore, the intervention includes motivational text messages sent to participants throughout the study to aid with risk factor modification.” While the intervention itself looks to be similar to the last study, the primary outcome measure this time has changed: “The difference in Low Density Lipoprotein – Cholesterol (LDL -C) control as measured by the level of LDL – C [ Time Frame: 12 weeks ] LDL cholesterol level measured (in mg/dl) at 12 week follow up visit and compared between the intervention vs control arms.”
Swing Therapeutics posted details of third study for fibromyalgia DTx
Swing’s latest study aims to enroll about 300 participants and will compare one arm that receives the company’s ACT digital therapeutic along with standard of care vs another group that “complete a digital symptom and function tracker and monitor, are provided access to digital fibromyalgia and health education, and receive standard of care.”
“PROSPER-FM is a multi-center, randomized, non-significant risk device study to evaluate the safety and efficacy of two digital therapy smartphone applications in participants with fibromyalgia. The two primary endpoints are the revised Fibromyalgia Impact Questionnaire (FIQ-R) total score and Patient Global Impression of Change (PGIC).”
Wise Therapeutics testing new DTx ABM-01 for GAD/SAD
Wise doesn’t provide a whole lot of detail on its intervention, but it is a “gamified computerized behavioral therapy with therapeutic intervention” that is based on Attention Bias Modification training — hence the “ABM”. It’s hoping to recruit some 500 participants for its new study:
“This study aims to assess the feasibility and efficacy of the digital therapeutic ABM-01 in adults ages 18-65 with SAD or GAD. Participants access ABM-01 on their mobile device or other smart devices and complete treatment over a period of 30 days. Enrolled participants will be randomly assigned to one of three groups (Experimental Group 1, Experimental Group 2, and Placebo Control) as well as complete 5 sessions (Baseline Session, 30-Day Treatment Phase, Post-Treatment Session, 6-Month Follow Up Session, 12-Month Follow Up Session). Participants will complete the 30-Day Treatment Phase from home, while the other sessions may be completed either in-person or remotely. During the treatment period, participants complete LSAS and GAD-7 assessments, as well as safety and medication use questionnaires. After the treatment period, participants will complete end-of-treatment assessments, and access to ABM-01 will be removed. Participants are then followed up at 6-month and 12-month post-treatment completion.”
Happify Teens trial finished recruiting with lower than anticipated participant count
Happify has finished up recruiting for its Happify Teens study with 307 out of the anticipated 800 enrolled. The company expects to finish up in April now instead of this month.
“Happify Teens is an… online platform for conveying techniques from positive psychology, cognitive-behavioral therapy, and mindfulness-based stress reduction.” “Teen participants (ages 13-17) will be randomly assigned to either the experimental group in which participants receive access to Happify Teens, a digital platform rooted in several therapeutic traditions that aims to improve wellbeing, or a waitlist control group. Both group conditions last 8 weeks. Participants assigned to the Happify Teens platform will have full access to the intervention, with featured tracks that focus on dealing with stress, worries and building skills for greater happiness. Participants assigned to the waitlist (control) condition will not have access to the Happify Teens platform for the full study period (12 weeks total). Participants in the waitlist control will receive access to Happify Teens after the full study period is complete (12 weeks). Perceived stress, rumination, and optimism will be assessed via self-report at baseline, end of the 8-week intervention, and at 1 month post intervention.”
Emerald passive vital sign monitor device rolled out in companion study to Alzheimer’s trial
You probably read about the Emerald device a few years back as capable of sensing vital signs “through walls”. Mclean Hospital is rolling it out alongside another study its conducting:
“The investigators will conduct a prospective, single-arm, non-interventional study using the Emerald device to monitor the behavior of individuals enrolled in the parent study (ClinicalTrials.gov identifier NCT04430517). Investigators aim to enroll approximately 40 individuals aged 18 -89 (inclusive) with either MCI or mild AD who will have Emerald deployed in their home for up to 12 weeks, spanning the time of approval of parent study screening and formal study enrollment. The Emerald device is a radio-wave sensor that uses signal processing and machine learning algorithms to track the gait, movement, respiration, and sleep of subjects without physical contact or effort by the user, i.e. it neither requires the subject to wear a sensor nor record any data. Emerald works by transmitting low-powered radio signals, 1000x less than Wi-Fi, that reflect off of the subject and return back to the device. If the user moves their arm or leg, or their chest expands and contracts from breathing, that movement changes how the signal reflects off of their body. Emerald records these reflections and processes them using algorithms that convert the radio signals into movement data, breathing rate, sleep stages (Awake, Light, Deep and REM), and key sleep parameters. The device will be deployed in the bedroom of each subject to capture behavior continuously.”
CareDx and Duke completed study of mobile app and coaching for kidney transplant patients
No results yet but this study just finished up:
“The purpose of this study is to examine the feasibility and acceptability of a mobile app to improve self-management skills and medication adherence in kidney transplantation, to assess the clinical benefit of mobile app in combination with tailored coaching using text messaging to enhance patient activation, self-management and medication adherence and to determine whether immunological biomarkers such as cell-free DNA and donor specific antibodies are associated with self-management and medication adherence.”
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