7/06/2021 | Point of viewPoint of view
On May, 27th, Healthware Labs and Plexus Ventures organized a webinar on a topic attracting growing interest in the digital health space: ‘Partnerships in Pharma: Exploring Intersections Across Molecules and Software’. The event provided exclusive insights into partnerships between pharma and digital therapeutics companies along with some digital health and DTx trends. The webinar was based on insights from the extensive experience of both Healthware and Plexus Ventures who formed an alliance earlier this year to structure deals for the pharmaceutical industry in the development and commercialization of digital therapeutic (DTx) products.
The webinar speakers included Gabriele Tundo, Vice President at Plexus Ventures and Gerry Chillè, Sr. Partner Digital Therapeutics at Healthware Group and Kristin Milburn, Managing Director at Healthware Labs.
Plexus Ventures is a business development and transaction advisory boutique for healthcare companies focusing on M&A, asset divestments and licensing projects. Plexus Ventures is actively involved in the latest tech and advancement in the life science industry with DTx being one of the latest key focus areas.
Healthware Labs is the innovation division of Healthware Group that helps healthcare and life science clients navigate the world of digital health and co-create and design innovative solutions across the healthcare system. Healthware Labs’ services include helping build digital health literacy within an organization, establishing digital health strategies, leveraging applied digital innovation and design thinking methodologies to test new ideas and explore digital health opportunities for numerous therapeutic areas.
Healthware Therapeutics is focused on fast prototyping and commercialization of DTx, all the way from DTx strategy, proof-of-concept and MVP development to clinical validation and go-to-market. The company brings strong technical expertise to support R&D and go-to-market strategies.
Healthware Therapeutics has a DTx pipeline that includes 6 assets currently under development either in partnership with pharma or in-house. The products belong to such therapeutic areas as hypertension, neurology, depression & anxiety, back pain and others.
Given the increased competition and growth seen in the market, Plexus Ventures and Healthware are leveraging their combined expertise to help companies in life sciences that are looking to incorporate DTx into their pipelines.
At a very high level, digital health encompasses the entire spectrum of health-related mobile applications and technological solutions. These products may not have the same level of rigorous clinical validation behind their products, but they can often provide great benefits for users’ to maintain overall health and wellness. Examples are Headspace, Calm or Happify that were launched as pure consumer products originally and have now begun to start building more and more scientific evidence.
Digital medicine solutions are used in support of patients managing specific therapeutic conditions. In other words, digital medicine includes software or hardware based on scientific and clinical evidence, which measures and intervenes in health. An often-mentioned example in the diabetes space is One Drop.
Digital therapeutics (DTx) are digital health interventions that have been built specifically with clinical outcomes in mind. DTx solutions are validated via clinical trials and generate real world outcomes. An example of a DTx is Akili, the company that released EndeavoRx, an FDA-approved video game helping adolescents with attention deficit disorder go through behavior changing routines. The end result of using DTx are actually in line with pharmacological treatment: in the case of EndeavoRx it means that the app on its own produces some of the same clinically-proven outcomes and benefits as the standard drugs given to treat attention deficit disorder provide.
New models of reimbursement for DTx solutions are starting to emerge.
Usually, the medical benefits of standard drugs are the measures of impact on morbidity, mortality, quality of life and a reduction of side effects. Looking at DiGA, the digital health reimbursement process introduced in Germany, one can see that German policy makers recognize a whole set of benefits beyond those typically seen for drugs. These so-called positive health care effects are actually significant contributors to the improvement of health for individuals or the improvement in the delivery of healthcare services. These patient-relevant effects are the coordination of treatment, alignment of treatment, adherence, facilitating access to care, patient safety, health literacy and so on. There are about 16 digital health solutions currently available in the German digital formulary, which is also setting up a model for the rest of the European countries to follow.
Another striking example in the reimbursement area is Moovcare, a platform and app, fully reimbursed in France, that lets cancer patients that are being treated for lung cancer to essentially monitor, track and report their symptoms on a day-to-day basis. The impressive impact is that clinical studies show patients using Moovcare survived 7 months longer, on average, than patients on the same therapy that were not using the software - an exceptional achievement for this therapeutic area and a clear demonstration of the value DTx could provide.
Plexus Ventures provided an analysis of the exhaustive database of partnerships between pharma and digital health companies that the company has documented.
The database consists of 59 partnerships that happened over the last 10 years, although 88% of these partnerships took place to the last 3 years, which shows a clear acceleration trend in the market. 71% of the deals where first-time partnerships while 22% were follow-on deals built on the previous partnerships – this in an important and positive sign demonstrating that these collaborations are working.
Regarding the type of deals, 80% fall within the framework of conventional, well known models for collaboration, whether it's co-development or commercialization agreements. One fifth of the agreements are pilots which is a more unusual and novel form of collaboration in in molecule-based medicine. On one side, pilots represent a good way for pharma to test the early-stage technologies and, on the other side, offer the opportunity for the startups to get acquainted with the dynamics of the market.
Acquisitions are only a limited fraction of the number of deals, this could be connected to the fact that pharma is facing challenges understanding the potential valuations in the market. Therefore, standard licensing deals could offer a better way to get to know the digital health space and realize the potential of data while minimizing the risk.
An important element to highlight is that 75 percent of pharma-digital health partnerships involve either DTx or a prescription digital therapeutic product. Digital medicine products represent 16%, digital health - 9%. This shows that pharma is still relying on solid data and chooses solutions with a higher level of clinical evidence generated or at least if not already generated, in progress or planned.
Looking at the business model aspect, it can be noted that most partnerships are still in the early stage and the business model and commercialization pathway is far from being defined. The role of follow-on deals is to further define or expand the role of each partner in further advancing the development and/or commercialization of the DTx solution.
Finally, talking about the deal sizes, Gabriele from Plexus Ventures noted that early stage deals usually don’t disclose financials. From the disclosed ones, two deals of Click Therapeutics one could be taken as an example: a deal with Otsuka on the treatment of major depressive disorder is worth $302 million while another one with Boehringer Ingelheim on the treatment of schizophrenia is worth $500 million. Taking into consideration also a recent $100 million deal between One Drop and Bayer, it can be concluded that the partnerships between pharma and DTx are getting quite sizeable.
4 main value propositions of DTx to pharma can be highlighted:
4 examples of partnerships between pharma and DTx can be provided based on the types of the collaboration:
Summarizing the topic, Kristin Milburn from Healthware Labs presented a selection of quotes from several C-level executives of leading pharma and digital health companies that were collected at the Frontiers Health conference, organized and co-hosted by Healthware Group and dedicated to healthcare innovation.
Citing Jeff Dachis, Founder & CEO of One Drop, ‘the partnering process often sees a lot of time wasted going nowhere, time a startup doesn’t have’, it was noted that selecting the right approach in digital health partnerships is crucial to bring pharma and DTx together. Therefore, the topic of the partnership will be gaining more and more importance, also considering the accelerated pace of new partnerships in the market, investments in the digital health overall and the growing maturity of the DTx space.
If you are interested to learn about pharma and DTx partnerships in more detail and also listen to the in-depth Q&A session of the webinar where speakers addressed more questions about choosing the most effective between pharma and startups, check the video of the webinar following this link.
If your company is interested in learning more about the digital health space, would like to understand digital medicine opportunities within a therapeutic area, seek investment or licensing opportunities or would like to explore DTx co-development partnerships, feel free to reach out to Kristin Milburn, Managing Director at Healthware Labs, Gabriele Tundo, Vice President at Plexus Venture or Gerry Chillè, Senior Partner, Digital Therapeutics, Healthware Group.