Article | May 30, 2024

Where Are They Now? Otsuka

Source: Life Science Leader
Ben Comer_2022_1

By Ben Comer, Chief Editor, Life Science Leader

Otsuka cover_Oct 2016

Then: In a Life Science Leader article headlined “Why Otsuka Diversified Into Digital Health,” published in 2016, Dr. William H. Carson, then president and CEO of Otsuka Pharmaceutical Development & Commercialization, Inc., explained the circumstances leading up to the formation of Otsuka Digital Health (ODH), a joint venture with IBM created to develop and market software for analyzing psychiatric patient data. As board chair for the U.S.-based ODH, Inc. subsidiary, Carson described a key internal challenge in building out Otsuka’s new digital health solutions: employees kept asking, “How does this relate to our pharmaceutical business?” In response, Carson says he reminded those colleagues that the mission of Otsuka isn’t to be a pill company, but to create new products for better health, worldwide. “We had to build a new mindset that the digital health system we were developing had little or no relationship to our existing business,” said Carson.

In April 2016, ODH, Inc. and IBM Watson Health jointly announced the launch of Mentrics, a population health management platform targeting health plans and managed care organizations. Mentrics was created to aggregate healthcare data from multiple sources and use advanced analytics to assign a behavioral and physical health risk score for each member, thereby providing immediate actionable insights that alert care coordinators to treatment gaps or inconsistencies — not exactly a traditional product offering for a subsidiary of a large biopharmaceutical company. However, as Carson explained in the 2016 article, former president of Otsuka Dr. Taro Iwamoto had been working with IBM and piloting software for several years prior to the launch of Mentrics and had become convinced about the power of data and analytics as tools for improving patient health. After Iwamoto received a tour of the New York City Police Department, which at the time was “using IBM data analytics solutions to help make the city safer,” per Carson, “everything changed organizationally for us. The question became, ‘How are we going to add data analytics into everything we do?’” said Carson.

Separately from the ODH, Inc. launch of Mentrics in April 2016, Otsuka Pharmaceutical Co. received a Complete Response Letter from the FDA that same month requesting more data on what would become, in November 2017, the first ever FDA approved “smart pill,” which paired Otsuka’s antipsychotic drug Abilify (which had lost patent protection in 2015) with an ingestible sensor and patch made by Proteus Digital Health.

Now: Excitement around digital health products — digital therapeutics and sensor-enabled medicines, in particular — has cooled decidedly in the last eight years, even as the AI hype machine cranks up to ever higher levels. The FDA’s 2017 approval of Otsuka and Proteus’s combined smart pill product, called Abilify MyCite, generated headlines around the country, but ultimately struggled for market share against cheaper, traditional generic competitors. In 2020, Otsuka acquired Proteus’s technology assets for $15 million in a Proteus bankruptcy fire sale. In April of 2023, Pear Therapeutics, widely regarded as a leading digital therapeutics company, filed for bankruptcy.

Sanket Shah
Otsuka, however, is picking up those pieces and working to find ways to “unlock the power of all 180 companies under the Otsuka umbrella,” which also includes consumer businesses such as Nature Made and Crystal Geyser Water Company, says Sanket Shah, president of the newly created Otsuka Precision Health, Inc (OPH). In announcing the formation of OPH in early May — a subsidiary focused on products ranging from “connected health solutions to digital therapeutics, all powered by advanced analytics tools like artificial intelligence” — Otsuka America Inc. offered the FDA marketing clearance of Rejoyn, a prescription digital therapeutic for major depressive disorder (MDD), as an example of what OPH can bring to patients. Interestingly, Click Therapeutics, Otsuka’s partner in the development of Rejoyn, is a digital therapeutics company that picked up some of Pear Therapeutics pieces following the latter’s bankruptcy proceedings.

Shah says his mission at OPH is bringing everything together, in a way that connects different solutions that exist in the marketplace, or that Otsuka is building (or has built in the past), to improve the individual patient journey. Shah credits Carson as being instrumental in some of Otsuka’s early forays into digital, and assets created by ODH have been brought into OPH under Shah’s leadership. OPH has over 170 direct employees, including patient and caregiver support personnel, a digital data team, and access to shared Otsuka services in finance and human resources, says Shah, adding that the group plans to connect and build on the “significant learnings that we’ve had over a number of years.”

OPH’s runway to experiment — to “try a handful of things, and to learn, and to adjust” — sets it apart from other digital therapeutics companies. “Because of the backing of Otsuka, we have a runway that is a little longer than organizations that are just relying on revenue,” says Shah. “We’re in this for the long haul.” Given the difficulties that Pear, Akili Interactive, Better Therapeutics, and others have faced in securing sufficient insurance coverage (and consistent sales revenue) for digital therapeutics, it’s somewhat surprising that Shah is not overly focused on that aspect of the business. Instead, Shah is following a strategy more widely used in the technology sector: create a great product and drive adoption first, then figure out how to monetize it. Ultimately, OPH’s digital therapeutic business model might be “a little different from what Pear or Akili and others have done,” says Shah.

Rejoyn, OPH’s digital therapeutic for MDD, is slated for launch this summer, and while Shah wasn’t ready to divulge a price tag just yet, he said it will be priced in such a way that makes it available to the masses. “The mental health struggle is an epidemic,” says Shah. “One of the opportunities we have is to put this solution in the hands of people that potentially could not afford other mental health treatments.” Regarding the Proteus smart pill assets, now owned by Otsuka, Shah says a handful of projects are underway to evaluate that technology beyond the initial use cases.

Asked about the implications of Otsuka’s acquisition of Mindset Pharma last September — the first Big Pharma acquisition of a psychedelic therapeutics company — Shah echoed the sentiments of Carson eight years ago. The ultimate goal, says Shah, is for all of Otsuka’s business operations to ladder up to the company’s mission: better total health, worldwide. “That’s how we ensure that anything we do links back to Otsuka.”