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Novel Software-Based Treatments Face Old Problem: Reimbursement
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By Brian Gormley, WSJ Pro
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Good day. Startups that develop software-based disease treatments are devising strategies to overcome reimbursement obstacles that have hampered the emerging industry.
Digital therapeutics, often delivered through an app, have attracted venture capital in part because of their potential to extend the reach of medical care and reduce inequalities. The global digital-therapeutics market was valued at $5.09 billion in 2022, according to market tracker Grand View Research.
Because these treatments are new, securing reimbursement is often a slow process. Pear Therapeutics, a pioneer in the sector, filed for bankruptcy in April because of this challenge. Until there is a robust infrastructure for reimbursement, commercialization will be challenging, said Autumn Brennan, director of marketing and communications for Digital Therapeutics Alliance, a nonprofit trade group.
A bipartisan bill in Congress, the Access to Prescription Digital Therapeutics Act, would require the Centers for Medicare and Medicaid Services to establish a payment methodology for these treatments.
Companies are also taking their own measures. Startup Click Therapeutics is developing prescription digital treatments for migraines, schizophrenia and other conditions with the same clinical rigor as a drug, which should encourage adoption, said co-founder and Chief Executive David Klein.
“Our approach takes into account that evidence of efficacy will be required for new medicines, and digital therapeutics shouldn’t receive any special treatment,” Klein said.
Another strategy is to deliver digital therapies directly to insurers, employers and other customers without the need for a prescription. One company taking this approach is publicly traded DarioHealth, whose platform is designed to help people manage chronic conditions between doctor visits. Putting a doctor in the middle of the process adds a barrier for patients, said President Rick Anderson.
And now on to the news...
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Pear Therapeutics secured FDA authorization for apps used to treat substance-use disorder, opioid-use disorder and insomnia. PHOTO: PEAR THERAPEUTICS INC.
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Digital therapies. Startups have developed dozens of software-based treatments designed to make medical care more effective and accessible. These companies are facing difficulties introducing this new category of digital therapies into the medical system.
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Investment in digital therapeutics rose during the pandemic. Globally, startups raised $7.17 billion in 2021, up from $1.89 billion the year before, according to market tracker CB Insights.
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Insurers are acting cautiously as they get accustomed to prescription digital therapeutics. The often-lengthy process of persuading them to cover these treatments can stretch a company’s resources.
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Pear Therapeutics, which formed in 2013, developed prescription apps for substance-use disorder, opioid-use disorder and insomnia. Its inability to secure sufficient reimbursement for them led it to file for bankruptcy in April.
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$1 Billion
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The approximate amount that a group of hedge funds seeks to cut from a deal by opioid manufacturer Mallinckrodt meant to help victims of opioid addiction.
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Biotech Stocks Join AI-Fueled Rally
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Healthcare shares have struggled this year, but a handful of small stocks riding a wave of enthusiasm from artificial intelligence are bucking the trend, The Wall Street Journal reports.
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Investors have lately flocked toward speculative investments such as shares of technology companies, meme stocks and cryptocurrencies, leaving behind more defensive sectors such as healthcare.
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Meanwhile, companies perceived to be leading the AI revolution, including chip maker Nvidia and tech giant Microsoft, have been among this year’s top performing stocks.
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The surge in enthusiasm has given a major boost to shares of smaller biotech companies, a sector where investors give greater weight to growth opportunities than current financial results.
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The First Smart Gun Is Finally Coming to Market. Will Anyone Buy It?
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Guns that use technology to ensure that they can only be fired by their owners, called smart guns, have been developed and debated since the 1990s. The Biofire Smart Gun will be the first widely available for sale if it ships in December as planned, The Wall Street Journal reports.
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Proponents tout smart guns as a way to reduce accidental shootings and firearm thefts. Gun-rights supporters have been wary, in part over concern that governments could outlaw sales of weapons that don’t have smart-gun technology.
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Earlier efforts to bring smart guns to market have failed, largely because of pressure from gun-rights activists or because they didn’t work as promised.
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As with other technologies such as electric cars that changed long-established products, the question for smart guns is whether they can work at least as well as the traditional versions they replace and find customers behind affluent early adopters.
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Funds
European life sciences investment firm Medicxi launched its latest fund with $400 million in commitments. Medicxi IV will continue to focus on drug discovery and the development of therapeutics for unmet medical needs.
People
Bessemer Venture Partners promoted Sofia Guerra to vice president. She joined the firm in 2021.
Bicara Therapeutics, a developer of cancer therapies, appointed David Raben as chief medical officer. He was most recently vice president of global product development and product general manager, oncology, at Amgen.
Programmable medicine platform Senda Biosciences appointed Igor Matushansky as chief medical officer. He was previously CMO and global head of research and development at Hookipa Pharma.
Exits
Wayne, Pa.-based Teleflex agreed to purchase Palette Life Sciences in a deal that expands the medical-technologies company’s interventional-urology portfolio. Teleflex will pay $600 million in cash up front for Palette, along with up to an additional $50 million based on certain commercial milestones.
Quince Therapeutics agreed to acquire EryDel, including the company’s treatment for Ataxia-telangiectasia, a rare and genetic pediatric condition that affects the nervous and immune system. EryDel stockholders will own about 16.7% of the combined company and will be entitled to up to $485 million upon the achievement of milestone payments, with no royalties, once the transaction closes.
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Nexo Therapeutics, a cancer drug developer, emerged from stealth with $60 million in Series A funding led by Versant Ventures.
Octave Bioscience, a Menlo Park, Calif.-based precision care provider focusing on multiple sclerosis and other neurodegenerative diseases, added $30 million in Series B funding from new investor Hikma Ventures, existing backer Northpond Ventures, along with several others.
A-Alpha Bio, a Seattle-based provider of high-resolution protein interaction data to improve human health, landed $22.4 million in Series A2 funding. Perceptive Xontogeny Ventures led the round, which included participation from Madrona Venture Group and others.
Entia, a London-based startup providing remote patient monitoring for people undergoing cancer treatment, raised £16 million (about $20.7 million) in Series A funding led by BGF and Parkwalk Advisors.
Laplace Interventional, a Plymouth, Minn.-based startup developing a transcatheter tricuspid valve technology, secured $12.9 million in Series B financing. Investors including Features Capital provided the round, with Managing Partner Jenny Barba joining the board.
K4Connect, a Morrisville, N.C.-based startup offering technology to providers serving older adults and those living with disabilities, picked up an $8.9 million investment co-led by Bryce Catalyst and AXA Venture Partners. Bryce Catalyst’s Cary Burch will join the company’s board.
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PHOTO ILLUSTRATION BY EMIL LENDOF/WSJ; ISTOCK
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