Digital therapeutics — therapeutic interventions driven by software rather than pharmaceuticals – have been on pharma’s viewscreen for quite some time. It’s not hard to see the appeal of such technologies, which stand to meet the objectives of many groups within healthcare.
For the pharmas, digital therapeutics offer a new product option well-suited to an emerging digitally-driven healthcare environment. Meanwhile, providers get tools that can help them scale up their capacity to track individuals across populations, patients can expect additional support in meeting their health goals and insurers may be able to keep patients healthier without making big investments.
What’s more, in recent times this approach has steadily been gaining clinical credibility, including with regulators. For example, in November of 2018, partners Pear Therapeutics and Novartis division Sandoz announced that the FDA had cleared substance use disorder treatment reSET for clinical use.
In many cases, such approvals signal that a therapeutic approach will find a market. However, recent financial troubles faced by pioneer Proteus suggest that the emergence of digital therapeutics is still far from certain.
According to a recent piece in CNBC, digital therapeutics company Proteus Digital Health has been working to develop “smart pills” for about 20 years. These smart pills are designed to tell the company’s companion smartphone app whether patients have taken their medications. Proteus technologies also include a wearable patch that detects responses to medications as well as data analytics software designed to let hospitals track the impact of interventions.
Apparently, as recently as three years ago, investors valued the company at $1.5 billion. Today, however, the company’s future is far from certain. CNBC reports that Proteus is now struggling to survive now that it failed to close a $100 million funding deal. While Proteus has been a hot property in the past, attracting over $500 million investment, these days it’s not clear how it will survive.
It’s not as though its investors’ enthusiasm was misplaced. As the article notes, patients’ failure to take medications as prescribed costs an estimated $100 billion to $300 billion per year due to additional healthcare costs and loss of productivity. If Proteus technology could improve patient medication compliance, in theory it could easily justify its big-dollar valuation.
That certainly seems to be how pharmas saw things. Attracted by this potential, Novartis invested in Proteus in 2010. The deal allowed Novartis to leverage Proteus technology, which the pharma used for organ transplantation and to track patients’ compliance with their blood pressure drug regimen.
Later, in 2017, Proteus agreed to a partnership deal with pharmaceutical company Otsuka for a digital medicine system called Abilify Mycite which got approval from the FDA. As part of the deal, Otsuka invested $88 million.
The regulatory clearance allowed the two companies to combine a pill and a patch into a therapy for people with schizophrenia, bipolar disorder and depression. The pill included an embedded sensor that could report to the provider when the patient had ingested it.
However, the treatment never seems to have gotten much traction. Since then, Otsuka decided not to invest more in Proteus and potential investors are hanging back until they see data from the Otsuka deal, CNBC reports. (Pear Therapeutics just saw its partnership with Sandoz dissolve, as well.)
The truth is, there’s a lot about this niche that healthcare players haven’t figured out yet. Investors and other experts who spoke to CNBC noted that pharmas still aren’t sure how to connect patients and clinicians with digital therapeutics, insurers aren’t sure when and if they should pay for their use and it’s not clear who should even be monitoring patients and responding if they stop taking their meds.
All told, it looks like growth-stage companies in the digital therapeutics business have one heck of a challenge on their hands. Somehow, ventures like Proteus and Pear will need to keep investors interested for a while more before they’re well and truly launched, but without more customers, they might have a hard time doing so. Given the huge investments needed to keep them going, this particular chasm may be particularly tough to cross!