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SoftBank is betting on health apps that function like medicine

Digital therapeutics company Big Health just got more money to treat sleep disorders and anxiety through software—no human health professionals required.

SoftBank is betting on health apps that function like medicine
[Photo: Luis Alvarez/Getty Images]

SoftBank’s Vision Fund 2 is betting on digital therapeutics—apps that function like medicine. The Japanese investment conglomerate led a $75 million funding round in San Francisco-based Big Health, which uses mobile apps to treat sleeplessness and anxiety. The investment may be indicative of the kinds of digital therapeutics companies that are likely to receive investment in the year ahead.

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Founded in 2010, Big Health has taken a well-regarded psychological treatment called cognitive behavioral therapy (CBT) and made it entirely digital—no humans involved. Similar companies in the space, most notably Pear Therapeutics, which uses CBT to treat substance use disorder, have sought approval from the U.S. Food and Drug Administration so that their digital therapeutics can be prescribed, increasing the likelihood that insurers will cover them. But Big Health has taken a different tack. Its apps, Sleepio (insomnia) and Daylight (anxiety), can be used by anyone without a prescription.

To get the apps covered by insurers, the company has spent lots of time building up academic studies proving their efficacy, with 13 randomized controlled trials. A 2021 study found that Sleepio, when used in conjunction with weekly therapy sessions for depression or anxiety, led to improved sleep compared to therapy alone. The difference in results was not earth-shattering (65% of Sleepio users recovered from sleeplessness, versus 59% of the control group). Still, it proved the app could boost outcomes without breaking the bank. Perhaps more compelling was a study among pregnant women that showed Sleepio not only helped them sleep better but also that only 4% of women who used the app had symptoms of postpartum depression and anxiety, compared with 18% in the control group.

These encouraging data points have led to partnerships with the National Health Service in the U.K., as well as CVS Caremark, a pharmacy benefit manager that serves employers, unions, and insurers. Through its CVS Caremark relationship, Big Health has signed more than 45 U.S. employers, including Boston Medical Center, the Hartford Financial Services Group, Delta Airlines, and Target as clients. In total, its apps have 250,000 users, 180,000 of whom live in the U.S., and are available to a total of 10 million people through partnerships.

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By contrast, in November 2021 Pear Therapeutics was tracking toward 12,500 prescriptions total for the year (with the goal of reaching 30 million covered members). As digital therapeutics companies continue to navigate the regulatory and insurance landscape, their solutions may look more like Big Health’s.

Companies are exploring the possibility of bundling pills with digital interventions as a way of getting insurers on board.

SoftBank previously invested in Pear Therapeutics, leading the company’s $80 million series D round in 2020. Pear went public in December via a SPAC (special-purpose acquisition company)—an alternative to an initial public offering that’s popular among healthcare companies—and is now trading on Nasdaq under the ticker PEAR. The merger was valued at $1.6 billion. But Pear has had difficulty making inroads with insurers. That may be, in part, because it hasn’t shown that its apps are cost-effective. A 2020 report from the Institute for Clinical and Economic Review stated that at its current price, there was not enough evidence to demonstrate a net health benefit for reSET-O, Pear’s treatment for opioid use disorder. The company countered with a study published a few months later showing that if patients engage with its app, it can help lower healthcare costs associated with those patients.

Still, even if Pear can convince insurers to reimburse, it will have to get doctors to prescribe it, which will be yet another hurdle. Plus, it’s in competition with a growing field of apps for treating several types of substance use disorders that go beyond providing CBT.

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What will Big Health do with its fresh infusion of cash from SoftBank and others? “My intent is that these funds are used to scale out the commercial function and grow reimbursement coverage, radically, and accelerate the pipeline in terms of new therapeutics,” says CEO Peter Hames. His next big push is to get insurers to make his apps part of their offering to members. 

Other companies in digital therapeutics are exploring the possibility of bundling pills with digital interventions as a way of getting insurers on board. Biofourmis, another SoftBank investment, recently was awarded the FDA’s breakthrough device designation for its heart failure prevention system that offers medication dose recommendations based on vital signs. In addition to working with health systems, the company also partners with pharmaceutical companies to develop digital interventions that make their drugs more effective. For example, in 2019 it collaborated with Novartis to use its heart monitoring system among patients prone to heart failure in Southeast Asia.

Some pharmaceutical companies are looking to create their own digital therapeutics alongside novel drugs. Atai Life Sciences is developing nine drugs to treat a range of mental health ailments while also building out digital therapeutics to make those therapies much more targeted to the individual patient.

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What the Big Health funding shows is that investors are keen to see how companies can get their digital therapeutics used—whether through striking smart partnerships with health systems and pharmacy benefit managers or making them part of an FDA-approved drug regimen.

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About the author

Ruth Reader is a writer for Fast Company. She covers the intersection of health and technology.

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