The News:

The US Food and Drug Administration (FDA) recently cleared for marketing the first prescription Mobile Medical Application to help treat substance use disorders (SUDs) involving alcohol, cocaine, marijuana, and stimulants, but not opioid dependence.

The reSET application, from Pear Therapeutics Inc. (Boston), should be used in conjunction with both outpatient therapy and a contingency management system, a widely used program for treating SUD that utilizes a series of incentives to reward patients for adherence to their treatment program, the FDA says.

The reSET mobile medical application system contains a patient application and clinician dashboard and incorporates cognitive-behavioral therapy, the FDA explained in a news release.

“This is an example of how innovative Digital technologies can help provide patients access to additional tools during their treatment,” Carlos Peña, PhD, director of the Division of Neurological and Physical Medicine Devices in the FDA’s Center for Devices and Radiological Health, said in the release. “More therapy tools mean a greater potential to help improve outcomes, including abstinence, for patients with substance use disorder.”

In granting marketing approval for reSET, the FDA reviewed data from a multicenter, unblinded, 12-week clinical trial involving 399 patients who received either standard SUD treatment or standard treatment with the addition of a desktop-based version of reSET, which could be accessed at the clinic or at home.

The study showed a statistically significant increase in adherence to abstinence in patients with alcohol, cocaine, marijuana, and stimulant SUD who used reSET relative to those who did not (40.3% vs 17.6%), according to Medscape.

The reSET system at this time is indicated as a prescription-only adjunct treatment for patients with SUD who are not currently receiving opioid replacement therapy, who do not abuse alcohol solely, or whose primary substance of abuse is not opioids, the FDA says.

The reSET mobile medical application for SUD was reviewed through the “de novo” premarket review pathway, a regulatory route for some low- to moderate-risk devices that are novel and for which there is no legally marketed predicate device to which the device can claim substantial equivalence.

Steve’s Take:

I get excited about situations like these were a much-needed technology scores hugely in early clinical testing but is flying so far beneath the radar, it’s virtually invisible. Then when I hear a successful Series B funding just occurred, I’m more than excited. I want to spread the news.

So, what just happened?

Boston- and San Francisco-based Pear Therapeutics, maker of a prescription digital therapeutic platform, announced the closure of $50 million in Series B funding. The round was led by Singapore-based investment company Temasek Holdings Ltd., with participation from returning investors 5AM Ventures, Arboretum Ventures, and JAZZ Venture Partners, as well as new partners Novartis AG, EDBI, and the Bridge Builder’s Collaborative.

(Nota bene: Usually after 3 rounds post-seed, a financially-sound business–read “profitable”–goes for an IPO to raise large capital.)

“At Pear, 2017 was a year filled with noteworthy achievements. Our team made significant strides in advancing our pipeline of prescription digital therapeutics. We plan to use this additional capital to substantiate the clinical efficacy of our therapeutics across a variety of indications,” Dr. Corey McCann, president and CEO of Pear Therapeutics, said in a statement. “This latest financing recognizes the strides we’ve made in proving the clinical utility and commercial viability of prescription digital therapeutics.”

“Pear is a company that has a digital platform with proprietary software and innovation that allows us to create therapeutic products…to treat numerous different disease classes,” Chief Commercial Officer Alex Waldron told MobiHealthNews.

“What the investors are so excited about–and the FDA has been very keen on this as well–is that digital therapeutics, ones that are targeted at efficacy, actually have the ability to modify the behavior that is out of sync,” Waldron continued. “So not only is there a chemical imbalance in some of these patients, there’s a behavioral imbalance, and we have a way through our digital technology and our platform to modify that behavior [and] to help correct that aspect of what’s wrong with these people.”

Pear Therapeutics’ previous round of funding came in early 2016 to the tune of $20 million, with a previous undisclosed round concluding in 2015.

Steve's Take: @Pear_Thera is risky for sure; but a rational bet, rather than a pure gamble.
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FDA software pre-certification program

Along with go-aheads from the FDA for its two premiere products, the company was also named among the agency’s picks for its unprecedented pre-certification program. What’s that?

The “Software Pre-Certification Pilot Program,” recently announced by the agency, shows that regulators are taking digital health innovations seriously. The program is aimed at building a new regulatory process for software used in the prevention, treatment, and diagnosis of medical conditions.

Forbes cautions that the use of interactive software as digital medicine isn’t entirely new. But Pear’s reSET software for treatment with substance use disorder marked the first instance that the FDA approved software claiming to help treat a disorder.

However, it’s the new tantalizing combination of game design and interactive software that could bring a new generation of game developers into the massive healthcare market. I concur with Forbes that this is definitely a space to watch.

Bear in mind that Pear Therapeutics’ clinical studies underscored the digital health technology’s promise. More than 40% of patients who used the Reset system in addition to standard therapy abstained from alcohol, cocaine, marijuana, and stimulant substance abuse over a three-month period, compared with 17.6% abstinence for those receiving standard therapy alone, according to the FDA.

A growing number of digital health firms and biopharma giants are embracing the idea of using mobile apps as medical add-ons to bolster conventional drugs–or even replace them altogether. For instance, startup Omada Health Inc. (San Francisco) has a tech-based diabetes prevention program that uses an online support community and digital scale to keep people at risk for the disease healthy enough to avoid it. It’s been effective enough to win federal reimbursements, according to Fortune.

Assuming Pear Therapeutics’ technology justifies a Series C, also keep in mind that employees and other investors typically own the pre-IPO shares of a private company like Pear and that there’s usually a secondary market for trading them. Your broker or investment fund may obtain access to a block of such shares. If all goes well after the Series C, you know what’s next. The IPO cash blizzard.

This name is for real in my assessment.

I’m reminded of Warren Buffett’s interviews, op-eds and his annual letters. His investment philosophy is no secret, and he has repeatedly shared bits and pieces of it through a lifetime of quips and memorable quotes. In this instance with Pear Therapeutics, I like his advice: “I try to buy stock in businesses that are so wonderful that an idiot can run them.” Not that Pear’s current management falls into such category! But you get the point.

Risky for sure; but a rational bet, rather than a pure gamble. Stay tuned.

Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.