Proteus parts ways with Otsuka as it pivots toward oncology, infectious disease treatment adherence

The pharma company walks away with the full license for Proteus' mental health treatment adherence technology.
By Dave Muoio
02:45 pm

Following news of hardships at Proteus Digital Health, CEO Andrew Thompson has told STAT News that the company is winding down its high-profile $88 million deal with Otsuka Pharmaceutical, and will be pivoting from its current primary focus on mental disorders toward cancers and infectious disease treatments.

The pharmaceutical company has now acquired the full license for Proteus’ mental health treatment adherence technology, and will be independently pursuing development for these types of therapies, a representative from Otsuka told MobiHealthNews in an email statement.

“Rather than a premature end to the agreement, it’s more of an evolution of the original agreement that allows each company to independently advance the development and commercialization of digital medicine offerings,” the representative wrote. “Our digital medicine businesses have evolved to a point where we can maximize success by pursuing future opportunities independently and we are excited for both organizations moving forward. Otsuka will continue to purchase sensors and wearables from Proteus during this transition period.”

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Proteus, meanwhile, will be using the amended contract as a springboard to refocus its technology on oncology and infectious diseases — two therapeutic areas that Thompson described to STAT as “more pressing” to payers and more reliant on pharmacologic therapy.

“As part of a strategic review, the company will reduce its headcount and focus its resources and two facilities on delivering digital medicines solutions using its Proteus Discover platform,” a Proteus spokesperson told MobiHealthNews in an email.

“Otsuka will continue to focus on serious mental illness and we will focus on other therapeutic areas including infectious disease and oncology. These are areas where our commercial experience and peer reviewed studies, including a recent study in Hepatitis C, have shown repeatedly that digital medicines improve the quality and cost effectiveness of care, especially for patients who have the most difficulty succeeding with drug therapy,” they wrote.

And on the subject of those reduced headcounts, Thompson told STAT that many of those cuts will be among those conducting co-development work alongside Otsuka. Although he did not specify the number of employees being affected, he did tell the news outlet that a 292-person count cited in prior reporting was “much, much larger” than what the company is planning.


For the last few years, Proteus’ “digital pill” has been among the go-to examples of a novel digital health product that has enjoyed support from investors and pharmas alike. But the company’s future was cast into doubt last month following reports of a failed $100 million funding round that led Proteus to furlough the majority of its employees.

While no sources have officially come on the record to describe the driving factors of Proteus’ hardships, those speaking to MobiHealthNews and others have described poor adoption of the system among mental health patients and providers alike. Some observers also criticized Proteus’ decision to put all of its eggs in one basket with a therapeutic area as challenging as schizophrenia.

“It looks now like Proteus may have picked [a] therapeutic area with a degree of difficulty that’s an eight or nine out of 10, right? They may be paying the price for that tactical choice because it’s such a challenging therapeutic modality for their particular intervention to take hold,” Bill Evans, managing director of digital health venture fund and research group Rock Health, commented to MobiHealthNews last month. “If that’s true, it’s unfortunate, but it doesn’t disprove the value of Proteus itself. It simply means the evidence is yet to be seen.”

Taking this and previous comments from Proteus in mind, the shift to conditions more deeply aligned with pharmacologics is an understandable tactic for a high-profile startup looking to regain its footing. However, the company will still be fighting several of the same battles it faced in the mental health space, such as public perceptions that the digital pill system could have major negative privacy ramifications.


A new therapeutic focus is just the latest development in the digital health pillar’s shifting story. The company had its first patch cleared in 2010 and its first pill cleared in 2012. But Proteus made headlines in November 2017 when the FDA approved Abilify MyCite, which allowed the digital ingestion tracking system to be combined with a schizophrenia therapeutic. Before, clinicians had to take the pill and add the Proteus chip, whereas this system more closely integrated the sensor and pill.

The months following this approval saw the digital health company announce plans with systems and health plans like Megellan Health and Children’s Health to roll out pilots of its core adherence system. And of course, in October 2018 it signed onto the (now adjusted) $88 million deal with Otsuka.

Meanwhile, etectRx, a competing ingestible adherence tracker system, announced its FDA clearance last month within a day of Proteus’ struggles coming to light. Just this week, the company also announced that a new HIV treatment adherence study being conducted by the University of Colorado would be using its system.


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