MEDTECH 3: DIGITAL THERAPEUTICS

“It’s easy to build a consumer-facing app that doesn’t connect to a hospital system. There is a great need in the hospital environment.”
Naomi Fried, Chief Innovation Officer, Boston Children’s Hospital

OVERVIEW:

The scientific field of digital therapeutics involves using digital/online health technologies to treat an existing medical condition. Wholly digital technologies are highly scalable compared to physical devices or drugs, which means greater accessibility, a potentially larger target market and lower costs associated with expansion.

Today we will be discussing ‘Digital Therapeutics,’ founded in 2015 by a group of Imperial College medical students.

Enjoy!

 

PROBLEM AND SOLUTION:

Smoking is the leading cause of preventable death in the United Kingdom. Around 15-17% of the population are cigarette smokers, and in addition to the well-known links to lung cancer and respiratory disease, smoking has also been linked to mental health problems, dementia and reproductive failure. Smoking is responsible for 19% of UK deaths and carries a direct cost to the NHS of £5.2bn.

68-70% of smokers want to quit, but suffer from addiction; compulsive drug seeking and use, despite the harmful consequences of drug taking.

One of the key treatments is Cognitive Behavioural Therapy or CBT. CBT involves targeting ‘unhelpful thoughts, behaviours and emotions‘ and is the gold standard treatment for most Mental Health conditions, including eating disorders, gambling and depression.

However, there is currently a significant shortage of CBT therapists and funding, with NHS waiting list times ranging from 6 months to 2 years in some areas. The NHS’ own smoking cessation service provides behavioural support to only 5.8% of smokers looking to quit.

Quit Genius, an app launched by Digital Therapeutics in January 2017, offers personalised CBT in a ‘gamified’ format, providing a low-cost solution for smokers. Here is a short video describing how it works.

THE SCIENCE:

There are many theories of addiction, with one of the more popular theories being the ‘opponent process theory;’ namely, homeostatic mechanisms counter the pleasurable effects of drug taking, with increased intensity and duration of the negative processes over time, combined with an increased tolerance. CBT helps to alleviate the negative brain processes to reduce addiction and help individuals develop coping strategies to deal with negative feelings.

Science geeks only:

Like all drugs of abuse, nicotine activates the brain reward system, by causing dopamine release at Nicotinic Ach receptors in the brain. Abstinence from dopamine-releasing drugs can result in withdrawal symptoms, including flu-like symptoms, increased pain sensitivity, irritability and insomnia, and withdrawal symptoms, or cravings, are a key obstacle to smoking cessation.

Gamification involves the use of rewards for people who accomplish desired tasks/competition to engage players, such as in-game monies which act as a prize for certain periods of abstinence, that can be spent in an in-game store. Activation of the brain reward system by ‘gamified’ apps may help to offset the dopamine withdrawal in the brain, which promotes the continued use of the application and reduces negative withdrawal symptoms!

A review by Stanford University found that CBT led to a 45% abstinence rate after 20 weeks, compared to a 29% abstinence rate for non-CBT participants, who received either medication or 24-hour phone support.
However, questions remain over the effectiveness of therapies when not delivered with a ‘human touch.’ A positive relationship with a therapist is believed to be one of the most causes of therapy based improvement. Although some studies have shown promising results, there is a universal acknowledgement that more studies are needed to assess the efficacy of online CBT against personal CBT.

 

 

MARKET AND COMPETITORS: 

On the Google Play Store, Quit Genius has been downloaded more than 10,000 times and has been given a 5-star rating by 170/211, or 81% of reviewers.
There are a number of popular smoking cessation support apps already available:

  1. QuitNow: Over 1 million downloads, with 60% 5-star ratings.
  2. Smoke Free: Over 1 million downloads, with 72% 5-star ratings
  3. Quit Tracker: Over 500 thousand downloads, with 65% 5-star ratings.

Quit Genius has a higher percentage of 5-star ratings than any other major smoking cessation app on the market. Furthermore, the vast majority of complaints on the Quit Genius page are due to technical faults, which is to be somewhat expected with a relatively new application, compared to product based complaints with the bigger apps.

We can suggest that these results are due to a superior offering, with the other apps acting as a ‘tracker’ or ‘motivator’ rather than offering a staged CBT programme.

However, by merit of having a greater number of downloads, the larger apps will be more visible for customers perusing smoking cessation apps on the app store. With adequate customer satisfaction and retention, Quit Genius needs to invest heavily in publicity and branding to attract new customers. 

 

BUSINESS MODEL/ FINANCING:

The real problem facing Digital Therapeutics is how it converts its’ superior product into higher uptake. Like many other observable phenomena, app downloads follow a Pareto distribution; 10% of apps are responsible for more than 90% of downloads. To break into the top bracket, you need a winning combination of publicity, engagement and luck; there is no secret recipe for a successful app.

Revenues are limited. The app is currently free, and rather than compromising the user experience with advertisements, the Digital Therapeutics team will be moving to a paid subscription model, and plan to sell to individuals as well as business customers. There are two immediate challenges with this model:

  1. App uptake may decrease as consumers may prefer free apps.
  2. Employees may resent their employer making lifestyle choices on their behalf. 

Investors are naturally risk-averse, which may be one of the reasons why the only investment that Quit Genius has had so far is non-equity assistance from the ‘Pitch @ Palace’ accelerator programme. Given the need for investment in publicity to increase app uptake, more equity may be issued in future.

 

DRIVERS OF GROWTH: 

  1. Compelling visuals and user experience: The app looks great and is easy to use and navigate.
  2. Evidence-based superiority: The app provides a more effective smoking cessation therapy than competitors.

 

INHIBITORS OF GROWTH:

  1. Market saturation: There are predicted to be 5 million apps on the app store by 2020, with thousands of smoking cessation apps already available. Consumers are spoilt for choice.
  2. Limited virality: The most successful apps are those that encourage individuals to invite others to use the service. Quit Genius offers a tailored personal journey, with no incentives to invite others onto the app, meaning slow growth in user number.
  3. Funding limits: A balance needs to be found between the cash-hungry requirements of PR and Marketing, and getting capital at a good price from investors.
  4. Co-morbidities: Smoking cessation techniques have been shown to be less effective in people with co-morbid conditions e.g. psychiatric disorders, substance use disorders. Quit Genius’ personalised plan does not cater specifically for these groups, so its’ use is somewhat limited here.

 

ISAAC’S INTUITION:

The gamified CBT pioneered by Quit Genius is an excellent example of a therapy shown by studies to be superior to existing therapies, but one which faces significant challenges becoming a commercial success. 

Quit Genius will fare better if it can work in collaboration with organised healthcare bodies, such as local Clinical Commissioning Groups, rather than trying to grow an independent app on the app store.

Nonetheless, gamified CBT and delivery via digital vehicles is an exciting development in Mental Health treatment. The Digital Therapeutics team are in an excellent position to use this technology for the treatment of other conditions, so this company is certainly one to watch for the future.

SUMMARY:

Concept: ★★★★

Company finances: ★★

Competitive advantage: ★★

Final investor rating: ★★★

 

This article will be the last lengthy post on 60-second start-up. These first 3 posts were designed to give an insight into the thought processes underlying investment and Venture Capital.

In future, we will be posting shorter articles every working day, covering a number of different sectors!

 

Further Reading:

A longitudinal study on smoking cessation, done by the Digital Therapeutics team

A 2008 pro-con analysis of CBT in the British Journal of Psychiatry

A 2016 systematic review of Internet-based interventions in the JMIR Mental Health

Digital Therapeutics video pitch

Quit Genius in the news

 

Disclaimer:
1) This blog has been created using public information about DIGITAL THERAPEUTICS.
2) This is an opinion piece intended only for educational purposes, not as professional investment advice.
3) I can declare no conflicts of interest in the publication of this article.

If you enjoyed this article, please comment and share!

 

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