A Better Pill to Swallow

Andrew Thompson’s visiting card is distinctly different. A circular cut with a plastic encasing next to the company’s name has a small granular chip enclosed and the back of the card reads, “Say hello to our ingestible sensor”. It’s this chip that encompasses the story of Proteus Digital Health, the Redwood City-based health-tech company. A Brit by birth, Thompson is spearheading a revolutionary technology that will arguably redefine the way medicines are consumed and prescribed.

But medicine is not what Thompson, initially started out with. With an engineering background, he began his career with Metal Box Plc and later, as a management consultant with Booz Allen & Hamilton, before switching over to venture capital as a member of Mayfield Fund’s Life Sciences Group in 1989. Building on his experience here, Thompson co-founded two medical technology companies with his Harvard Business School roommate George Savage: CardioRhythm (1991), which was acquired by Medtronic in 1994 and FemRx, which was later acquired by Johnson & Johnson in 1999. “The two medical device companies were really focused on making what were proven medical procedures much less invasive, and that was a whole set of opportunities that happened particularly in the mid-1990s,” explains Thompson, who went on to found Proteus in 2001. But this was different.

The idea for Proteus germinated when Thompson was attending a meeting at the American Heart Association. “I listened to doctors talking about the use of medicine and felt a majority of them were uncertain about how drugs worked, what they did, and whether patients used them,” recalls Thompson. At the same function, there were medical device companies which were showcasing products that were using a computer interface by using data from patients to personalise therapies and on the opposite, were pharmaceutical companies displaying their products but with no computer interface.

Thompson got talking with Savage on what if they could tie the use of medicines to computing. The premise being an estimated one-half of all patients do not take their medications as prescribed, which results in costs up to $300 billion every year in the US alone, owing to preventable tests, procedures, doctor’s visits, and hospitalisations. “That’s the most stupid idea,” was George’s initial reaction but they stuck to the conversation and eventually ended up creating a product that was radically different. “You know that when you do this kind of businesses, you’re on a 10-year journey to go from an idea to potentially having a product in the marketplace,” explains Thompson.

After closely working with the Foods and Drugs Administration from 2008, Proteus got a major fillip when it got the regulator’s approval for their ingestible sensor, called Proteus Discover. “There were many efforts to improve patient compliance, but ours was the first product specifically cleared [by the FDA] to do so,” mentions Thompson. The ingestible sensor, made entirely of ingredients found in the food chain, gets activated on contact with stomach acid after ingestion and sends a signal that determines identity and timing of ingestion to an adhesive patch stuck in the left upper quadrant of the abdomen. The patch collects additional physiologic and behavioral metrics that include heart rate, body position and activity and relays the information to a smart phone application via Bluetooth. The phone relays the encrypted information to a doctor’s office, allowing physicians to track how well a patient adheres to instructions, and also when and how often they take their medicines. Once the chip has done its job, it dissolves and passes out of the body along with other digested food. “The information will help individuals develop and sustain healthy habits and clinicians to provide more effective, data-driven care,” explains Thompson. Individuals can also consume the pill with supplements and other foods to understand how, for example, it affects their athletic performance, and how to adjust diets for a better performance. 

There’s a bunch of ways in which patients can consume the sensor. The sensor can be inserted into the tablet at the time of manufacture by a drug company and even physicians can use the sensor with any medicine by putting it into a capsule to create a digital dose form. “We have answered the two most important questions in ambulatory medicine (outpatient care), which is, did the patient take the drug and if they did, did it work? The first thing in digital medicine is to put the consumer — the patient — into a setting where they are measured and they get feedback and behavioural cues,” explains Thompson. For the physician, he believes that digital medicine offers the scope to move from on-time care to on-condition care. “This isn’t a new idea. Trucking fleet across the world has been run that way for 20 years. Why would you service a truck when it’s working? You bring your trucks when they are close to a break-down point and not when they have broken down,” adds Thompson. 

Partners in progress
Recently, Proteus announced an interim study results at an event at the American College of Cardiology. The study, which included 96 patients with uncontrolled hypertension and type-2 diabetes, showed a majority of the patients using the digital offering achieved the blood pressure target at fourth week. 

To increase the adoption of its offering, Proteus is partnering with healthcare providers. In early January, it tied up with its first US healthcare provider, Barton Health. Clint Purvance, CEO and President of Barton Health, believes there is a huge value proposition that Proteus brings to the table. Barton is using the medication adherence platform to treat patients with uncontrolled hypertension and cardiovascular risk factors. “When a non-adherent patient is not seeing results and the physician believes that the patient is taking medication, this may lead to unnecessary changes in treatment which can be costly for the patient and the health system,” points out Purvance. More importantly, he believes Discover provides a data-driven communication channel between a medical provider and a patient, and a better understanding of the importance of daily activity levels and lifestyle changes.

Similarly, Proteus has tied up with the Dallas-based Children’s Health, the first pediatric organisation to adopt the technology. “Extending care beyond the hospital walls to families where they live, work and play is an integral part of our vision as a system. New technology like Proteus allows us to care for patients and families where they need it the most, while also empowering them to be active drivers of their own healthcare,” mentions Julie Hall-Barrow, vice president, virtual health and innovation, Children’s Health. About 75 pediatric transplant patients that take multiple medications daily are being covered in the trial and the hospital hopes to release preliminary data in a white paper soon. “With our liver and kidney transplant patients, we hope it will improve medication adherence, so long-term health outcomes will be significantly improved in return,” adds Hall-Barrow. In short, she believes it’s a strategic alliance that works well for both. “With Proteus, there is an exchange benefit to both parties — they offer the technological advancement, and we have the pediatric population of liver and kidney transplant patients,” explains Hall-Barrow.

Better outcomes will also ensure that patients don’t incur higher costs. “Barton purchased the technology to keep costs down for the patient. In some cases, care providers modified the patient’s prescription, sometimes decreasing the dose and, in turn, lowering costs for the patient,” reveals Purvance. Barton is, however, not forcing patients to embrace the tech but making it optional. “Our partnership with Proteus is designed to provide information on the effectiveness of the sensor-based technology. It’s up to the patients if they wish to opt in and use Proteus Discover,” adds Purvance. 

The big alliance
Even as the business unfolds, one question that Proteus gets repeatedly asked is: if this [tech] was such a good idea, then why didn’t drug companies pursue it? Thompson mentions the reason: “These are medical devices and their action is physical and not chemical. Pharma companies do chemistry, Proteus does physics. It’s a different discipline.”

But the company did enter into an alliance with pharma majors such as Novartis in 2009 and with Otsuka, a Japanese company, in 2013. According to Proteus, given that the pharmaceutical industry’s current business models are challenging, there is an opportunity for the digital health to make it efficient. If generics is a race to the bottom, discovery-based drugs are unaffordable for most companies given that the average cost for developing a new molecular entity and bringing it to market is in the range of $5-10 billion. “The industry is stuck in a model that is, in my view, past its maturity date which is pretty much focused on the discovery of new molecules that are patented, so you can have monopolistic pricing. Governments don’t like it and frankly, from a business point of view, it’s not a very high return opportunity,” believes Thompson.

Proteus is banking on the fact that using its technology, pharma can make products that can become more effective. It’s a volume-based business model and patients are part of this model. There has been no attempt by drug companies to design anything around the patient or patient interface for him to succeed. “We are not figuring out how to make money for companies, we are in the business to figure out how to make people well. Pharma can innovate around their products to produce services that improve their effectiveness using software, data analytics, and tying their products to the most important utility on the planet, the mobile internet,” explains Thompson. Concurring with Thompson is Shumeet Banerji, who is on the board of Proteus. “Price is not the issue.  The key will be paying for value,” says Banerji, formerly the CEO of Booz & Co. 

In a bid to commercialise its technology, Proteus has also tied up with Oracle, which is slated to integrate the company’s system into its clinical trial management software. The tech major believes the medication adherence data will potentially increase the success rate of clinical trials as 45% of Phase III clinical trials fail, in part, due to a lack of patient adherence data. “This is a powerful example of how we can combine our industry-leading clinical trial data solutions with emerging technologies to transform the drug development and approval process,” Steve Rosenberg, general manager of Oracle Health Sciences, was quoted as saying.

Drawing an analogy to Tesla’s alliance with BMW, Thompson says, “Just like Tesla is showcasing to the world what a car with an electric drive train looks like, Proteus is showing what drugs with a digital drive train looks like. Tesla’s worth is the same as GM, but it is not because they are going to be the biggest car company in the world or they are going to sell 50,000 cars. It’s because everybody is betting that when the automotive industry goes electric they will get the tech from Tesla,” articulates Thompson.

Pep pill
While the backing of Big Pharma will help Proteus in its endeavour, it’s not a necessity. “What’s important to understand is that most of the medicines used around the world are not protected by patents. It means that we don’t need permission from any particular drug company to make digital medicines. Apple has made more money downloading songs that are off copyright than anybody made off those songs when they were on copyright,” quips Thompson.

Not surprising that venture capital interest in the medical devices maker has been growing. Proteus in April raised $50 million, taking its total funding to around $450 million, making it one of the most-funded private digital health players. Banerji feels that it’s not without reason the company is finding traction among investors. “Proteus has created an ingestible computing category and is the only medical device approved by regulators around the world. There is no question digital medicines are the future. Besides, the clinical data demonstrating improved outcomes, reduced costs, and high consumer acceptance are consistent and convincing,” says Banerji, who is also on the boards of HP Inc and Reliance Jio Infocomm.

While the FDA has already approved the drug and the sensor system separately, they will now be evaluated together under a whole new category of ‘digital medicines’. If approved, the ingestible sensor can actually be used in the pill. Otsuka had applied to the FDA for using the sensor along with its popular anti-psychotic drug Abilify (aripiprazole) but the authority wants more ‘human factors investigations’, before it can be deemed safe and effective for use. Otsuka’s chief strategic officer Robert McQuade was quoted as saying: “I think the adherence issue is particularly relevant to serious mental illness.” Proteus is expecting the FDA’s approval for the fully integrated digital drug in the coming 12 to 16 months. While it has device clearances already in the US, Proteus has managed to secure similar clearances in Europe, China, and Japan.

In the 1996 flick, Fantastic Voyage, scientists in a lab shrink a submarine named Proteus and its crew into a microscopic size. The vessel is then injected into the bloodstream of an ailing scientist and when it enters his brain, the team dons scuba gears and use a laser gun to perform a delicate surgery. But in real life, Thompson has found his inspiration. “Today, all cell phones run on a chip made by Qualcomm, tomorrow all drugs will thrive on our sensors,” says Thompson, as he slowly twirls a box of Proteus Discover on his table.