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Trouble could be brewing for California-based digital therapeutics (DTx) startup Proteus Digital Health — maker of the first trackable, sensor-embedded pill to earn FDA-clearance — after its expected $100 million financing round came to naught, CNBC reports. Business Insider Intelligence
The startup reportedly failed to close the round after pharma giant Otsuka — Proteus' partner that helped launch the FDA-approved digital drug system — didn't send over fresh cash, which led other investors to backpedal on their plans to float cash over to the firm, too. The startup — which has raised about $500 million over the last two decades — did manage to scrape up $5 million in emergency cash, an anonymous source told CNBC.
Proteus is navigating a space where few others are operating, which has afforded it ample industry attention — but digital drugs are still in their nascence, and it's likely been hard to convince most customers to get on board:
Proteus' financing blunder isn't an isolated incident — it's just the latest sign that high-flying DTx developers are operating in an entrenched healthcare industry that might not have the means to fully embrace them yet.
We've seen pharma companies that have presented interest in the space soften their DTx strategies — which could show that commercialization efforts aren't producing a high enough return yet for deep-pocketed drugmakers: For example, Novartis cut ties with Pear Therapeutics — developer of digital treatments for mental health conditions — in October, calling into question just how valuable partnerships with smaller digital players are for massive pharmaceutical companies.
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