Issue 096
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.
OK, here’s what’s happening this week in the world of pharma digital products and FDA-regulated digital health:
- Not pharma-related, but just a quick note that I noticed in a recent SEC filing that Teladoc’s board of directors decided not to renominate either Glen Tullman or Hemant Taneja. The company’s board will, therefore, reduce in size from 15 to 13 moving forward. (While this is probably just so that Tullman can focus on Transcarent — and the many other projects he has going — it is interesting timing given that lawsuit imbroglio I dug into on Wednesday, isn’t it?)
- Speaking of lawsuits, Apple filed a response to AliveCor’s patent infringement allegations (Issue 081) this week, but — alas — the response really focused on AliveCor’s argument. It didn’t offer up any new information about Apple’s development process for its ECG app. Instead, Apple stressed that AliveCor didn’t show that the alleged infringement resulted in irreparable harm to AliveCor’s business.
- Click Therapeutics, which is developing prescription digital therapeutics with Otsuka and Boehringer Ingelheim, recently added former Livongo executives Glen Tullman and Lee Shapiro as investors. (The duo personally invested in Click — it wasn’t via their VC firm 7wireVentures.) Shapiro is also now on Click’s board.
- News broke this week that Amgen had tapped Liva Healthcare for a cardiac rehab program in Europe, but we actually already knew Amgen was a client of Liva’s. The company disclosed that in its funding announcement in January. Novo Nordisk is a customer too.
- Pear Therapeutics floated a new batch of social media ads for its Rx-only insomnia digital therapeutic Somryst that start out: “Don’t just take it from us—we have Restimonials to prove exactly how much Somryst could help people struggling with chronic insomnia.”
- Remember that Zemedy vs Headspace study (Issue 081) that Bold Health set up a few months ago? I already mentioned that the IBS-focused company removed “Headspace” from its clinical trial posting on CT [dot] gov, but I just figured out that the removal was more than a name change. According to the study’s modified protocol document: “We have changed the nature of the active control condition. Rather than using an established mindfulness meditation app we are using a control app that includes links to NICE IBS treatment guidelines and multiple relaxation training videos.” Head-to-head trials with off-the-shelf, consumer meditation apps remain a wide-open opportunity for digital therapeutic companies looking to make their case.
- Apple’s big HEARTLINE study with Janssen just got pushed out a little more. Cupertino now doesn’t expect it to be finished up until late June 2024 now.
- Verily and ResMed revealed the name of their years-long joint venture, a “high-tech effort to identify and treat tens of millions of Americans afflicted by” sleep apnea: Primasun.
- Akili Interactive is setting up two 100-participant trials to test its first product, AKL-01, which is already FDA-cleared for treating inattention in kids with ADHD, in a population of people with long-COVID who are experiencing “brain fog”. Curious whether COVID brain fog might spur more conversation around cognition health more generally.
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Better Therapeutics aims to go public via SPAC
During the wave of digital health-related SPAC mergers these past few months, there has been a wide spectrum of companies opting for this non-traditional path to the public markets. Some were fast-growing companies like Hims. Others forecasted declining revenues in the next few years, like 23andMe.
This week, Better Therapeutics (formerly FareWell) became the first digital health company focused on developing prescription digital therapeutics to announce SPAC plans. Better Therapeutics has neither fast-growing revenues nor declining revenues. It doesn’t have any yet. And it doesn’t expect to have any until 2023.
Better Therapeutics’ clinical studies to date
Better Therapeutics’ SPAC maneuver is, in effect, a way to fund a pivotal trial for its first prescription digital therapeutic product, which is for people with Type II diabetes. As the company wrote in a recent document describing its clinical studies to date, its next step is:
“A 6-month randomized controlled trial will be conducted to assess the safety and efficacy of the digital therapeutic in addition to standard of care, compared to standard of care alone, in adults with type 2 diabetes. Data from the study will form the basis of our premarket submission to the US Food and Drug Administration (FDA). Concurrent with this research, we will be piloting our nutritional-CBT in a broad set of cardiometabolic diseases, such as hypertension, hypercholesterolemia and non-alcoholic steatohepatitis.”
Better’s therapy isn’t a traditional form of cognitive behavioral therapy (CBT). Nutritional-CBT is something the company developed in-house:
“Nutritional-CBT builds on traditional CBT by systematically targeting the cognitive structures, behavioral routines, emotional patterns and coping skills that underlie culturally-specific eating behaviors. The content and delivery mechanisms of our nutritional-CBT were developed internally from first principles, leveraging experience from clinician- and health coach-patient interactions to distill common maladaptive thinking and beliefs pertaining to diet and lifestyle. It is designed as a digitally-delivered therapy so that it can be widely-disseminated to large patient populations, yet personalized to the individual patient using AI-driven feedback loops.”
To date, Better has conducted a handful of studies to develop its first DTx. The linked document above summarizes these well, but just to mention a few of these:
- JMIR published results from one early study, a non-blinded, single-arm interventional study that included human coaches along with the digital program to see if the combo would improve glycemic control in 97 adults with T2D.
- Better executives presented results from a later study of 74 adults using a version of the program that worked without human coach support at an Endocrine Society event.
According to the SPAC filing, Better Therapeutics has begun enrolling for its pivotal trial and it will include 648 adults with T2D. The first patient was screened in February and the first patient was randomized in April. The company expects interim data in August and secondary endpoint data in January 2022. The timeline shows an expectation that the FDA will then review the company’s DTx from February 2022 until October 2022.
Better believes the pivotal trial will cost it about $3.7 million, according to an investor presentation it prepared for the SPAC transaction.
The plan for studies over the next three years
The company also plans to start two more pivotal trials next year: one for a version of its DTx for hypertension in people with T2D and another focused exclusively on hypertension.
Just to scope out the company’s ambitions: In 2023, the company plans to launch six more pivotal studies for therapy-resistant hypertension, hyperlipidemia, familial hyperlipidemia, hypertriglyceridemia, NAFLD, and NASH. Each of these pivotal studies will cost Better between $3.5 million and $4 million.
The commercial plan for BT-001
Better Therapeutics articulates a business model that should sound familiar to anyone who followed Welldoc’s early years or Pear Therapeutics’ more recent endeavors.
“Business model: By choosing to seek FDA authorization for our products, we seek to fit seamlessly within the existing healthcare system to enable adoption and scale, while only changing the form of therapy.”
Better also writes that its therapies are aligned with existing clinical guidelines and that a “payer will reimburse BT-001 like a drug”. (Eek.)
Go-to-market strategy: Just like a pharma company…
Six months after BT-001 gets market authorization from the FDA, Better plans to have a salesforce in place of about 100 to engage providers, 8 medical liaisons to win over key opinion leaders, 4 payer-focused executives to obtain coverage and access for BT-001, and about 7 people staffing a patient services hub to answer reimbursement-related questions. This will cost Better about $30 million a year, according to the investor presentation.
BT-001 will be priced in the $250 to $450 range — assumedly for a 12-week program, which is the duration used in Better’s trials.
Better’s Revenue forecast for 2021-2027
Better Therapeutics, which got its start in 2015 as FareWell, does not expect to post any revenues in 2021 or 2022.
By 2023 the company expects to see $7 million in revenues, but then things will really take off:
- 2024 will see $88 million in revs.
- 2025 will hit $405 million, and
- 2026 is when Better hopes to top $1.2 billion
- 2027 is when they’ll bring in $2.5 billion
As a public company, of course, Better Therapeutics will be sharing its progress quarterly. I’m curious to see how a pre-FDA, $0 revenue prescription digital therapeutics company fares quarter-by-quarter. You can bet E&O will be following along closely.
Happify uses a Quality Management System for all of its software development (DTC and SaMD)
Eugene Borukhovich, the host of the Digital Therapeutics podcast that I help out with a bit, put together another great episode this week. They are all worthwhile — listen to them all here — but this one was especially informative.
This week, Borukhovich interviewed the head of Happify DTx, Chris Wasden. Happify is one of the quieter companies developing digital therapeutics, and that probably made this episode more of a must-listen for me.
One surprising thing I learned about Happify is that it uses the same Quality Management System for all of its software development — both its DTC offerings and SaMDs (software-as-a-medical-device).
Happify is the maker of a popular (millions of downloads) direct-to-consumer app that offers “science-based activities and games can help you overcome negative thoughts, stress, and life’s challenges.”
During the interview, Wasden gets into Happify’s origin story as well as what led to its pivot into digital therapeutics. Below is an excerpt about Happify’s Quality Management System. (Is this a common practice now? It’s hard for me to imagine game developers agreeing to work under these conditions.)
“We had to be committed to the proposition that we would develop a robust quality management system that could pass an FDA audit. This is not a trivial exercise. This took us two years of development work, where we had to more than double the size of our software development team because of all the documentation required to meet all the FDA requirements (e.g. design history files and quality management systems that meet the GMP standards).”
“As we were beginning to make this commitment, the question came up regarding [whether we should] have a direct consumer, lighter quality system for that business, versus the more robust system for the other things that we do.”
“Our conclusion was that since we have one platform that serves up our products, regardless of the product and the acuity of the patient (that is, wellness all the way to prescription), we needed to have our quality management system be the same for everything we do. That was another huge commitment.”
“When I talk to other organizations that try to figure out what to do, they want to say [they’ve] got one quality management for wellness and one for something else. In many ways, that’s actually more complicated than saying it’s going to be one platform for everything. So that was a big decision. Once we made that decision, everything else kind of fell into place.”
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