SoftBank, Temasek and other top investment institutions have developed the world's first DIGITAL THERAPY product approved by the FDA, and one of the earliest explorers in the field of digital therapy... Recently, Pear Therapeutics (hereinafter referred to as Pear), a digital therapy with many halos on the head, released its first performance report after listing.
In December 2021, Pear completed the merger with SPAC company Thimble Point and officially landed on the NASDAQ. In its first annual report, Pear disclosed that in 2021, the company's sales revenue of prescription digital therapy (PDT) products increased 24 times, mainly from the increase in bulk sales of reSET and reSET-O products, which were the first two products approved by Pear to be approved by the FDA.
If you look directly at the scale of revenue, in 2021, Pear's product revenue is only $3.748 million, and the total revenue is $4.208 million, which is still quite small. But in any case, the sales growth rate verifies the commercial value of the product to a certain extent, and at the same time, Pear has 14 products in the research and development stage, which have become the driving force for subsequent growth.
Since 2021, digital therapy has developed in full swing in China, and Pear's performance growth path may also bring reference to domestic companies.
Revenue from product sales soared 24 times
Pear has three products approved and marketed by the FDA: reSET for substance use disorder, reSET-O for opioid use disorder, and Sommryst for chronic insomnia treatment.
Pear has three digital therapy products on the market, image source: Pear official website
According to the annual report, the sales revenue of the three products in 2021 was $3.748 million, an increase of 24 times from $149,000 in 2020. Among them, reSET and reSET-O products contributed the main part of Pear's revenue growth; Somryst was approved for listing in March 2020 and only began commercialization in the fourth quarter of 2020, with a small growth contribution.
patient-side interface of reSET-O, image source: Pear official website
Until 2021, Pear's revenue will come primarily from collaborative research, development and commercialization agreements. Over the past year, Pear has engaged in intensive commercial collaborations to promote PDT.
In April 2021, Pear partnered with Northwell Health, a large healthcare group. Northwell Health will offer reSET and reSET-O to patients through its Zucker Hillside Hospital's substance abuse treatment program. Under the influence of COVID-19, Northwell Health accelerated the shift from traditional outpatient treatment to telemedicine mode, and in order to improve the quality of service, Northwell Health decided to incorporate digital therapy into it, and also hoped to improve treatment retention through digital therapy.
Caesar is also one of Pear's collaborators, and in 2021, the Kaiser Washington Institute for Health launched a study to evaluate different approaches to implementing reSET and reSET-O in daily primary care practice. The project will also assess the effectiveness and sustainability of caesar washington primary care clinics' implementation strategies on both the physician and patient sides as they apply digital therapy.
By the end of 2021, Several large addiction health systems, medical groups, and medical research centers have deployed Pear's PDT, including ChristianaCare, Crossroads, M Health Fairview, etc. in addition to Northwell Health and Caesars.
At the same time, Pear has also accelerated coverage of organizations such as PBM, Medicare, and Medicaid to rapidly expand product coverage.
In 2021, Pear partnered with PBM company Service You Rx, and three products, Reset, Reset-O and Sommryst, were added to Service You Rx's prescription set as members' pharmacy benefits management.
In terms of government programs, the Ohio Department of Mental Health and Addiction Services provides reSET and reSET-O to eligible patients through the Opioid Response Grant, and patients receive services at the time of outpatient treatment. In 2021, Massachusetts also became the first state to include all Medicaid recipients in PDT coverage; reSET and reSET-O have been added to MassHealth's list of non-pharmaceutical products, effective November 1, 2021.
Thereafter, in January 2022, the Oklahoma Health Care Administration also reached an agreement with Pear to provide reSET and reSET-O to patients enrolled in Oklahoma Medicaid.
Currently, more than 30 organizations offer Pear's PDT products to patients through formularies, underwritten benefits, or bulk purchases.
In response to the operational results achieved in 2021, Corey McCann, president and CEO of Pear, has said that 2021 is a turning point for both Pear and the entire PDT field; because Pear has gradually proven through practice: the service provider is willing to prescribe PDT, the patient can accept the PDT, the payer is willing to pay for it, and in 2021, Pear has made a breakthrough in all three aspects.
How to implement a commercialization strategy?
As a company that combines digital technology and drug discovery attributes, Pear's commercialization strategy also seeks to combine the commercialization methods of technology companies and life science companies. Pear has now built two commercialization models: one is to refer to the commercialization path of life science companies, take a sales-oriented approach, and use key account management to expand IDNs, health systems, teaching hospitals, and large addiction clinics; the other is the commercialization path of reference technology companies, using virtual care platforms to directly interact with clinicians and patients.
At the same time, Pear's PDT integration platform can collect data during patient treatment, bringing value to stakeholders such as clinicians and payers. On the one hand, clinicians can provide patients with treatment methods outside of the usual outpatient clinic to improve patient compliance. Payers, on the other hand, can use Pear's data collection and analysis capabilities to better understand PDT and use them to improve treatment outcomes and reduce healthcare costs.
Specifically, Pear implements a commercialization strategy through the following four main areas.
First, invest more to build awareness of PDT among patients, clinicians, and payers
As a pioneer in PDT, Pear has the need and responsibility to educate early on the market, including key players such as patients, clinicians, and payers. To that end, Pear has built sales, marketing, patient and clinician services and medical affairs teams.
Pear's sales, general and administrative expenses were $67.6 million in 2021, an increase of $11.4 million from 2020. Of the increase expenses, $5.3 million was labor costs from expanding the commercialization team and $5 million was marketing and advertising costs. It can be seen that Pear has made great investment in the formation of commercialization teams and market education.
According to the annual report, Pear has trained more than 690 clinicians and prescribed more than 14,000 prescriptions in 2021. Since the first PDT product went on the market, Pear has had more than 700 clinicians in 32 states prescribe more than 20,000 reSET and reSET-O prescriptions.
It is understood that more than 20 million people in the United States suffer from substance addiction, about 1.6 million people suffer from opioid disorders each year, and more than 75,000 people die of opioid disorders every year, and chronic insomnia affects about 30 million Americans.
Judging by the size of the patient population targeted by the three PDT products, Pear's prescription volume is not high, and the number of doctors currently affected is also limited. However, compared with the overall prescription volume, the prescription volume in 2021 has made a leap forward, which also shows that Pear has begun to establish an influence on the doctor side. In the future, as the commercialization process advances, doctors who have already gained something in the use of PDT will affect more patients and other doctors.
Second, further verify the clinical value to attract more payers
There is a set of data in the annual report that deserves attention: most of Pear's product revenue comes from bulk purchases from three customers, accounting for 34%, 23%, and 10% of the total revenue, respectively, and the three major customers are state governments or agencies. That is to say, commercial insurance, which dominates the U.S. medical payment system, has not yet become the main payer of Pear, which will be the focus of Pear's breakthrough.
The payer is willing to pay for a new treatment because it has better treatment results and reduces medical costs. Pear also faces two major challenges:
First, both reSET and reSET-O are adjunctive therapies and must be used in conjunction with conventional treatment, which also means that the direct medical cost is the total cost of conventional treatment plus PDT, which is equivalent to an increase in conventional treatment. To prove the value of PDT, it is necessary to demonstrate a reduction in healthcare costs on a larger scale.
Second, PDT is different from drugs, the treatment process may be interfered with by many external factors, and clinical trials are carried out under certain conditions and in a limited population. In the real world, in the face of various uncertain and potentially interfering factors, can the therapeutic effect of clinical trials still be obtained? Or is it possible to produce consistent results when used in a wide range of patients? These issues have yet to be studied, and they are not just the problems that Pear is trying to solve, but also the problems that the entire PDT industry needs to pay attention to.
Faced with the challenge, Pear must further demonstrate the hygienic economic value of PDT and conduct ongoing real-world research to provide evidence on the durability of beneficial clinical effects and scalability in people who use it at scale.
As a result, in 2021, Pear published 4 papers based on real-world research.
Pear's research based on PDT real-world research, source: Pear and the official website of the academic journal
These papers demonstrate the safety, efficacy and hygienic economic value of PDT product reSET-O from different dimensions. For example, conventional treatment plus reSET-O is less costly and more effective than conventional treatment alone. Among patients using reSET-O (at least 1 week of use), the medical cost per patient decreased by $2385 over 6 months, while in patients who did not comply with or continued to use reSET-O after week 1, the cost of care per person increased by $353.8 over the same time period.
ReSET-O has a single prescription treatment cycle of 12 weeks, and Pear also looked at continued treatment with reSET-O. That is, in patients for a period of 24 weeks, 94.4% achieved withdrawal response rates at least 80% of treatment weeks; the treatment retention rate at 24 weeks was 91.4%, significantly higher than other addiction therapies. There was also an additional reduction in patient utilization of healthcare at 24 weeks.
In May 2021, Pear also released two analytical data. One of the studies estimated the expected impact of reSET-O on the market over a five-year period, based on payers' healthcare resource utilization data, retreatment rates, and cost scenarios. The analysis shows that the use of reSET-O reduces the total cost of healthcare and will be further reduced as utilization increases.
Another study that used machine learning to analyze real-world patient data showed a 60% drop in emergency and inpatient visits for patients using reSET-O, with an estimated $1749-2654 reduction in medical costs over a 6-month period compared to patients who did not use reSET-O.
Happily, in February 2022, PDT's payment ushered in an important breakthrough. The Centers for Medicare and Medicaid Services (CMS) established a new secondary HCPCS code to describe PDT, which went into effect April 1. There is often a lot of uncertainty about the coverage and reimbursement of new approved products, and cmS is a key decision maker for new product reimbursement, which can determine whether or to what extent a new product is covered and reimbursed by Medicare, and commercial insurance usually tends to refer to CMS.
As a result, cmS's new code is a milestone for healthcare providers, payers, and patients, marking another step in insurance and payment standards in the PDT space.
With active proof of product value internally and supported by external favorable conditions, Pear's process of attracting payers is expected to accelerate.
Third, improve the infrastructure and improve the convenience of doctors and patients
In order to make it easier for doctors and patients to use, Pear launched pearconnect, a patient service platform, becoming a one-stop service platform for PDT. PearConnect consists of four parts, including the PDT used by patients, the Pear MD clinician interface, an end-to-end patient service center, and a data analysis system that integrates patient engagement, adherence, and clinical outcome data.
Among them, clinicians can view and understand the progress of patient participation in PDT through Pear MD, and collect and analyze clinical results. The service center provides support to patients who have already received a PDT prescription, including information and technical support using the PDT and virtual care platform. Data analytics systems collect and analyze patient engagement, adherence, and clinical outcome data to generate insights for clinicians to reference and will also be used to develop personalized PDTs.
Although the use of PDT can be carried out remotely, it requires a doctor to prescribe, which is equivalent to adding a necessary process for doctors and patients, becoming one of the restrictions on the scale of use. As a result, Pear began experimenting with direct patient interactions through a virtual care platform that allowed patients to get a prescription without having to go to their doctor.
In April 2022, Pear announced plans to provide PDT to patients through telemedicine services. Pear's first telemedicine project was a partnership with PureCare, a telemedicine addiction treatment service provider, to provide patients with continuous addiction rehabilitation care. In partnership, PursueCare provides medication-assisted therapy (MAT), consulting services, drug delivery, home screening and targeted case management. Pear and PureCare's offerings are now available in specific markets in PureCare's 12 states and are planned to expand to other states.
These initiatives will make it easier for patients to access prescriptions and follow-up services, and will also make doctors more accessible, which will help expand PDT coverage.
Fourth, it hosts third-party PDT products and has platform service functions
In addition to its own products, Pear also hopes to include more PDT products from other companies in the Pear MD clinician interface and other infrastructure facilities. This could also lead to more PDT options for patients, giving more patients access to safe and effective digital therapies. In the past, Pear has accumulated experience in regulatory review processes, built a scalable platform, and laid the foundation for hosting more than 100 additional PDT products.
How to achieve 4 times performance growth in the new year?
Based on the performance base, commercialization channel construction and product layout in 2021, Pear proposed a performance target for 2022: to achieve revenue of $22 million and the number of prescriptions reached 50,000-60,000 times. Compared with 2021, the equivalent of total revenue needs to increase by 4 times.
Pear's 2022 key performance indicators, image source: Pear's official website
Pear's marketed products have a limited range of indications, limited patient groups, and market education is still ongoing, and there should be a certain gap between them and achieving performance goals. In 2022, in addition to strengthening various commercialization strategies, Pear also needs to accelerate the breakthrough of subsequent products.
At present, Pear has 14 products in the research and development stage, covering the field of alcohol addiction, schizophrenia, anxiety, depression, bipolar disorder, post-traumatic stress disorder, acute and chronic pain, migraine, multiple sclerosis, epilepsy in the field of neurological diseases, and also layout the field of irritable bowel syndrome, tumors and cardiovascular diseases.
It can be seen that Pear has already considered in advance in expanding the coverage of diseases and patients. At the same time, a series of recent developments in Pear can also be seen that the company is speeding up the process of launching new products.
Pear's product pipeline in the research and development stage, image source: Pear official website
In November 2021, Pear's reSET-A for the treatment of alcohol use disorder (AUD) received FDA Breakthrough Device Designation, the second Breakthrough Device Designation Pear has received after reSET-O.
According to FDA regulations, breakthrough devices need to have two key conditions: they can help diagnose or treat life-threatening or exhaustive diseases more effectively, and the devices use breakthrough technologies that do not yet have an approved alternative product, or have a significant advantage over approved replacement products. Products that have obtained breakthrough device certification can be reviewed on a priority basis.
Alcohol is one of the abuses in the United States. AUD is a clinical diagnosis of alcoholism or alcohol addiction, which can bring adverse social, occupational and health consequences, but certain control or cessation of alcohol use will cause physical function damage. Surveys show that in 2019, about 14 million adults in the United States had AUD, and less than one in ten people with 12-month-old AUD received treatment.
An estimated 95,000 people die each year from alcohol-related factors, making alcohol the third leading preventable cause of death in the United States. Treatment options for AUD patients are few, with less than 2% of AUD patients receiving AUD medication, and there are no FDA-approved medical devices or digital therapy products specifically targeted at AUD patients in the United States.
Obtaining breakthrough device recognition lays the foundation for faster approval of reSET-A in the future.
In December 2021, Pear added two depression treatment products through acquisitions and licensing. One product provides patients with cognitive behavioral therapy (CBT) through standardized symptom assessment, video, interactive tools, and algorithms to treat depression of varying severity; the other treats residual symptoms of depression as a treatment for recurrent depression through a combination of modules such as behavioral activation, cognitive reorganization, sleep and relaxation, mindfulness, physical activity, anxiety reduction, and long-term goal setting. Currently, preliminary clinical findings have been released for both products, but have not yet been submitted to the FDA.
Pear intends to use these two new assets to expand its depression candidate to treat mild, moderate, severe, and refractory depression.
Chris Guiffre, Pear's chief financial officer and chief operating officer, said meeting the 2022 performance target would allow Pear to better invest in reSET-A for the treatment of AUD, as well as two new products in the area of depression. Chris Guiffre believes that the market potential of these two indications is large and can be synergistic with existing products in the current spiritual field.
Will Pear be able to maintain rapid growth and achieve its goals in 2022? In the coming months, let's keep an eye on more of Pear's developments.
What inspiration did digital therapy gain in China?
Similar to the United States, digital therapy is also mushrooming in China. Especially since 2021, more and more investment institutions and innovative companies have paid attention to digital therapy and participated in it. According to the "China Digital Therapy White Paper 2.0" released by the Eggshell Research Institute of Arterial Network, as of September 2021, there are 73 digital therapy companies in China, including enterprises that have not yet obtained medical device registration certificates. According to the first-level indications, these companies have also covered popular areas such as mental illness and neurological disorders.
The difference is that domestic digital therapy started later, and product research and development, landing application, payment and other links are in the initial exploration. Therefore, pear's rapid development can bring some enlightenment to domestic enterprises.
First, prescription or over-the-counter positioning needs to be clarified, which involves different commercialization strategies and payers. At present, there is no special approval policy for domestic digital therapy, but it is carried out in accordance with the corresponding approval rules of medical software. Therefore, at the policy level, there is currently no strict division between prescription and over-the-counter. However, companies still need to position the development direction of their own products.
If the product is positioned according to prescription digital therapy, then the company needs to focus on reaching medical institutions and doctors to influence doctors' decisions. If the product is positioned according to over-the-counter digital therapies, it is not only necessary to reach the doctor, but also to influence the patient's decision-making. For such products, patients may become the main force of payment, but medical institutions, other social health institutions, large enterprises, etc., as long as there is a corresponding demand, may become the payer.
From the perspective of the current digital therapy environment in China, it is more suitable to start from over-the-counter digital therapy, wait for its effectiveness to be better verified, establish a broader willingness to pay, and then gradually transition to prescription digital therapy. For prescription digital therapy, there will be a stronger ability to pay, and the purchase of larger scale medical insurance and commercial insurance will have the motivation to pay.
Secondly, it pays great attention to the research and verification of product safety and effectiveness. Digital therapy is fundamentally different from chronic disease management and health management because of a "cure" word. The former requires more rigorous data to illustrate the effect of treatment. In addition to the clinical trial data required for approval, long-term data for practical applications are also significant. Whether it is for the payer, the patient, or the doctor, the effect data is worth paying attention to.
It should be noted that the effect data is not the data unilaterally released by the enterprise and may have been packaged, but is retrospectively analyzed through rigorous academic research and displayed through authoritative channels such as academic journals and academic conferences.
Finally, in the face of the current boom in the development of digital therapy, there are also some voices that believe that its conceptual value is greater than the application value, and there is no optimism about the development prospects. Although there is no perfect digital therapy development environment in China, any physical evolution is not achieved overnight.
For example, in 2022, Hainan Province will include "exploring digital therapy pilot" as one of the main tasks of its "14th Five-Year Plan" digital health development, which is the first time that digital therapy has been included in the provincial planning and a positive signal sent by the policy to the industry. Therefore, the rational voice of the industry must be there, but the determination to actively explore and innovate cannot be reduced.
*Cover image source: 123rf