00:03 Eugene Borukhovich
Welcome to the Digital Therapeutics Edition of Digital Health Today, and I’m your host Eugene Borukhovich. In the last episode, I had the pleasure of speaking with Eddie Martucci, CEO and founder of Akili Interactive. Akili is a creator of Endeavour Rx, which is the first and only prescription treatment delivered through a video game. Imagine that. Today, I continue my journey with yet another early trailblazer, David Klein, CEO and founder of Click Therapeutics.
00:31 Eugene Borukhovich
But before we dive in: I first met David at Frontiers Health conference few years back, he struck me as cool and composed with a clear vision. And now we jump to my conversation with David.
As you now know, David, I wanted the listeners to get into the head of some of the trailblazers in this industry. So why don’t you first tell us a little bit of your background of yourself, introduce yourself, and how did you even come to starting Click Therapeutics back in the day?
01:06 David Klein
Sure, yeah. Thank you, Eugene, and thanks for having me here. My name is David Klein, co-founder and CEO of Click Therapeutics, and, you know, really, my background was in more biotech. So I was working in a kind of merchant banking type environment, for a hedge fund, where we go really kind of form our own companies within licensed compounds from all around the world, and then form little biotech companies around that. And, this was, you know, back in 2012, I’d say I saw a pretty significant and the dramatic increase in mobile phone uptake, and generally mobile phone usage. And I really saw that the phone was changing people’s behavior. So you know, you would look all around the subways in New York and on the streets, and all the sudden this mobile phone was very clearly changing people’s behavior. And at the same time, I was working with a fellow who at the time was the head of clinical nurse Psychiatry at Cornell. And at the same time, we saw a very significant retreat from pharma, out of the CNS space, which I think as we all know, is a tough one notoriously difficult. Yeah, space to operate in the the endpoints can be largely, let’s say, subjective, right? It’s not like shrinking a tumor in oncology. And we kind of put two and two together, we, we thought, well, if we could create mobile software that targets specific diseases and behavior and cognitive change, to drive clinical and ultimately economic outcomes in those diseases, we could create treatments, essentially, that were as important if not more important than pharmacotherapies. So an idea was born, we created and coined a term called “Digital Therapeutics” in 2012.
03:05 Eugene Borukhovich
And I think you guys even trademarked that, right?
03:08 David Klein
We tried for years to trademark, never successfully, although we did get it on, I think what’s called the supplemental register. But you know, at the time we were in finance, I was basically financing the company with my own money. So we did try to trademark it for a long time. It was later used in 2014, starting publicly by Omada. So a couple years later, and they’re the ones who really, I say, popularized that term. But the important thing is the thesis right of driving clinical outcomes using software. And that’s what we’re intending to do. And in 2012, I founded a company Click Therapeutics, really based on that sole premise that we would create almost like a biotech-like company but our molecules, if you will, will be digital.
03:57 Eugene Borukhovich
And the active ingredients will be screens and actions and behaviors. Exactly. And if I’m not mistaken, you started with smoking cessation.
04:06 David Klein
Yeah. So our original idea was that we would start with smoking cessation. Again, it was, you know, relatively low hanging fruit. The US clinical practice guidelines in this space can be largely digitized. We knew that text messaging, for example, was an effective method of helping people to quit smoking. And it really seemed like a logical place to start again, we didn’t, we didn’t have you know, a 10-year plan. And, you know, Clickotine was born, really at the same time that Click was born.
04:40 Eugene Borukhovich
And, you know, you mentioned obviously, I guess, yourself and other founders were investing for a while. And I think for the listeners, it’d be interesting, right? Because as you started this in 2012, up until your sort of largest Series A. What was that DTx, I’ll call it selling and channel traction that you’ve gathered in those belief, you know, five or six years to get to that Series A, what was the outcomes and the endpoints that you gathered?
05:05 David Klein
So what did we do, Eugene, to kind of ramp for a Series A? Yeah, I mean, that was a long road, we didn’t take our first round of outside capital until really the very beginning of 2015. So that was when we essentially became a real company, right? We were, you know, bunch of co-founders kind of operating more as a virtual company, until really right, you know, right in the beginning of 2015. From there, after we took our first round of outside capital, which was much more of seed, like seed capital, we then, you know, went full time, hired in-house engineering team, and so on and so forth. And, really worked to develop an evidence-based and a commercial story for Clickotine and to continually develop the product, if you fast forward a bit. We partnered with a company called Delon Health, later that year and agreed to, you know, pilot Clickotine and then subsequently launch it, and at the same time really ramped for a pretty significant size clinical trial that we ran in 2016. So, you know, I think that it was really a combination of clinical evidence and commercial traction, that really took us into our series A, which was a few years later, we didn’t raise a Series A until 2018, I should say.
06:34 Eugene Borukhovich
Right, right. So let’s jump either to 2012, when you were starting or around where you were gearing up for that Series A round with some of that traction. Aside from the patient outcomes, which is the key to all of this, what was the initial business hypothesis, and to a certain extent, if you can tell us a little bit about the journey of even the pricing models that you’ve explored over time.
07:00 David Klein
Sure. So you know, our approach to pricing has really been based on the goal of lowering overall cost of care by a meaningful amount, right. So, you know, it’s actually based on a pretty simple thesis that we would lower the cost of overall care while improving outcomes and derive revenue from kind of call it value-based type contracts for our marketing products, like Clickotine, where there’s a focus really on, call it the savings that we can drive for payers. So in, in smoking cessation, the direct savings are actually pretty clearly visible. And specific pricing in that area becomes less of an issue. So if you take, I can give you one example, about in a recent deal we just did with a large national payer, we’re getting you know, call it up to in the, you know, nearly $1,000 per script per user. And while that, you know, might not appear kind of inexpensive at face value, it’s really you know, that that payer is saving 20-30, maybe even more percent on the overall cost of care, right. So, you know, if we can drive a visibly superior outcome like this, the ROI is, you know, potentially 3-5x and the and the value is actually pretty clear. So our thesis is around pricing is, is actually it’s a, it’s a complex environment out there. And obviously, we have a very complex healthcare system. But ultimately, it really comes down to lowering the overall cost of care by a meaningful amount, and deriving revenue out of those savings.
08:53 Eugene Borukhovich
You mentioned, obviously, the end consumers and the patients, and, you know, for our listeners, I’ve been trying to demystify, what is the actual experience of that consumer or patient with your product set. And I know you’ve been obviously expanding as well. So feel free to, you know, pick one or talk about, you know, from the time that I either get a script or an OTC so can I just get to take us through the flow a little bit, and what does that experience on your product?
09:24 David Klein
Yeah, no, thanks for asking that. I mean, I think that is a really core focus of our whole company. Oh, yeah. We were founded on a kind of more biotech-led model, we have really gravitated towards balancing neuroscience with really engagement science and user experience. And so to your point, yeah, we have different products, but they all sit on a common platform. So not only does that platform share a variety of different technical elements and in a different application, side aspects as well. But we reuse and use many of the same modalities for different products. But at its simplest, I guess the simplest way to describe how our programs work is they are very, very easy to use. So our programs all work in the same way where the patient has a, what we call mission to do, for that day. So every day, whether you’re in our cardio program, or a smoking program or insomnia program, “Eugene”, let’s say, has a mission to do that day. And the word programs differ is that, that mission can be, you know, pretty different, obviously, from cardio to insomnia. Really, our core competency as a company is in getting “Eugene” to do his mission today. Right? That’s, that’s what we’re good at. We are we are good at engaging the patient, and creating this therapeutic alliance with our programs that really works to get people to do that. So it’s actually, although complex on the back end, it’s actually very, very simple for the patient,
11:21 Eugene Borukhovich
You bring up an interesting point, right? So users and consumers interacting with technology. Where do you see doctors, nurses, and even probably more interesting health coaches to help these users reach their goals versus just pure technology? Because I mean, you come from kind of biotech world as well, you know, the concept of adherence has been in compliance. So can you talk a little bit about the human labor and the human knowledge surrounding your product and where the need is?
11:55 David Klein
Yeah, so we really are very focused on integrating within the current healthcare system. So when we first started Click, and really have a very kind of patient and provider-focused company, and a very mobile-first structure, where we knew that getting a patient to change their behavior is already a significant uphill battle. So what we didn’t want to do is to create things that would require very significant physician behavior change, or, you know, heaven forbid, cross what I regard is a red line. And that’s really in creating things that physicians are not, let’s say, compensated to use, right, I mean, just like any other profession, they need to make a living and have a business model as well. So our programs really are designed to integrate with the current care paradigm, and patients received prescriptions, and you know, in terms of access insurance coverage to our digital therapeutics, just like they would have a drug. So it’s very similar. Obviously, there’s opportunities for even greater efficiencies, especially now in the kind of time of COVID through telemedicine scripts, and the ability to create a really fully integrated virtual care pathway certainly does exist. So nurses, coaches, physicians, are all part of that care pathway and absolutely essential to driving outcomes. The digital therapeutic component of that is really, in our view, the primary active ingredient that is prescribed and drives outcomes in and of itself, but it simply wouldn’t be possible without those professionals surrounding it, endorsing it, supporting it, prescribing it. So that’s really our view is that we’re not replacing any of those folks, we’re giving them a tool to treat patients a more effective and efficient way and actually potentially streamline their own practices.
14:07 Eugene Borukhovich
Let’s build a little bit on that because part of that is, you know, if you think about pure technology as a prescription digital therapeutic, and what I would just say over the last decade or so the disease management 2.0 companies and I’ll bucket like a Livongo in there, but lines are starting to blur, right? Because the technology is part of the experience and the experience as part of the technology and the knowledge of humans surrounding it. Where’s your head on PDTs (prescription digital therapeutics) and disease management 2.0 and where do you see that going?
14:43 David Klein
Yeah, no, I think that’s a good point. I actually believe that the two should and will be working in the end, so around our prescription digital therapeutics. In order for them to be as effective as possible, they really should be as within part of an overall disease management program. So I actually view the two as entirely complimentary, and when people have serious diseases, right, if you just had a heart attack or have high blood pressure or insomnia or severe depression, whatever that might be, really a patient should be going to their physician. So developing and seeking regulatory clearance for our programs as treatments is an absolutely essential part of the development and prove that they’re safe and efficacious, and driving a certain level of comfort in all patients, providers and payers, that this is a safe and effective treatment is absolutely necessary. But to that end, the disease management aspect really is, in my view, more holistic, and our digital therapeutics will be and are more effective when integrated into entire kind of called it “disease management 2.0” type approach to treating that patient, and that’s something that we’re developing also in-house here, as well. But ultimately, the two are different, right? So the actual treatment is prescribed by a physician. And we think that that’s an absolutely necessary part of the process. And that’s the area that we’re most focused on, and how we’re looking to really change the world of medicine is by developing and commercializing software that can, and will be prescribed by physicians en masse. And that really addresses this very significant unmet need that is core to Click’s vision, but I view the two as entirely complimentary.
16:49 Eugene Borukhovich
Yeah, and we won’t even get into the melting points between virtual care and primary health and primary care. So let’s, you know, you mentioned something earlier around that user experience, right? And we touched on it and we keep touching on this throughout this discussion. DTx companies, like yourself, will “swallow the pill” and the molecule will become part of that experience. And I realize, you know, some of your investors are pharma companies, and you know, you have a number of large deals with pharmaceutical companies. Or do you see the pharma companies embedding digital therapeutics and PDTs as add-on? Or it’s a spectrum? Again, there’s no probably not one size fits all, but I’m just curious where your head is on this. DTx swallows the pill, or the pharma company swallow the DTx?
17:39 David Klein
Sure, I don’t think it’s gonna be necessarily one or the other, I think that the two will be integrated. And at some point, it’ll simply be medicine. I mean, right now, because the field is so new, it is distinct, and so on. But if you look at areas like biologics, right? When they first kind of came on the scene, they were differentiated as large molecules, and so on and so forth. But ultimately, if you fast forward to today, I mean, there’s not a tremendous difference, at least from a patient and prescriber’s perspective, whether they’re prescribing a small or large molecule. So I think, you know, right now, it’s different. I don’t think one will swallow the other at least for a long time, I think it’ll be interesting to see how the big tech companies also play in this space. So I don’t think that future is written in stone yet, Eugene. But certainly, these do fit, you know, very nicely into the bag, as they say, in kind of the pharma world, so.
18:41 Eugene Borukhovich
That’s what makes this whole sub-industry so exciting, right?
18:49 Eugene Borukhovich
Well, that sound means it’s time for a question from my journalistic partner on this podcast, Brian Dolan, who is the founder of Exits and Outcomes, and as I like to call him the “digital health detective”. Let’s see what question Brian has for our guests today.
19:04 Brian Dolan
Okay, here’s my question. So one tack that I’ve seen a few prescription digital therapeutics companies use is to license or acquire digital interventions that have already demonstrated some level of evidence via a randomized control trial or RCT. Click Therapeutics seems to do its own research, however, and it does not acquire or license these interventions if I understand it correctly. Can you walk us through why a company might go either route and maybe mention a few of the benefits or the challenges for choosing either path?
19:37 David Klein
Yeah, thank you, Brian. And thanks for that question. I think it’s an important question that people don’t really fully appreciate or realize and just for full transparency, I mean, Click does also look for and in licensing new technologies. I think that that has to be part of our strategy. But yes, it’s true, we are discovery and researched-focus and are focused on innovating and creating our own treatments, I think many of which, are based on what is currently used and kind of the real world as they say, and simply digitizing it. And then many of which, we have a full discovery effort, which is much more confidential that we don’t talk about publicly, on developing new ways to treat people that can only be administered digitally and studying those and kind of smaller type studies. I think, ultimately, our thesis was and is, and perhaps always will be, that the phone is really the modality that we’re currently treating people with and the phone is always on someone, the phone is a center of data collection, and the interventions can be personalized based on those data, both from the entire patient population and from the individual patient. So, when you look at what’s been happening in this space, I think, to your point, Brian, yeah, I mean, there’s been other companies that have essentially, you know, in license, what I would regard as, you know, pretty old academic technology, web technology, right and filed FDA clearance based on those data, what you end up with is a program that was developed a very long time ago and designed specifically for patients to access via a desktop computer. Right? And that’s something that does not harness the power of data and personalization in a mobile phone. And, it generally results in an entirely kind of different type of intervention. Where we are a bit more focused on kind of bite-sized interventions, as opposed to, let’s say, you know, long videos, and so on. And I view, what we’re doing as probably more in tune with what the future of this space will look like, and that’s programs that were designed to be prescribed by physicians, and drive outcomes, specifically utilizing the mobile phone. And sure, it does take longer, it’s a longer path to development, but ultimately, you end up, in my view, with an intervention that’s more appropriate. So, it’s more of a kind of traditional biotech-like commercial type model where you can work with payers and we do on what the, let’s say, pivotal trial endpoints will look like and understand our potential pricing and reimbursement pathways, and integrate that understanding, really, into the studies and types of studies that we’re running. So, we prefer the method that we’re really doing, and that’s really discovering, developing and commercializing proprietary digital treatments, but there’s no ‘right way’, I think, to approach this space and, you know, different strokes for different folks. I mean, I think, ultimately, and we’ll see what avenues are the most successful.
23:03 Eugene Borukhovich
It’s interesting, as I’ve been listening to you about in licensing, about, I’ll say portfolio management in developing from scratch, and some additional modalities, even within the mobile space, miniaturizing something from the web, but it’s really a portfolio or pipeline. And it’s interesting how the development piece in some of the more pure PDT is starting to mimic much more, and I think you started with this, you guys were looking at this as much more of a biotech company. But let’s touch on, you’ve probably been asked this a million times already the BI (Boehringer Ingelheim) deal because even some of the deals with digital therapeutics are starting to mimic some of the more traditional pharma biotech deals, so maybe you can touch for our listeners a little bit of the BI deal.
23:52 David Klein
Sure. So you know, really under the term of the deal, and you know, obviously, I can’t get too much into it other than what’s public, but we’ll be primarily responsible for research and development activities and will support Boehringer Ingelheim as it undertakes worldwide commercialization. So under the term of that deal, which to your point, as publicly announced, is more structured like a biotech deal where there is an upfront payment and funding for R&D, as well as clinical regulatory and commercial milestones that represent, you know, a very significant total deal value. And then in addition to that, and hopefully what will be the kind of best part of it from a revenue perspective will be the royalties based on annual sales of the program. And that’s in hopes and you know, my firm belief that it’ll be a very successful program and partnership and generally, we’re in this for the long term and to really address significant unmet needs and create new medicines for a really underserved patient population.
24:55 Eugene Borukhovich
Fantastic. And finally, you know, we started with you and your story and how you got here, and I’d love to know, what is your “Why”, what makes you get up every morning? Aside from the alarm.
25:08 David Klein
Yeah, yeah, no, that’s a good question. I mean, very frankly I wake up at the same time every morning with or without an alarm. But look, I am a really big believer in this space and in the somewhat narrow but important and potentially life-changing for so many people view that I really want to catalyze the industry and specifically for Click to lead it but an entire industry and catalyze change in the world of medicine, where physicians have access, and patients have access to software as treatments, right? If you look at the world we’re in now, and you know, your average person goes or calls now a physician and, you know, is diagnosed with insomnia, for example, there’s, you know, very limited options that a primary care physician has. I mean, I’ve been speaking to physicians for years who, you know, literally will prescribe Benadryl because they don’t want to prescribe a Schedule IV drug yet the American Academy of Sleep Medicine, in their practice parameters recommends behavioral therapy as the first line treatment. So it’s really something where you know, technology has advanced to a stage where we can essentially digitize behavioral treatment that has not historically been available to almost anyone, right? I mean, who do you know, that’s ever seen a sleep psychologist? And digitize that and address a very important unmet need. And I could go down our pipeline, and really, in almost every therapeutic area, and give a similar analogy, to convey where these programs fit, and how much they’re really needed. So, you know, I get up in the morning to really help change the world of medicine for the better in which, you know, patients have more effective and efficient care providers are able to treat their patients better. And ultimately, the other stakeholders, such as payers benefit from lower overall cost and covering more effective treatments for their patients. So I think it’s a real winning situation for everyone. And I’m really looking forward to a world that, you know, frankly, I think, is around the corner, Eugene, where, unlike gene therapy, or cell therapy, I think, you know, the very near future, most of us, if not all of us will, at minimum know somebody who has been successfully treated by a real digital therapeutic. So it’s an important area, and I’m very excited to be helping to grow this industry.
27:56 Eugene Borukhovich
Amazing. And on that note, thank you very much for making the time and look forward to seeing more of your pipeline, and the outcomes.
28:05 David Klein
Thank you, Eugene.
28:07 Eugene Borukhovich
Thanks so much for tuning into Digital Therapeutics Edition of Digital Health Today, a production of Mission Based Media. Be sure to hit that subscribe button to this podcast on your favorite podcast player, so you’re then automatically notified when we post our upcoming episodes where I speak with dozens of leaders and trailblazers who are forging the path for digital therapeutics. If you’d like to learn more about YourCoach.Health, or Brian Dolan’s Exit and Outcomes, you can always find the links to this and more in the show notes for this episode. You can connect with me personally on Twitter @HealthEugene, or follow my journey of writing my first book Hard Pill To Swallow at hardpilltoswallow.substack.com. I’m Eugene Borukhovich and catch you next time.