Issue 068
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Digital health research from Brian Dolan.
Welcome to E&O.
Last week I wrote about Amwell’s IPO filing and the possible longterm repercussions of Amazon’s move into voice biomarkers via its first wearable device, Halo. Here’s what’s happening this week:
- Teladoc-Livongo revealed more information about their multi-billion dollar merger in a lengthy government filing — more on that below.
- European tech site Sifted rounded up 15 digital health startups that have applied (or are in the process of applying) for reimbursement in Germany under that country’s new digital health law.
- One of mySugr’s four founders, Frank Westermann, who was also the longtime CEO, announced he has left Roche, which acquired mySugr in 2017. He will continue investing and advising health startups post-mySugr.
- Sunovion Pharmaceuticals is looking to hire a Senior Director Worldwide Brand General Manager in New Jersey. Among other things, the person will support and implement Sunovion’s digital therapeutics plans.
- Omada released some preliminary results from a recent study it conducted with Evidation Health: “The study took place from November 2019 through July 2020, meaning participants maintained engagement, and achieved results, throughout the COVID-19 public health emergency. The study was conducted using Evidation’s Achievement platform and population. Hemoglobin A1c was captured through a combination of laboratory measurements and at-home test kits supplied to study participants. The study population included 195 participants with a diagnosis of Type 2 Diabetes, and an average starting baseline A1c of 8.93%.”
- Limbix Health’s RCT focused on teen depression is listed on ClinicalTrials dot gov now. The study will compare the safety, effectiveness and engagement of Limbix Spark, a CBT mobile app, to a mobile app offering educational material about depression.
- Cedars Sinai snagged a $3.75 million grant from the NIH to pit two of its its virtual reality therapies up against a “sham VR” as an adjunctive therapy for back pain patients. This looks to be the study right here.
- One More Thing… Biofourmis, which acquired digital therapeutics company Biovotion in November, just raised $100 million from SoftBank’s Vision 2 Fund. Biofourmis says the funds will go to its “home hospital” initiatives with health systems and “beyond the pill” programs with pharmaceutical companies.
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DTx excluded? CMS proposes 4-year reimbursement for Not-So-Breakthrough devices
Digital therapeutics companies Pear Therapeutics, Cognoa, and NightWare — as well as other digital health companies like Alivecor and Eko — likely got their hopes up this week as CMS announced a proposal that would grant automatic reimbursement for medical devices that the FDA designated as “Breakthrough Devices”.
The proposed rule, which CMS called the Medicare Coverage of Innovative Technology (MCIT) program, calls for four years of coverage for such devices starting immediately upon securing FDA market authorization.
The big holdup for digital therapeutics companies is that this MCIT proposal would only apply to Breakthrough devices that fit into a Medicare benefits category:
“This coverage would occur unless the device does not have a Medicare benefit category or is otherwise excluded from coverage by statute (that is, the Medicare statute does not allow for coverage of the particular device.) This coverage pathway delivers on the Administration’s commitment to give Medicare beneficiaries access to the newest innovations on the market, consistent with the statutory definitions of Medicare benefits. Because Medicare is a defined benefit program, devices that do not fit within the statutory definitions may not be considered for MCIT.”
I’d guess few if any DTx companies could find a preexisting category to fit into, right?
If you recall, in December a House bill attempted to overcome this issue while trying to provide Medicare coverage for Breakthrough Devices via legislation: “H.R. 5333 also provides temporary coverage for certain breakthrough devices that did not exist or were not contemplated when Medicare was first created and do not have a Medicare benefit category.” And, while I’m not a lawyer, it sure seems like it would require an act of Congress to make that kind of a change happen.
The FDA has never publicly disclosed a list of Breakthrough devices, since the vast majority of them do not yet have market authorizations. The last count I saw was from MedTechDive, which reported just under 300 Breakthrough designations had been given out as of the end of March.
In this latest proposed rule, CMS says only 16 of them have market authorization today!
CMS claims its hands are tied on coverage if the Breakthrough device has no defined benefits category, but, c’mon, it’s a bit ironic that a proposed rule focused on “Breakthrough devices” requires a pre-existing defined category.
And remember: This is a proposed rule so the CMS is taking comments from the public before it (probably) becomes a final one. Add your comments here before the comment period ends on November 2, 2020.
How Pear’s approach to clinical studies helps explain “digital coatings” vs “active ingredients”
Pear Therapeutics recently presented data from a randomized control trial that studied the digital intervention that powers its Somryst prescription digital therapeutic (PDT). Pear presented the data at the Virtual Sleep 2020 conference but it was actually from a study of an experimental DTx that pre-dated Pear.
It’s helpful to understand the company’s intervention acquisition strategy to understand why that is.
In E&O’s The Pear Therapeutics Report from last year I discussed the company’s strategy for studies, which goes hand-in-hand with how Pear has built most of its pipeline of prescription digital therapeutics to date:
“[Pear] has referred to its asset licensing as a “roll-up” that the company spent most of its time on during its first year of existence in 2014 and 2015…”
“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 controlled 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.”
So, this most recent presentation was pulling data from an RCT conducted in Australia back in 2012.
Professor Helen Christensen of the Black Dog Institute in New South Wales, Australia led the study, which used a digital intervention called, Sleep Healthy Using the Internet or SHUTi (pronounced like “shut-eye”). SHUTi was developed at the University of Virginia as one of the first digital therapeutic interventions and it has been in dozens of clinical trials over the past two decades, which helped improve it over time. Pear ended up acquiring the licensing rights to SHUTi to power its most recently FDA-cleared PDT, Somryst.
When Pear acquires these digital interventions the company needs to be careful not to alter the “active ingredients” that produced the results shown in their pivotal studies. Typically, Pear needs to repackage the digital intervention from a browser-based form factor to a native smartphone app form factor.
This week I also asked Pear Therapeutics’ Chief Medical Officer Yuri Maricich M.D. to help me better understand how much or how little Pear changes the digital interventions it acquires to still be able to rely on the early studies that showed their efficacy:
“The ultimate version [of SHUTi] that was run in the two pivotal studies that we submitted to FDA ran on a reactive browser. So, you could access it from any device, but rather than downloading it from the Google Play or Apple AppStore, you just log in via your browser. The downside of that is if you lose your Internet connection for a moment, you can’t use it.”
“So all we did was — we took the exact equivalent content. Just like any molecule that is used in a drug. You might take that exact same molecule and put it into a different injector, for example, but still, the mechanism of action is still the same. We just took that version of SHUTi, all of that clinical content and mechanism of action, and put it into a native mobile application so that it was easier to download and you could have some of the video and image content right there stored locally on your phone rather than always having to have an active connection. That helps with access, particularly in underserved areas, and we just renamed it Somryst.”
Maricich emphasized that what is important about this process, especially when it comes to an FDA submission, is to “really stay true to the mechanisms of action” to make sure you are maintaining that scientific validity around the safety and efficacy of the intervention.
The major bifurcation of a digital therapeutic into its two main components is a way of thinking about these products that has gathered some momentum along with the rise of SaMD. The general thinking there is that if a regulated product maintains the same “mechanisms of action” or digital “active ingredients” it can still make changes and tweaks to the user experience without triggering the need for a new regulatory clearance.
Diagrams will help.
This view has been something of a fixture in digital therapeutics. Here are two images from a presentation that Omada Health’s CEO and co-founder Sean Duffy gave back in late 2017. (This YouTube link should be cued up right to this section of his talk.) First, Duffy showed a simple diagram of a traditional pharmaceutical. The diagram shows “chemistry” inside the pill and the “coating” on the outside:
His next slide showed a much more complicated diagram of how to think about (what I would call) a digital therapeutic using that same basic framework:
It’s not too far off from Pear’s way of thinking about this, and I would suggest that it aligns with the FDA’s approach to SaMD. The ongoing debate will likely be how much of that outer-coating a DTx company can change before the agency asks to step back in…
More details on the Teladoc-Livongo merger
Teladoc and Livongo filed an S-4 statement outlining many details related to their impending merger, and the companies also revealed more of their thinking in a presentation to investors this week. Here are some highlights, including the breakup fees each would have to pay if the deal goes south, first from the S-4:
- Livongo was one of four companies that Teladoc considered acquiring. It is unclear whether Teladoc only held conversations with chronic care companies like Livongo or if they were also talking to companies that more directly competed with Teladoc, like Amwell. Ultimately, On July 3rd during a board meeting, “Teladoc management presented its view that expansion into chronic care is the most meaningful pathway to advance Teladoc’s strategy and, at the then-current point in time and diligence to date, Livongo represented the most impactful transaction.”
- Teladoc made its first offer to acquire Livongo on July 22, but that proposal went through many revisions before the companies came to an agreement and announced the deal 14 days later on August 5th.
- If Livongo chooses to terminate the deal, it would have to pay Teladoc $562,810,000.
- If Teladoc chooses to terminate the deal, it would have to pay Livongo $712,330,000.
I thought these two slides from the investor presentation helped illustrate the ways Teladoc services could flow into Livongo’s:
Quick links: E&O research reports and databases
The links below aim to make it easier for paying subscribers to find the long-form research reports and databases on the E&O site:
The Evidation Health Report (Subscribers-only Link)
Database: Rx-only Digital Therapeutics Pipeline of Pipelines (Subscribers-only Link)
Database: Online Diabetes Prevention Program Companies (Subscribers-only Link)
Database: Digital Health PPP Loans (Open Access)
The Proteus Digital Health Report (Subscribers-only Link)
The Hinge Health Report (Subscribers-only Link)
The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)
That’s a wrap on Issue 068 of E&O.
