Head of NeuroTech & Open Innovation, Biogen
Anish is an experienced global director in digital medicine. Whilst with Novartis he established the group’s digital commercialization ‘go to market’ model. Following this, he joined Sanofi as a VP for digital therapeutics and now works at Biogen to accelerate their Neurotech capabilities by establishing NueroTech labs and developing NeuroTech partnerships. Anish has been a Professor at the Geneva Business School and an Advisor to Hu-Manity.co.
Section 1: Pharmaceutical Companies Embracing DTx
1.1. What is the definition of digital therapeutics (DTx)?
In simple words, digital therapeutics is any, and all, solutions, that shows data that can confirm the efficacy of a solution that it is progressively healing or making a person with a certain condition better and also qualifies from a safety perspective.
I think if we can get a solution to have some sort of a therapeutic reaction to a given condition, I think that, for me, that’s a digital therapeutic, and making sure that it’s safe.
1.1.1. How has the definition of digital therapeutics evolved in recent years?
Within the world of medicine, a lot of concepts do take time in order to settle in. For example, if you look at telemedicine, it’s been around for almost 20 years, but right now it is really gaining traction. So, I think digital therapeutics will evolve, the definition will become more concrete and more acceptable from a geographical perspective. Ultimately, the FDA has their own way of interpretation of digital therapeutics. We know that the Ministries of Health in Germany and in France, have a different definition of DTx, because they’re adding remote care, and treatment options to it. But I think, at least the foundation elements are in place, and that is what is important.
1.2. What tech focused solutions exist?
1.2.1. Happify Health
The Happify Health solution is pretty good. If you look at some of the clinical trials and the evidence they generated for stress and anxiety and depression, it is very relevant. Apart from the solution itself, the update that they’ve had to identify people that show symptoms and make sure that they have the right engagement models. Furthermore, the model where people download these solutions, let that be ‘freemium’ or let that be a paid part of the service.
The other company that I like a lot is NuvoAir, who focus on respiratory illnesses. They have three products in their portfolio, which makes it very special, because they started off with a ‘drugs+ solution.’ They’ve created a very specific solution for COPD patients. And now, in the third line of product, it is a digital therapeutic. In some cases, they want to make sure that it’s just a companion therapy that allows for the monitoring of it. But then the third one is to make sure that the initial solution itself acts as a healing solution. So, I like the way they’ve done it. I also like the way they’ve approached the market, so looking at how they can get approval through the NHS.
1.2.3. Kaya Health
I’m seeing a lot of value on what Kaya Health is doing, with their motion sensor solutions. When you look at physiotherapy, when you look at prehab, rehab, there is huge scope, not just in wellness, but also in therapeutic reactions that you can capture, combined with the platform and the AI engine that supports it, and it is constantly learning how to improve itself. Of course, you have companies like Sleepio that have done some phenomenal work as well. So, these are the ones are top companies for me, but there are plenty DTx that may be not as popular, for example within the oncology space, for cancer-related fatigue, which is called Tired of Cancer. They do some amazing work as well.
1.3. Why have digital therapeutics grown in popularity?
I think it goes back to the scientific element piece. We’ve all used mobile applications. I use a lot of men’s health applications which are more for wellness and where I track my own health, compared to an application that does this tracking work for you which automatically tells you that you’ve had X percentage of progression over time. And the realization of that has been critical in this space.
Of course, when you look at the percentage of companies that are working on digital therapeutics, a huge percentage of them are working on neurological conditions, like insomnia, where constant exercising, relaxation, and meditation help. And the results are quite fast and quite evident to the patient. Furthermore, anything related to imaging, for example with skin-related illnesses and stuff, receives a lot of attention.
When we start looking at these elements and you see, progressively, a solution delivering certain aspects that they’re promising, and generating clinical evidence that prove that the DTx is working, I think that has been one of the critical parts of growth.
Second, all of us have access to some sort of a smart technology today. For example, your computer, your phone, or something that’s on your wristwatch, or something that is connected to your computer via PlayStation, via Xbox or Nintendo. There are so many elements to it that are now consumer-driven, and all these companies are looking at health baked into the solution itself. So that makes it very easy for companies to build solutions without the end user putting in a lot of effort. I think a combination of these two with the right balance has made growth very fast.
And then, the last one, which is a sad thing, but it’s a sad reality, that with COVID, everything that we had anticipated within the area of digital therapeutics that would happen in 2023/2024 is happening now, because of remote care and the need is there. Doctors are getting ready, doctors want to make sure that the patients are okay when they’re not able to see them, that they’re able to follow the therapy that has been prescribed to them.
1.4. What is the state of pharmaceutical companies’ DTx portfolios?
I think pharmaceutical companies developing their own digital therapeutics is still yet to happen. There are some core skillsets that a pharmaceutical company has.
First, there is the go-to-market channel, which pharma developed that capability over many decades, of how do we approach the model where you have a B2B2C, depending on how you look at the doctor, or a B2B2C2C, which is how do you look at the hospital administration, who then looks at a doctor, who then looks at a patient. So, pharma company has a good hold on how that could work.
Second, pharmaceutical companies are very robust when it comes to regulatory and compliance pieces. I think those are some of the core competencies of this organization.
And then the third one, which is the most important one, which is the clinical and medical side, the scientific knowledge. When you look at these three things, and you look at a solution, let that be technology-driven, those three skillsets are very important for these companies.
Now, technology, although there has been a lot of attempts for IT organization within these big pharma companies, to create these DTx solutions, it implies that those skillsets are not there. The way of managing data is not there.
Following this, the model that has been chosen from there is to either have a partnership, joint venture, or getting into mergers and acquisitions, where pharma sees opportunities that are good. So, it is about how we develop partnerships from them, and the reason being, the time to market and the time to take the opportunity of an existing solution, is very important. Because if you go into the normal life cycle of developing some of these products, it takes a start-up about 3-4 years to go from conception to actual creation of product; to validate it, it will take a lot more time. So, it is much easier to partner, and then potentially get into some sort of acquisition from there.
1.5. Who is currently leading the DTx development race?
When you think about races, you think about speed but this is a race of turtles. It is not the race of super cars because one of the things I think we need to be all cognizant about, is that anything that goes artificial for a pharma company, let that be molecule-based, let that be technology-based, it needs to be validated, it needs to be proven, it needs to ensure that it has controlled effects of what it’s doing. And it’s a very sensitive industry that we are in right now. So, the margin of error has to be very low. So, I would say, that is the reason it’s a race of turtles.
I think Novartis has been leading, it is the first one to at least be open to those risks, and make sure that they do those partnerships, they create some of these models. I think Roche with that internal incubation, I think they have done some good work. Sanofi, we started off some really good things. Now with the change of organization, we’ll see how they do. And then BMS, out of nowhere, they come out with big deals a lot of times. And I think Boehringer Ingelheim is also getting over there. But I would say Novartis, for sure, together with Roche. And Pfizer is out there as well.
Section 2: Future DTx Opportunities
2.1. What are the future DTx opportunities for pharmaceutical companies?
From a therapeutic perspective, there’s a lot of work done in diabetes. There’s a lot of solutions out there. Not all of them are digital therapeutic solutions, they are companion solutions that help from a drug usage perspective and help with monitoring. I think within hypertension, dyslipidemia, there is a big opportunity. Almost 30-35% of the world has some sort of hypertensive condition, and especially now with COVID, those cases are increasing. Cardiovascular patients, I think one in three people have some sort of a cardiovascular illness. I think that’s where a lot of work is going to be coming out, with the sensors and with the technologies for blood oxygen levels. I think that’s where there’s going to be huge progression on digital therapeutic.
And then oncology and neurology are two spaces where there are things happening, but not at a level where they have become a digital therapeutic solution. But I think companies are getting there, and pharma organizations are very keen on that as well. So, I see these cardiovascular illnesses, oncology, and neurology as areas to be growth drivers.
If you look at the core capabilities, I think data, understanding data, creating insights out of that data is probably the biggest core capability that needs to be developed on the pharma side. And that’s where you see a lot of companies creating teams with skillsets related to data science and software engineering. That’s one of the skillsets that’s going to develop quite a bit. I personally think IT resources looking at the technological elements will not become a core skillset for pharma companies it in the near future, but I do think the data science capabilities will definitely develop.
Then, where the other one area I look at is on the business development side. So digital business development, together with quality assurance on the clinical and technological side, I think those are the core skillsets that will develop, so you would have new quality-based skillsets in the company for sure.
2.2. How are health regulators supporting the growth of DTx?
There’s a lot of policies and guidelines in place already from FDA, that have now assumed that digital therapeutics will be helping in the overall evolution of how health is managed, how care can be transmitted, so it is already happening,
For combination therapy you have, within the guidelines, something called 505(b)(2), where if, with a molecular therapy, and a digital therapeutic, if you can show that there is a new indication of your drug, you can get an IP extension for that. And that’s already passed last year. Pfizer was the first company, based on real-world evidence, to ask for the new indication just based on their solution.
If you look at Germany, there is a digital supply chain act that was rolled out, starting January 2020. And they are making digital health a part of their priority, and they are also reimbursing the solutions. There are two companies that already have reimbursements. So, from a policy perspective, policies are out there.
Sanofi, together with the Digital Therapeutic Alliance, worked on a draft of that was presented to the WHO on accepting digital therapeutics as an area. I think development is going fast, but we see these developments popping up more and more, country by country, and also as a part of the overall organization.
2.3. What are the key focus areas of growth?
In drug development, a lot of companies have been trying to include some sort of a digital solution that becomes a part of the clinical trial. Not many have been successful, because the protocols within a clinical trial are so tough, and most of the times, it is not managed by the pharma companies, instead the CROs manage it.
But if we are able to show that there are outcomes that can be gathered, based on mobile solutions, and based on solutions that are not in a specific clinical setting, then the CRO model, as it stands today, will have to change quite a bit. And I don’t know how much they want to change because they are very well-established companies. And the clinical trial space is a big money-making business in this case. So, a lot of things need to change for that to happen. And that’s where companies, like Medable, who are doing the additional clinical trial piece, are doing amazing and are using some of these solutions such as bringing remote patients onboard.
Now, on the drug development side, I think DTx plays a role in it. We still need to see how it can be incorporated, because it should not be more different than what you have in real-life where we are launching for commercial purposes. I think AI-based drug discovery, which has nothing to do with digital therapeutics itself, but it has to do with data. And if we can have much more personalized data around patients within clinical trials; then, when it comes to marketing those things, the data and evidence becomes more relevant for people, from a mass audience perspective.
On the other hand, what I also see, as an opportunity for digital therapeutic solutions in a specific area is within employee management itself. Today, there are various benefits that employees get within different companies. But now we are starting to realize that health is one of the things that employers are taking more active responsibility in. And that’s where companies like Kaya Health are also playing a role, in order to show how they can create solutions. Amazon has developed their own solution in order to take better care of employees in the company, and how to make them stay away from COVID, for example. But, there a lot of different cycles that we need to go through for this to become more effective. But consumer-driven digital therapeutics, I think, is where we will see the fastest and the biggest value, because people are asking for it. And when it comes to controlled trials, it will get there. A lot of things need to change in the protocol and the studies which are designed.
2.4. Is there appetite within pharmaceuticals to grow DTx via M&A?
Absolutely. I think if companies, who are within that race of turtles, the only difference between them is the number of deals that you sign in a given amount of time. I think, unfortunately, that is the KPI that is being looked at right now. So, M&As are the fastest way of getting into the game. But now that you have done that merger or acquisition, how do you make profit from it, and make sure that you create a solution that has some sort of an impact on patients. If not, then it is all noise and it will not go beyond that.
If the core skillsets are not there, you can build them, which takes a lot of time because there’s a lot of competition to hire those skillsets; and is pharma the most attractive place to get people who code, people who develop, those technologies? Probably not. So that’s a consideration, in terms of extending pharma’s core skillsets by making sure that the startup essence stays there, in terms of how they create things.
I would say, in terms of why it’s interesting for startups is, if they’re going to receive seed funding, usually there is an expectation that within the next three to four years, they have to have 7-8x in returns. Whereas on the pharma side, since we are looking at long cycles of launch, and actually making money out of those things, the pressure is not as high as it would be from a VC, at least from a revenue generation perspective. Data generation perspective, yes, absolutely, pharma is going to be more demanding than what a VC is for data. So those are the, I would say, give-and-take on what a deal could be, and I think it works out both ways, for the startup and the pharmaceutical company as well.
2.5. What strategies can pharma employ to ensure ROI from DTx?
When it comes to pharma’s revenue model, you have the pipeline products, and the projected revenue that comes from it. You have the growth products where they’re still growing, and then you have what we call LOE products, which is ‘loss of exclusivity.’ These three tell you where exactly the money is, in pharma. So, if it’s a loss of exclusivity product, there’s no sales reps, there’s no marketing budget, there’s nothing there.
So, is it interesting for LOE to potentially grow through DTx?
Absolutely. Now, laws, policies, like the 505B2, in FDA, help entertain those things, where if I add a companion therapy to a product that is about to lose exclusivity, and I’m losing market share, and business over the years, or it is coming close to a patent expiry. Then that is the right timing in order to see if investing in something which is a companion and show that it’s a new indication, or show a much more comprehensive therapy, for which we can keep the same pricing option and continue the growth. That’s a good way of seeing ROI as well.
So, there are four buckets where you see this.
There is one on differentiation, how do you differentiate your product, and the money may not come from the digital therapeutic itself, the money may come on the differentiation strategy and that you are able to now capture the much bigger market share.
Second is IP extension, with the 505(b)(2), that’s one of the revenue models.
Third, when you look at the pricing itself for the digital therapeutic, in addition to the molecule, where it could work in combination, or standalone as well. So, if you can add pricing for the product in order to make sure that it can be used for any consumer or through insurance companies, or even through the public system, that will become the third revenue model for pharma.
And the fourth one is, and I’ll make a big assumption that every DTx company that pharma is partnering with or is acquiring, there are specific license terms and conditions, or equity, that it is going in to. So, if the product is in the hands of more people, then the stake in the company automatically grows based on the investment that is done. So, from an equity perspective, that company is going to grow and that becomes another source of return on investment that, because the stake in the company has grown so much, now, my share is much bigger, in terms of the growth of the company as well.
2.6. What will the DTx space look like in 3-5 years?
I think there’s a pattern on how digital therapeutics is creating the right amount of noise, a lot of it is hype as well, because companies, or startups are working to position themselves as a digital therapeutic. And they’re not delivering to that ‘mark’ of digital therapeutic, they’re not taking enough safety measures, they’re not efficacious, and other issues. But what I expect from a human and from a patient perspective, I want to have a much more comprehensive therapy, rather than speaking about digital therapeutic as a separate identity, I would rather have a therapy that includes a molecule, the digital companion, or a separate thing that goes with it. My doctor would then be able to get a much broader picture about how I am responding to the treatment, rather than having a conversation, which is very subjective to what I’m thinking, how I’m feeling, and telling them, how my last month or last two months was.
So, I would rather have DTx as a part of the whole therapy, rather than being separate. And that’s where I think it would be great if we have that in three years. But if we get that in five years, I’m not going to be complaining, but I hope DTx doesn’t need to be an identity of itself, it just becomes a part of the overall treatment delivery.
If you look at disease areas, if you look at two specific disease areas, oncology, and neurology, what percentage of it is going to be related to all the changes that your body goes through when you’re taking a cancer medication? I think a digital therapeutic will not be able to replace some of those elements. Where I think a digital therapeutic will be able to do something, is the socio-psychological impact that is created because of the diseases, where these patients close themselves off from society. So, in order to have more solutions in depression, anxiety and fatigue-related issues, that’s where digital therapeutics can grow. Now, does it need to be tied to a specific product of a pharma company? I don’t think so.
So, when you look at the neuroscience and oncology space, I think there’s a much bigger opportunity for standalone digital therapeutics. Within cardiovascular and other disease areas, I think the percentage is very high. Very, very high. In COPD, for example, because there’s a lot of behavioral-therapy related stuff that happens together with the treatment. So, for hypertensive people, salt, sugar, all these things, diet, exercise is very critical. And it’s related to the treatment they’ve been prescribed. So, cardiovascular, I see a huge percentage on a more specialized medication piece, I see less percentage of combined therapies, rather than having standalone therapies.