Memorandum

Abbott and Omada Partner to Bring FreeStyle Libre CGM & Personalized Coaching to Type 2 Diabetes – October 14, 2019

Executive Highlights

  • Abbott and Omada jointly announced a major partnership today to bring FreeStyle Libre into Omada’s digital program for people with type 2 diabetes. The companies have developed a combined experience that includes an Omada app with FreeStyle Libre data flowing in; home delivery of FreeStyle Libre and a wireless weight scale; an online physician consultation and remote prescribing of FreeStyle Libre; personalized human (CDE) coaching; in-app digital education; and a peer group.

  • Omada will offer the integrated program through employers and health plans. People diagnosed with type 2 diabetes - both insulin and non-insulin-using - who have access to the Omada program will be eligible to participate. Pricing was not shared. We’re not sure if the real-time CGM wear is 24/7 or intermittent (e.g., quarterly). This is a key question from our view, as the cadence of wear affects behavior change and program costs - especially for those engaged in a longer term journey to lose weight.

  • Notably, FreeStyle Libre is now the exclusive CGM partner for Omada’s type 2 diabetes offering. No financial terms were shared. This parallels Dexcom’s exclusivity with Onduo’s connected care program for type 2.

  • For Abbott, this partnership gives it a proven connected care/coaching offering to drive FreeStyle Libre into type 2 diabetes. Omada is one of the longest-standing digital health players, with more than 275,000 participants enrolled to date – mostly via its original diabetes prevention offering although it announced a type 2 diabetes program formally in June 2018. This partnership should allow Abbott to: (i) develop new business models for CGM wear in type 2 diabetes; (ii) deploy FreeStyle Libre in an already successful coaching offering; (iii) add more value to standalone CGM via paired education, behavior change programming, and peer support groups; and (iv) combine CGM data with wirelessly collected weight and blood pressure data.

  • For Omada, a partnership with the world’s most used CGM (>1.5 million FreeStyle Libre users globally) is a major opportunity to improve and expand its relatively new type 2 diabetes management program. The latter was launched last June with a connected BGM and blood pressure cuff, but not much has been shared since. Depending on the number of members who qualify, Omada/Abbott’s program could quickly become the largest type 2 diabetes coaching program to utilize CGM data.

Partnership Rationale

Abbott gets…

Omada gets…

  • Exclusive CGM provider to Omada’s already successful, scalable digital program: >275,000 participants to date

  • Beautifully designed behavior change program from Omada – no need for Abbott to build this on its own

  • Adding lifestyle education, personalized coaching, and more context to FreeStyle Libre CGM data

  • Consumer-friendly offering – home delivery of FreeStyle Libre, remote prescription

  • New business model to offer FreeStyle Libre to people with type 2 diabetes, especially those not on insulin

  • Real-world data from Omada participants with more context – e.g., weight change, coach interactions, blood pressure

  • Assuming things go well, potential to expand FreeStyle Libre into prevention of type 2 diabetes

  • Builds on FreeStyle Libre Pro (blinded) type 2 diabetes partnership with Livongo in 2018

  • Very strong competitive offering vs. Onduo’s connected care efforts with Dexcom CGM

  • Its first (and exclusive) CGM partner, adding more value to its type 2 diabetes program over fingersticks

  • Opportunity to deliver stronger outcomes with CGM data – e.g., more behavior change potential in type 2 diabetes (e.g., CGM data around meals); more data for coaches to share advice; more help for patients in terms of optimizing therapy

  • Abbott’s payer relationships and reimbursement expertise – more payer/employer clients for Omada's program?

  • Strenghtens product offering vs. other connected care players (e.g., Livongo, Onduo, One Drop, Virta, etc.)

  • Potential to work with Abbott on co-branded FreeStyle Libre + Omada bundles

  • More comprehensive real-world data (with CGM) to continue improving the program – e.g., what distinguishes responders vs. non-responders?


Abbott and Omada have developed a “tailored experience” for Omada’s eligible type 2 participants – a picture of the combined app (see above) was included in the press release. Eligible participants will have an online physician consultation, receive a prescription for CGM, and have FreeStyle Libre and a connected weight scale mailed to them as part of a welcome kit – very similar to the welcome kit that Onduo offers. We are not sure how many people will be eligible for the program through employers and health plans, but Omada does have an impressive 275,000+ members across all its programs (mostly diabetes prevention – we do not know how many people are in its newer type 2 program). Data from FreeStyle Libre will be accessible to Omada’s CDE coaches through Omada’s app, flowing in from the separate FreeStyle LibreLink app (i.e., users will need to engage with two apps). Using CGM data, Omada’s CDEs will be able to provide recommendations through in-app chat. Users will also have in-app educational lessons, a peer support group (a nice differentiator), and an action plan – all already part of Omada’s diabetes management program and exciting value-add over standalone CGM data alone. Abbott SVP of Diabetes Care Mr. Jared Watkin was quoted in the press release, expressing excitement for “giving people with type 2 diabetes actionable information that leads to better health.”

  • We have not heard much about Omada’s type 2 diabetes management program, which launched a little over one year ago with a connected BGM and blood pressure cuff. We’re not sure how the pricing compares to the diabetes prevention offering. In its diabetes prevention program, Omada places 100% of its fees at-risk, based on participation and participants achieving targets; employers are charged on a per-month basis. The company has seen rapid growth – adding over 125,000 enrolled since last June – and raised $73 million in Series D financing in July. Omada has the largest digitally-delivered Diabetes Prevention Program (DPP) in the US.

  • CGM’s effectiveness in type 1 diabetes is beyond question, though progress in type 2 diabetes is still early. With today’s partnership, Abbott has a terrific opportunity to deploy CGM in a digitally-enabled behavior change program for type 2 diabetes - particularly in non-insulin users. Getting real-time CGM to people with type 2 has enormous potential to drive more engagement and better outcomes over infrequent fingersticks or A1c without CGM. Plus, having CGM remotely prescribed and delivered to patients’ doorsteps in an integrated product seems like a highly scalable and very consumer-friendly approach. We are reminded of Helmsley, Jaeb, and Cecelia Health’s “Geek Squad” pilot study of a virtual clinic to get patients started on CGM, which has shown promising early results (n=36); a bigger study of 200-300 people across 5+ states is planned for late 2019/early 2020.

Competitive Implications

For Abbott, the partnership with Omada brings a strong digital health/coaching offering to leverage FreeStyle Libre data in type 2 diabetes. Omada has proven itself over many years –in terms of compelling, user-centered design, prevention outcomes, business model, scalability, fundraising – and the addition of FreeStyle Libre should enhance its programming. Last year, Abbott announced a partnership with Livongo to bring FreeStyle Libre Pro to eligible Livongo members at select on-site clinics, though we have heard nothing on this since the announcement. (Livongo’s website does show someone wearing FreeStyle Libre.) People with diagnosed type 2 diabetes are of course a huge potential market for CGM (>20 million diagnosed in the US), though the business model remains a big question here – what is the right frequency of wear to balance better outcomes vs. additional cost? Omada’s program will be a convenient place for Abbott to (i) develop new models of wear and business cases for people with type 2 diabetes; (ii) to add digital education and coaching based on CGM data; and (iii) to gather real-world outcomes data to help expand coverage of CGM in type 2 diabetes. The partnership presumably opens up potential for Abbott and Omada to develop co-branded CGM and coaching bundles.

  • Abbott already has a strong presence in the retail pharmacy channel, and this CGM/coaching “bundle-in-a-box” offers a channel to reach more type 2 consumers through employers and health plans. BGM-coaching bundles are of course not new – Livongo, mySugr, One Drop, DarioHealth have had these for a while – though movement in CGM has been slower. Dexcom has a primary play in connected care and coaching for type 2 diabetes through Onduo, where it is the exclusive CGM partner as of last November; to date, Onduo has used a connected BGM (Telcare) and selectively offered real-time CGM “sprints” to eligible members. That said, Onduo is still fairly early in its commercial trajectory, and we expect Abbott and Omada could very quickly reach far more consumers. Dexcom’s G6 Pro (fully disposable) was FDA cleared last week and would be a nice offering for the Onduo program, once it launches in 2020. Medtronic’s CGM offering for type 2 diabetes has mostly focused on professional CGM (blinded), which could see an uptick in Europe via the new Envision Pro offering; however, Envision Pro is still blinded-only, offering less behavior change potential.

  • For Omada, a partnership with the world’s most popular (>1.5 million FreeStyle Libre users globally) is a major opportunity to improve and expand its diabetes management program. Depending on the number of members who qualify, Omada’s program could quickly become the largest digital health/coaching program to utilize CGM data. FreeStyle Libre data could enable Omada to deliver improved glycemic, cost, and client/patient satisfaction outcomes and reach more of the underpenetrated type 2 diabetes market. If Omada will handle CGM prescriptions here, that could be a first step towards Omada becoming a curator for an assortment of devices, therapies, and services, as it means that the company is now willing and prepared to interact with HCPs to orchestrate prescribing activity. Omada could also eventually build an internal team of doctors to prescribe tools and therapies absent traditional healthcare routes (i.e., similar to Virta’s approach to type 2 diabetes).

Close Concerns Questions

Q: How many people with type 2 diabetes will actually be able to receive FreeStyle Libre via Omada's program? Could it eventually extend to people with prediabetes?

Q: How much will FreeStyle Libre data enhance Omada’s outcomes? How much will Omada enhance type 2 diabetes outcomes over FreeStyle Libre alone? Will CGM become a weight loss tool over time? Will real-time FreeStyle Libre data boost engagement in Omada over fingersticks?

Q: What is the length of the deal? What are the financial terms? Who pays whom? What were the terms behind FreeStyle Libre exclusivity? 

Q: How many participants has Omada treated through its type 2 diabetes management program launched in June 2018? Did it notice many users wearing FreeStyle Libre?

Q: How will Omada’s CDEs utilize data from FreeStyle Libre? How often will they look at the data? What sorts of education will be available for patients to: (i) understand and interpret their data (e.g., time-in-range, highs, lows, GMI); (ii) to run personal experiments (e.g., eating different meals and foods and observing the impact); and (iii) creating lasting behavior changes? Will users be able to take photos of meals and pair that data with CGM traces? 

Q: How will this change pricing (if at all) for Omada’s employer and health plan clients? How will pricing of the Omada/Abbott FreeStyle Libre offering compare to Onduo (Sanofi/Verily/Dexcom), Livongo, One Drop, and Virta’s connected care offerings?

Q: Will Omada build a team of in-house HCPs for prescribing CGM? To what extent will this resemble Onduo and Virta?

Q: What is the status of Abbott’s partnership with Livongo to use FreeStyle Libre Pro in Livongo for Diabetes members (announced in 2018)?

 

--by Albert Cai, Adam Brown, and Kelly Close