Proteus Digital Health, maker of an ingestible sensor for tracking medication adherence, filed for Chapter 11 bankruptcy protection yesterday.

The news comes months after word that the company had furloughed much of its staff, reassessed its high-profile partnership with Otsuka Pharmaceutical and shifted away from its primary focus area of mental disorder treatment.

The "smart pill" maker indicated in the filing that it has between $100 million and $500 million in estimated assets, and between $50 million and $100 million in estimated liabilities. The company also reported between 200 and 999 estimated creditors, top among which were PREI's Westport Office Park (a $1.04 million unsecured claim), Romanco North America ($510,848), Otsuka America Pharmaceutical ($397,721) and Workday ($288,000).

In addition, Andrew Thompson has stepped back from his role as CEO. Lawrence Perkins of SierraConstellation Partners, who had previously been retained as the company's chief restructuring officer, has now been appointed by the Proteus board as its interim CEO.

“Filing for bankruptcy protection allows Proteus to continue its sales process in a more concerted and efficient manner while continuing to run the business as usual,” the company said in a statement provided to MobiHealthNews. 

A representative from Otsuka said that the company won't be putting out any official statement on its business partner's bankruptcy, but said that delivery of Abilify MyCite – a sensor-enabled version of Otsuka's schizophrenia drug that was developed as a result of the companies' collaboration – will not be affected.

"We want to make it clear that this development is not expected to have an impact on our digital medicine program. Nor do we expect it will impact Otsuka’s ability to deliver the Abilify MyCite System to patients and physicians," the Otsuka representative said. "Otsuka remains committed to building a successful digital healthcare business that includes digital medicine as well as digital therapeutics."

WHY IT MATTERS

The writing may have been on the wall for the past few months, but this bankruptcy filing still signals a major fall from grace for one of digital health's best-known players.

Proteus had raised more than $500 million across several investment rounds, at a valuation of $1.5 billion. Abilify MyCite made waves when it received the FDA's green light back in late 2017, with some musing that the adherence technology could become a game changer for the pharmaceutical industry. The $88 million deal it signed with Otsuka in 2018 was a major digital health buy-in from an international pharma player, and a common topic of panel conversation at industry events.

The major question going forward will be whether or not Proteus' failure was a result of its technology or its business strategy. Bill Evans, managing director of digital health venture fund and research group Rock Health, told MobiHealthNews a few months ago, when signs of Proteus' troubles began to emerge, that the company probably "shouldn't have put all their eggs in one basket," and doubly so when that basket is a patient population uniquely distrustful of tracking devices.

“Proteus may have picked [a] therapeutic area with a degree of difficulty that’s an eight or nine out of 10, right?" Evans said at the time. "They may be paying the price for that tactical choice, because it’s such a challenging therapeutic modality for their particular intervention to take hold. If that’s true, it’s unfortunate, but it doesn’t disprove the value of Proteus itself. It simply means the evidence is yet to be seen.” 

But on that note, some of the reports on Proteus' woes over the past few months also highlighted shortcomings in the company's early clinical-validation data. A dearth of supporting evidence would likely play a role when courting new investors – or convincing prior backers to keep ponying up, and that their millions weren't misspent.

THE LARGER TREND

As Proteus makes plans to liquidate, it will be worth keeping an eye out to see whether or not other pharmas, digital health companies or other players make a bid on any Proteus assets that are up for sale. Still, there are several examples of ingestible sensor technology already out in the wild.

Through Otsuka, Abilify MyCite had been, or already was, rolled out among providers for studies and pilots involving chemotherapy, antibiotic therapy and viral suppression medication.

Meanwhile Gainesville, Florida-based etectRx received a 510(k) clearance for its own ingestible adherence product, called the ID-Cap System, in December. This company's approach involves a receiving device worn on a lanyard – not adhered to the user's skin like Proteus' technology.

After years of waiting, Akili Interactive has finally received FDA De Novo marketing authorization for EndeavorRx, its video-game digital therapeutic for children aged 8 to 12 years with ADHD.

This is the first game-based therapeutic that the FDA has greenlit for any condition, the regulatory agency noted in its announcement. It is also the first authorization for Akili, which has a handful of similar software therapeutic products in its development pipeline.

Previously known as Project: Evo and AKL-T01, the EndeavorRx software treatment is indicated by the agency to improve children's symptoms associated with ADHD, and is intended for use as one component of a broader therapeutic program addressing these symptoms.

The therapeutic takes the form of a game in which users navigate an alien avatar through a course while they respond to on-screen prompts. The app keeps track of movements and so can monitor the user’s behavior and quickly adapt to the player.

“We’re proud to make history today with FDA’s decision," Eddie Martucci, ECO of Akili, said in a statement. “With EndeavorRx, we’re using technology to help treat a condition in an entirely new way as we directly target neurological function through medicine that feels like entertainment. Families are looking for new ways to help their children with ADHD. With today’s decision by FDA, we’re excited to offer families a first-of-its-kind non-drug treatment option and take an important first step toward our goal to help all people living with cognitive issues.”

Akili said in the statement that EndeavorRx "will be available with a prescription to families soon" as part of the company's Endeavor Care Program, which includes, alongside the therapeutic app, a behavior-tracking app for parents called ADHD Insight and a direct line to caregiver support services called Akili Assist.

However, a nonprescription form of the digital therapeutic is already being distributed by the company thanks to an emergency policy from the FDA allowing digital products for to be temporarily released before a more formal approval. That rollout provided the first look at the Akili Assist offerings and a general idea of the company's long-touted, pharma-free distribution and commercialization strategy.

WHAT'S THE IMPACT?

To make its decision, the FDA said that it reviewed trial data from multiple studies and more than 600 patients – chief among which was the STARS-ADHD pivotal trial that was concluded in late 2017 and published in full just a few months ago.

Across this and other studies, the agency said that it looked for clear improvements in attention function. No serious adverse events were reported among any of the studies, according to the FDA. However, frustration, headache, dizziness, emotional reaction and aggression were all reported in the studies as common adverse events.

The data and the De Novo clearance pave the way for a new modality of ADHD treatment that clinicians can consider as an alternative, or addition to, drug-based treatments and other efforts.

“The EndeavorRx device offers a non-drug option for improving symptoms associated with ADHD in children and is an important example of the growing field of digital therapy and digital therapeutics,” Dr. Jeffrey Shuren, director of the FDA’s Center for Devices and Radiological Health, said in a statement. “The FDA is committed to providing regulatory pathways that enable patients' timely access to safe and effective innovative digital therapeutics.”

Beyond the benefits of EndeavorRx itself, the De Novo clearance opens up a regulatory pathway for upcoming software therapies for ADHD, and more broadly sets a precedent for game-based products as vetted, evidence-based treatments.

THE LARGER TREND

The regulatory victory has been a long time coming for Akili, which first confirmed that it was moving forward with an FDA submission for what was then known as Project: Evo back in 2017. The two-and-a-half years since came with relatively few updates from the company, with a couple of notable exceptions.

In January of 2019, Martucci drew a line in the sand separating Akili from the broader trend of digital therapeutics companies partnering with established pharmas to distribute their products. At the time, a representative confirmed that the company was working on "a very different type of commercial model than traditional pharma" for its ADHD therapeutic and following products. That work largely appears to have taken the form of the distribution and support resources available as part of the Endeavor Care Program.

When the company published its pivotal trial in The Lancet Digital Health journal earlier this year, Dr. Anil Jina, chief medical officer at Akili, noted that the company faced some difficulty building an appropriate control for its video-game-based treatment, which could have complicated EndeavorRx's case for efficacy. He also acknowledged some "timeline frustration" within the company as it awaited a final decision from the FDA, but still was sympathetic to the regulatory challenges of approving such a product.

The De Novo clearance is a feather in the cap for Akili, which was already recognized within the digital therapeutics space as a frontrunner in video game medical treatments, but it's not the only company combining biofeedback and games to drive behavioral health treatments.

Barcelona-based Braingaze announced plans to launch its ADHD therapy app in the Chinese market, while another company called ATENTIV has worked to test its ADHD intervention in Singapore and the U.S. Mightier, a Boston Children's Hospital spinout, has also pulled in money from investors for its biofeedback video games designed to help children with emotional regulation.