Proteus Digital Health Raises $120 Million Venture Funding Round

2014-03-10_17-13-06

Redwood City, Calif.-based digital pharmacology startup Proteus Digital Health announces a $120 million venture funding round led by a group of undisclosed investors. The round is the single largest in the company’s 13-year history, and brings its funding total to $240 million.

Proteus is an interesting story in digital health. The company developed an ingestible sensor that transmits a signal to a patch worn on the skin once swallowed. That patch houses a small Bluetooth transmitter which is used to update a smartphone app with the date, time, and type of medication that was taken. Ideally, the sensor would be embedded directly into active pills as they are manufactured by pharmaceutical companies. Deploying ingestible sensors directly within active medications seems like a promising way of measuring and ultimately increasing medication adherence.

Unfortunately, Proteus has yet to secure FDA or EU approval to embed sensors directly into active pills. This is a significant constraint to overcome. For patients, it means that they need to take two pills, the active medication being tracked, and then a placebo with the embedded sensor that will track it. For patients taking multiple medications, as most seniors are, this is a considerable addition to their medication regimen. For Proteus, this also limits the appetite of pharmaceutical companies that might buy the technology for use in their medications, and leaves them with fewer paths to monetize their technology.

The result is a 13-year old company with a clinically tested and potentially disruptive new technology that cannot seem to zero in on a self-sustaining monetization strategy and so has returned time and time again to outside investors. Proteus closed a $62 million Series F round in 2013, followed by $31 million in debt financing in January of this year, and now the company is back again, raising another $120 million from private investors.

It will be interesting to see how Proteus uses its new funding, and if it is able to transition to a place where it can self-sustain. The company made a second financially focused announcement in that it has recruited Steve Feiler, former CFO of HP’s $4 billion software division, as its own new CFO. With a fresh face at the helm of its finances, and the capital to focus on overcoming regulatory hurdles and developing a monetization strategy for its technology, Proteus looks to be in great shape for growth. It should be an interesting next few years for Proteus and the ingestible sensor market that it is trying to create.


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