J&J LifeScan and WellDoc partner to integrate BlueStar software into OneTouch Verio Flex BGM and Reveal app; J&J also invests in WellDoc – March 2, 2016

As we reported yesterday, J&J/LifeScan and WellDoc announced a major partnership to integrate WellDoc’s FDA-approved BlueStar software for type 2 diabetes into LifeScan’s recently launched OneTouch Verio Flex Bluetooth-enabled BGM and paired Reveal app. In addition to the collaboration, J&J provided an investment (size not specified though our guess is that it wasn’t insignificant), completing WellDoc’s Series B financing round at a total of $29.5 million (up from $22 million in December). The investment is a major vote of confidence in WellDoc from an established diabetes player, and should help BlueStar scale nationally following a successful regional demonstration with a tiny sales force (see below). Integration paths are still under discussion, but we imagine a couple of options:

• App integration (two apps): Use the Flex’s built-in Bluetooth and Reveal app to automatically populate blood glucose fields in the BlueStar app, saving patients manual entry. In this setup, patients will need two apps. Both apps are currently available on Android and iOS.
• App integration (one app): Combine the BlueStar and Reveal apps, bringing the benefits of both platforms into a single tightly integrated app. We’re not sure how it would be branded or what the business model would look like.
• Meter integration: Build BlueStar software directly into a LifeScan BGM.

There is no timing to report, but we assume a launch in various phases will evolve over the next year. Discussions are ongoing regarding the regulatory path; presumably the side-by-side app integration won’t be too difficult, while a single integrated app or BGM will have FDA oversight.

This collaboration is outstanding news for WellDoc: more funding, the expertise and vote of confidence from a major diabetes player, and a distribution network to accelerate BlueStar’s national commercialization. As we noted in December, WellDoc hasn’t scaled BlueStar faster for three reasons: (i) It needed to gather real-world data and experience to iterate BlueStar and develop the operations model; (ii) the regional Mid-Atlantic launch taught WellDoc how to best approach physicians; and (iii) payer discussions have evolved over the past year. As of today, WellDoc has contacted almost 1,000 prescribers since BlueStar’s 2Q14 launch, and a striking 62% have written a prescription (up from 55% in December). The company has crossed the 10,000 prescriptions mark, notable for a digital health startup with a small sales force and a very different kind of therapy. We hope LifeScan can help take BlueStar’s launch to the next level. See highlights below from our discussion with WellDoc CEO Kevin McRaith, who characterized this partnership as “a home run” for the company.

J&J, who notably sent out its own press release to announce the deal (this is pretty rare, which also signals significance), also has a lot to gain from this partnership: (i) augmenting its Reveal app and Flex BGM with the clinically proven BlueStar software – instead of just displaying a number, BlueStar gives patients real-time feedback and education; (ii) setting itself apart from competitors selling just another meter (or just another connected meter); (iii) giving providers BlueStar’s powerful tools, including clinical decision support; (iv) getting WellDoc’s expertise on software, which is not a strength for the hardware-focused LifeScan; and (v) a clear path to reinvigorating the pipeline at a time of continued struggle in BGM.

More broadly, this news continues the trend of digital health and tech partnerships with established diabetes players – there have been a lot and some that come to mind include Dexcom/Verily (2015 - formerly known as Google Life Sciences formerly known as Google), Lilly/Companion Medical (2015), Medtronic/IBM Watson (2015), Medtronic/Samsung (2015), Samsung/Welldoc (2015), Merck/WellDoc (2014 via an investment), Novartis/Verily (2014 - see above), Novo Nordisk/IBM Watson (2015), and Sanofi/Verily (2015 -see above). In our interview last October, BCG’s partner in charge of digital health (and WellDoc’s former Chief Commercial Officer) Chris Bergstrom suggested that digital health is now at a “pivot point” in need of established pharma and medical device companies to take ideas to scale – this also raises the questions, of course, when will the established partnerships yield meaningful change, wide scale, and a thriving commercial environment. There is undoubtedly a lot going on behind the scenes and we are very excited to watch the landscape further unfold. Chris characterized the field’s first five years (2010-2015) as largely the “era of small companies with big ideas” (e.g., WellDoc!); the next five years (2015-2020) will be about more partnerships, acquisitions, and collaborations between small and large companies and what happens with those that have already been established.

Who will be next?

• Yesterday, we had a chance to speak to WellDoc CEO Kevin McRaith (who joined in April 2014 with a strong pharma and biotech background) – this was a fascinating conversation.
  
  • According to Mr. McRaith, the average BlueStar user has an A1c of 8.5%, with ~20% under 7.5%. An impressive one-third of all BlueStar users are above the age of 60, where WellDoc sees the highest engagement. Like Omada recently showed in its Medicare pilot with Humana, this counters the criticism that digital health is only for the young and tech savvy. It also maintains the metrics first shared last April when WellDoc was profiled in JAMA. Mr. McRaith emphasized WellDoc’s focus on continuing to evolve BlueStar to fit a diverse range of patients at different stages on the diabetes continuum and different ages. WellDoc is not pushing a particular patient type, as providers generally like to decide who to prescribe BlueStar to. We love that WellDoc is working to find the right kind of education, motivation, and guidance to be “sticky” regardless of user A1c – this is key for addressing type 2, and technology actually makes this level of customization possible.
  • WellDoc has iterated BlueStar aggressively; it’s a far different product from when the clinical trials were conducted years ago. This is of course a major advantage of software! Some of the latest feature adds to the app and web interface include: (i) more information on food – specifically carbohydrates – including recipes, a bar code scanner that displays nutrition facts of different foods, and a “Yelp-like” feature that allows users to pull up nearby menu items appropriate for people with diabetes; (ii) an updated user interface; and (iii) Fitbit, Misfit, and Jawbone activity tracker integration. Future potential adds include social features and gamification. Mr. McRaith said the goal is to make the product “as sticky as possible so attrition is as low as possible.”
  • Interest in working at WellDoc is huge – the company recently posted 15 new jobs and received a striking 900 resumes. Mr. McRaith said WellDoc’s focus is now on scaling – this funding should certainly help.
• We’re increasingly noticing a trend of down-featuring hardware and up-featuring apps – it’s a cost-effective approach to drive continuous user experience upgrades without requiring entirely new hardware. This strategy also means hardware is less expensive, dropping the startup cost. This is very evident with LifeScan’s Verio Flex BGM and Roche’s Accu-Chek Connect meters – the hardware is bare bones simple, and the apps can do a lot more. Insulet talked in 4Q15 about doing this going forward, and Dexcom and Medtronic are already moving in that direction in CGM. Most obviously, the phone offers more customization, a better user experience, passive data upload, easier product updates, and more. The one downside to this strategy is it may isolate some patients less interested in phone integration.
• Last week, J&J/LifeScan announced the US launch of its new Bluetooth-enabled OneTouch Verio Flex BGM and paired OneTouch Reveal app. The BGM is priced at just $19.99 and will be available online and in pharmacies across the US. Aside from Bluetooth connectivity, the Flex’s key feature is an arrow that points to a color and adds context to glucose readouts – blue for hypoglycemia, green for in-range, red for hyperglycemia. J&J has clearly prioritized low-cost, so the screen is not color; we assume this was a clever workaround to capture some of the advantages of color recognition without adding a costlier screen or rechargeable battery. Otherwise, the meter is pretty basic, with the main advantage being its low price and Bluetooth connectivity. The Flex replaces LifeScan’s former Bluetooth-connected OneTouch Verio Sync BGM, which has now been discontinued. The Reveal app now features Android compatibility and the iOS version posts data to Apple’s HealthKit.
• BlueStar is an FDA-cleared, prescription-only therapy software for type 2 diabetes, which WellDoc originally launched in June 2013. It works on data-enabled devices (e.g., iPhone, Android, web interface on desktops) and provides patients with real-time coaching, educational content, and motivational support based on inputted blood glucose and A1c levels, diet, exercise, and other information. It also offers clinical decision support for healthcare providers. We believe WellDoc’s BlueStar is a unique product with potential to: (i) give patients ongoing feedback and support; (ii) make providers lives easier and practices more productive; and (iii) scale to help many people with type 2 diabetes. Here are some of the reasons that set it apart from other digital health offerings:         
  
  • Medication management: WellDoc’s BlueStar is FDA-approved for all adults with type 2 diabetes, regardless of their medication/therapy regimen. The analytics engine educates patients about their medications and can suggest medication dosing changes to providers.
  • Proven efficacy and engagement (clinical trials and real world): Based on posters shared at DTM and ADA, real-world A1c reductions have been ~1%, maintaining the solid data from WellDoc’s published clinical trials. The two published two RCTs showed significant 1.2-1.4% reductions in A1c levels with WellDoc’s software – Quinn et al., Diabetes Care 2011 (1.9% in the WellDoc intervention group vs. 0.7% in the usual care group; p <0.001 over 12 months) and Quinn et al., DT&T 2008 (2% in the WellDoc group vs. 0.7% in the usual care group; p <0.02 over three months). WellDoc had an enthusiastic session at AADE 2015.
  • Value for patients: BlueStar is powered by the proprietary WellDoc Automated Expert Analytics System, which analyzes trends in users’ entered data (i.e., blood glucose and A1c levels, diet, exercise, blood pressure, lipids, and foot exams) and makes recommendations based on behavioral patterns. Everything is highly personalized from the initial setup, with feedback and messaging adapting over time – each patient’s BlueStar is completely different. The algorithms are derived from evidenced based guidelines and the R&D implementation is overseen by expert diabetes clinicians and behavioral scientists, and as we understand it, every single message maps directly to standards of care.
  • Value for providers: WellDoc has thought very strategically about minimizing the time providers will need to spend on BlueStar. There is no set-up required by a patient’s healthcare provider; all different forms of training are now available, and the majority are done through short videos within the product. HCPs can choose to just prescribe BlueStar like a drug, or they can also choose to use WellDoc’s clinical decision support. The clinical decision support aspect of BlueStar is intended to make HCPs’ work flow more efficient; in a quick glance of WellDoc’s SMARTVisit report, providers can understand what has been going on with a patient and make smarter treatment decisions, as well as, better achieve Quality Measures (an increasing part of physician’s performance payments). WellDoc has found that putting the analyzed data in the doctors’ hands makes them twice as likely to make treatment changes (e.g., getting patients to the right therapies and doses faster).
  • Reimbursement: BlueStar has an NDC code and launched with reimbursement similar to other prescription products (adjudicated as a pharmacy benefit; i.e., copays that vary by insurance plan). This is a major win for patients, a rarity in digital health, and a testament to WellDoc’s strong management team and focus on publishing solid clinical data. We understand that the FDA required the prescription-only distribution approach because BlueStar essentially helps patients adhere to their physician’s care and treatment plan – one could certainly imagine a scary scenario of a less controlled distribution scenario (e.g., open for download on the App store without the oversight and determination of medical necessity of a physician) would result in many patients using a product that might contradict his or her physician’s care plan.
  • A new class of therapy: Notably, ADA recognizes BlueStar on its website as the first and only in the new class of diabetes treatment known as “Mobile Prescription Therapy.”     

Close Concerns Questions

Q: What will the integration look like and when will it launch?

Q: How quickly can BlueStar scale? Could it reach hundreds of thousands or even a million patients in the next few years?

Q: How will the BlueStar business model change with this integration over time?

Q: Will patients need a prescription once the LifeScan and WellDoc products are more tightly integrated?

Q: Where can digital health add the most value to established diabetes pharma and device companies? What company(ies) are most in need of a digital health partnership?

Q: What will digital health in diabetes look like in five years? What fraction of patients are likely to use these tools? How much will payers and providers embrace them?

-- by Ava Runge, Adam Brown, and Kelly Close