Digital therapeutics startup Dthera Sciences was sunk by Alzheimer's drug failures, CMS reimbursement limitations

Former CEO Ed Cox tells the story of Dthera Sciences and outlines how the digital therapeutics landscape has shifted since his company's heyday.
By Dave Muoio
03:04 pm
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Nerve cells affected by Alzheimer's disease

(Photo by Sebastian Kaulitzki/Getty Images)

Those keeping an eye on the digital therapeutics industry over the last several years likely remember the name Dthera Sciences.

The startup and its CEO Ed Cox became one of the developing space's many standard bearers around 2018. During that timeframe it landed a Breakthrough Device designation from the FDA for its Alzheimer's symptoms treatment, with Cox chairing a handful of industry networking events through the following months.

But despite the regulatory win and initial interest from potential partners, Dthera's momentum petered out in the following years.

Cox – now EVP of strategic alliances and global head of digital medicine at Eversana – told MobiHealthNews that limited CMS reimbursement and numerous candidate-drug failures among potential partners cut off Dthera's commercialization plans. After failing to secure a substantive licensing or acquisition deal, Dthera wound down its operations in 2019. It had raised about $5 million in total funding over the course of five years.

"I am obviously very disappointed that Dthera wasn’t able to bring the product to patients," Cox (who also spoke about the company's roadblocks last month on a Digital Health Today podcast) told MobiHealthNews. "So many people over the five-year journey contributed to it because they were passionate about the mission and the impact it could have.

"However, I think Dthera also left an important mark on our very young sector. Dthera was the first to do many things and for many people [and] was the first digital therapeutic they were exposed to, so I think there’s a lot to be proud of as well." 

From family memories to the FDA's fast track

Dthera Sciences began its life as EveryStory. Founded in 2014 by eventual CTO David Keene, who's now CEO of IntroSpect Digital Therapeutics, it focused on collecting multimedia to build and share family stories.

In late 2016, EveryStory decided to exclusively pursue an Alzheimer's use case that was among the company's three initial verticals, Cox (who had joined in 2015) said. To do so, it merged with and rebranded as Dthera Sciences, while also becoming a publicly traded company on the OTC financial market.

That use case was DTHR-ALZ, a digital therapeutic looking to curb agitation and depression among Alzheimer's patients through an established approach called Reminiscence Therapy. It used a custom-built tablet to replay memorable photos and voice clips (collected from family members) via an automated chatbot.

A forward-facing camera would monitor the patient as they watched the content, allowing a biofeedback artificial intelligence system to adjust the on-screen content and manage the patient's emotions.

"Reminiscence Therapy has been around for many years and is very well accepted … In fact, the Alzheimer’s Association writes that it’s one of the leading ways to combat the symptoms of Alzheimer’s,” Cox told MobiHealthNews back in 2018.

“It’s very effective, and trial after trial has shown it to be something that makes a difference. The problem is that it’s very labor intensive. It’s not repeatable, and it’s not scalable. So we at Dthera, our goal is to bring reminiscence therapy to Alzheimer’s patients and their families using digital technology, and deliver it at scale.”

After roughly four years of development, Dthera took its product to the FDA with a docket that included published studies on standard reminiscent therapy, a proof-of-concept trial of DTHR-ALZ with the University of California San Diego, early user feedback and internal observations.

In 2018, DTHR-ALZ wasn't the first digital therapeutic product to receive the FDA's Breakthrough Device designation. That distinction went to Pear Therapeutic's reSET-O, in 2017, for use with buprenorphine opioid replacement therapy. However, DTHR-ALZ's designation marked the first time the agency had granted the status to a digital therapeutic monotherapy, to Cox and Dthera's knowledge, and seemed to open the door to continued development and deployment.

“For us, we have every reason to believe that this will be successful,” Cox said at the time. “What we want to do is work closely with the FDA to guide a product that can consistently, repeatedly and, importantly, proven in a clinical trial, bring these patients back from the edge.”

Reimbursement and partnership setbacks run out the clock

As many in the digital health space already know, developing a health tech product and successfully commercializing it are very different challenges.

Prior to the designation, Cox said that the company had conducted "an enormous amount of commercial testing" among hundreds of individuals that ultimately ruled out a D2C or B2B2C approach. The issue, he said, was that most families and caregivers weren't willing to foot the full cost of a treatment for ailing seniors, whether directly or through a senior living facility.

"There are extraordinarily few examples of consumer health products selling to the extreme elderly that are paid for in any way other than a traditional healthcare framework," he said. "So we felt we'd very passionately and aggressively explored the other alternatives to commercialization and they were all unsuccessful, but the Breakthrough Status changed all that."

As a medical device treatment, Dthera targeted two potential commercial pathways for DTHR-ALZ – direct reimbursement through CMS, and partnership with a pharmaceutical company with an upcoming Alzheimer's drug.

Interest in the first approach was driven by the large crossover between the Alzheimer's and Medicare populations, Cox said. However, CMS didn't yet have a benefit category for software as a medical device (SaMD) in 2018 or 2019, leading Dthera to join with others – particularly the Advanced Medical Technology Association (AdvaMed) – in a push for updated legislation.

"We thought there might be a chance that some of that legislation would accelerate within the window that could have been helpful to us," he said. "Eventually it did become law through the [Medicare Coverage of Innovative Technology rule (MCIT)], and the idea that a product that has Breakthrough Designation pathway will now be reimbursed by CMS through the MCIT is a game changer.

"But that came into law just a few months ago. ... It came too late to help the Dthera product. We effectively ran out of capital before that commercial pathway was available."

With the reimbursement option looking less likely, Cox said that Dthera had thrown the bulk of its weight behind the pharma partnership strategy. As a treatment for Alzheimer's symptoms rather than the condition itself, he said that Dthera viewed DTHR-ALZ as a "compelling" companion to a novel Alzheimer's drug.

The Breakthrough designation had fueled a fair amount of inbound interest, he said, leading to several potential partnership discussions and one deal "effectively agreed to." Unfortunately for Dthera, 2018 and 2019 were host to a long string of Alzheimer's drug failures that effectively nixed the products DTHR-ALZ would have accompanied."

"The underlying hypothesis for all the drugs were effectively the same, at least during that time period," he said. "[The failures] impacted the hypothesis for a lot of those opportunities, and so the drugs no longer needed a digital therapeutic to be partnered."

By the spring of 2019, Dthera was running low on funds and had redirected its efforts toward finding a new partner who could take the product forward, either through licensing or acquisition. With the exception of an exclusivity agreement to conduct feasibility studies with a still-unnamed company headquartered in Japan (Mobi's money is on Tokyo-based Eisai), those efforts came up short.

"We were unsuccessful in that for all the reasons that were already still true. If you were a drug company, and you didn't have an Alzheimer's drug anymore, you didn't need what we had. If you were a digital therapeutic [company], and you didn't see a clear path to reimbursement for your own products, that's true for [Dthera's] product as well," Cox said.

A new landscape for digital therapeutics

Dthera ceased its active operations around mid-2019, Cox said, and as of early 2020 saw full ownership of its remaining assets assumed by senior creditor Ionic Ventures. Still, Cox noted that he and the investor could be amenable to another player taking off with the technology where Dthera left off.

"I am saddened by that being how it ended," he said. "There were a lot of people who put a lot of effort in. There were investors who cared a lot. I cared a lot and put a lot of capital in. A lot of people passionately pursued this.

"[Ionic] wanted to see the product in the hands of patients as well – very much so. I know that they would still like the product someday in the hands of someone who could do something amazing with it."

With that being said, the broader regulatory, reimbursement and adoption landscape has greatly changed for digital therapeutics in the last few years. In addition to MCIT and some recent high-profile pharma deals, temporary public health emergency measures and general pandemic demand have placed more digital therapeutics into patients' hands.

At the same time, the digital Alzheimer's treatment space has sprouted some new players.

Singapore-based startup Neuroglee recently announced $2.3 million in pre-seed funding with plans to tackle neurodegenerative diseases with artificial intelligence, machine learning and digital biomarkers. MIT-linked startup Cognito, meanwhile, seems to be following in Dthera's footsteps with its own Breakthrough Device designation in January for its headset-delivered gamma frequency neuromodulation therapy. It also announced positive phase 2 results a few weeks ago, and announced plans for a pivotal clinical trial.

These and other digital therapeutics companies will likely benefit from a clearer path to market than what Dthera tried to navigate in 2018 and 2019, Cox said.   

"I am so incredibly encouraged and proud of how far all of this has advanced in the last few years," he said. "The regulatory path is now much better defined and many more companies have followed it. The reimbursement path is becoming more clear every day, and I think that’s something all of us can be proud of that we contributed to."

In spite of his own company's difficulties with securing a pharma deal, Cox said that he still believed it to have been the correct strategic decision.

Today's startups, he said, shouldn't see Dthera's experience as a reason to swear off of promising pharma partnerships. Although these types of deals will always come with a clinical risk, certain drugs and digital products can complement each other in a way that greatly benefits both parties and strengthens the resulting treatment.

"Regarding pharma partnerships, I still think for the right indications it’s the right solution," he said. "Some indications a digital product needs to be alongside a drug to have the greatest impact. There is nothing harder than Alzheimer’s disease, and, even if success is challenging, it is still something worthy of pursuit." 

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