Failing digital health unicorn Proteus severs ties with key pharma partner

Only weeks after reports suggested Proteus Digital Health, once valued at $1.5 billion, is struggling to stay afloat, STAT reports the health tech startup has ended a crucial collaboration with Otsuka Pharmaceuticals.

Proteus raised a total of about $500 million and reached unicorn status based on its mission to develop digital medication adherence solutions, including sensors embedded in pills to track whether patients had taken them. In December, reports surfaced claiming the company was unable to close a $100 million funding round and had furloughed the majority of its employees in November before securing $5 million in emergency funding.

Otsuka was reportedly providing financial support to Proteus to develop a portfolio of these digital medicines, focused on treating serious mental health conditions. Their sensor-equipped version of antipsychotic drug Abilify was approved by the FDA in 2017.

According to STAT, with the premature loss of Otsuka's funding, Proteus is discontinuing its work in mental illness and cardiovascular conditions, and will focus on attracting payer clients to cover its tech-based treatments for cancer and infectious diseases. Additionally, CEO Andrew Thompson confirmed to STAT that an undisclosed number of employees have been laid off.

People familiar with the company and its offerings told STAT the startup's issues stem from the technology's incompatibility with clinician workflows and patient preferences. In shifting its focus away from primary care, Mr. Thompson said, Proteus is hoping its technology will be better received in areas requiring more expensive drugs, "where the pharmacologic therapy is absolutely key to the outcome — and where it's a defined period of therapy."

Read the full report here.

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