Despite Lack Of A Sustainable Monetization Strategy, Proteus Named To Billion Dollar Club

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The Wall Street Journal recently published a list of 73 billion dollar startups. The list included a number of high profile startups like Uber, Spotify, and Airbnb, as one would expect, but healthcare held its own on the list as well. Theranos, a Palo Alto-based healthcare company founded in 2003 by a then 19-year old Stanford University drop, made the list. Jawbone also made the list, though for a company that was founded in 1999 and has a $3.3 billion valuation built up over more than a decade, its hard to understand how they still qualify as a “startup.” But of all the startups on the list, the one most interesting from a digital health perspective is Proteus, valued at $1.1 billion.

Proteus launched in 2001 with the goal of transforming drugs into digital medicines. Simply put, Proteus developed a small sensor that could be embedded in a pill, and once swallowed, could transmit a signal to a paired smartphone app confirming that the medication had been taken. The idea, while simple, has ramifications that cross the pharmaceutical industry, preventative medicine, and clinical trial research. The problem is that to date, Proteus has been unable to secure FDA approval to embed its sensor directly into pills. Instead, Proteus has been marketing a placebo-like supplementary pill that patients are instructed to take in tandem with their active medications. In an interview with HIStalk Connect, Proteus CEO Andrew Thompson discussed the progress made thus far on the road to full regulatory clearance, explaining “The first panel of fully integrated digital medicines are undergoing FDA review. In the interim, we are putting both the active medicine and ingestible sensor in a single capsule for a similar medication-taking experience.”

While technically effective, this is not the technology Proteus set out to bring to market and its inability to secure regulatory clearance is having a real impact on its monetization strategy. Still, the technology Proteus is developing has the potential to transform medicine, and because of that, the company has managed to raise nearly $300 million in venture funding since its launch. With a $1.1 billion valuation, and the pharmaceutical industry at large waiting with baited breath for Proteus to secure the needed regulatory clearances, its only a matter of time before the act of taking a medication is a digital experience that can provide feedback and be integrated into population health and medication adherence systems.


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