Proteus Digital Health is abandoning its mental illness and cardiovascular work in its digital pill technology after its deal with Otsuka Pharmaceutical (TYO:4578) ended prematurely and will start to focus more on therapeutic areas, STAT News reports.
Otsuka Pharmaceutical had been paying Proteus to develop a portfolio of digital medicines for serious mental health conditions. In early December, Proteus said it would restructure because it failed to close a $100 million funding round.
Proteus is now reportedly shifting its focus to getting insurers to pay for the digital technology in patients who have cancer and infectious diseases.
“Proteus is evolving its relationship with Otsuka in ways that we believe help both companies to be successful. 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,” Proteus told MassDevice 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.”
The Redwood City, Calif.-based company was once valued at $1.5 billion and raised $420 million from investors in April 2018. The first cancer patients were treated using its digital oncology therapy in January 2019.
The sensor-embedded pill was approved by the FDA in November 2017. Otsuka Pharmaceutical and Proteus developed the Abilify MyCite pill to treat schizophrenia, manic and mixed episodes linked with bipolar I disorder and depression in adults. Once approved, Otsuka and Proteus signed an $88 million deal in 2018 in which Proteus would help Otsuka develop more digital medicines while commercializing the smart pill technology.
“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,” Otsuka spokesperson Robert Murphy told STAT News. “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’s payout gives Proteus enough money to stay afloat and focus on more therapeutic areas where Proteus says it can move more quickly, according to STAT.
Under the deal amendment between the two companies, Otsuka has acquired a fully paid-up license for the mental health technology. Otsuka will have exclusive rights to use the Proteus technology to develop its own medicines for severe mental illnesses. STAT also reports Proteus will no longer be involved in the commercialization process of Abilify MyCite and will not receive royalties from sales. However, Otsuka will continue to purchase sensors and wearables from Proteus.
STAT reported the company would lay off an unspecified number of employees. However, Proteus issued a notice in December 2019 to the state of California warning all 292 employees that they were “in danger of being laid off.”
CEO Andrew Thompson told STAT News that figure is higher than the number that will actually be affected by the pivot and that all of the company’s facilities will remain open and operating.