Today, I’m excited to share my recent conversation with Santosh Shanbhag, CFO at Akili Interactive. Akili is a leading digital therapeutics company that received the first FDA clearance for a video game based therapeutic last year. Their lead product, also known as EndeavorRx, is intended for the treatment of ADHD.
Scott: Thanks for joining me today Santosh. To start us off, could you tell us a bit about your background and what led you to joining Akili?
Santosh: Sure — I’m an engineer at heart and hold a Master's degree in Engineering. I even spent a few months early on in my career as an engineer in the corporate world, but switched over to the business side soon afterwards. I also hold a MS in Management and Engineering from MIT Sloan, and have spent most of my career in the consulting or pharma/biotech space. Right before Akili, I was at Vertex Pharmaceuticals for about 10 years, where I moved up the ladder within strategy and corporate finance in the US, and eventually was the head of international finance and accounting responsible for Europe, Australia, and Latin America.
Having spent a large part of my professional career working on chemical therapeutics, one area that has always tweaked my interest is digital therapeutics. I love that digital therapeutics allow you to personalize the medicine, make it highly adaptive and have a deeper relationship with patients. It gives you the opportunity to obtain feedback from them which you can incorporate into the product. It’s a big draw for me because I believe that better products lead to better experiences and care, which will eventually lead to better outcomes.
Considering Vertex had grown to become a fifty billion dollar organization when I left, I was also excited by the idea of joining a smaller company, where everyone knows everyone else. It allows people to have more meaningful conversations, to make decisions more quickly, and to have an impact on the organization, no matter what their role is. At a place like Akili in particular, you get to work with people who come from totally different walks of life — you’ve got people like me who come from the pharma/biotech world, you've got folks with health tech experience, and then you have people from the entertainment space, who have spent their lives developing video games. These are extremely different fields, each with different “languages,” so we've had to be very deliberate about creating a culture that brings together these disparate industries.
Scott: I love that. I remember something we talked about when we first met was how digital therapeutics give you the opportunity take a consumer lens and apply it to healthcare. I’m sure that starts by having a team with deep experience across numerous different industries.
With that said, the term “digital therapeutic” has been used quite broadly over the last few years, to the point where its definition is somewhat ambiguous today. One of the things that stands out about Akili’s work is the focus on digital medicines that are FDA approved and intended for prescription use. Can you talk about the thinking behind this approach?
Santosh: For sure. When the founders first started Akili, they were faced with a challenge — they believed that effective medicine can also be enjoyable and so set out on a mission to change the status quo of medicine. They developed a video game to enhance people's attention, and knew from day one that the product would need to come with a significant amount of scientific credibility and backed by robust data from rigorous clinical trials.
As a company, we feel that patients today are bombarded with all kinds of technology, many without clinical evidence to support their claims. It’s a trial and error process for patients to find things that actually work. We want to do the opposite, and differentiate ourselves by bringing products to market that patients know have gone through rigorous clinical testing and are backed by strong science. To get the trust of physicians and families in this completely new type of medicine, the founders set out on a path to get FDA approval of the first ever video game treatment. We'll see how the broader field of digital therapeutics evolves over time, but I think a lot of companies are taking our lead and starting to move in this direction as well.
Scott: That makes sense — I think a quick search for health related apps in the App Store reinforces Akili’s strategy. It feels like there’s hundreds of random applications out there making different health related claims, and it’s very difficult for people to figure out which, if any, of them even work.
With Akili being at the intersection of healthcare and technology, I wanted to get your thoughts on the differences in culture between those two industries. One thing I’ve seen is that in the tech world, the idea of doing something new and different is almost always encouraged, while in healthcare, there can be quite a bit of inertia and pushback to changing the status quo. How does your team think about balancing those two approaches?
Santosh: I agree with you, I think it is a fine balance. One thing that’s helped us is because there’s such a clear unmet need in our first market of ADHD, people are on the constant lookout for innovative non-pharmacological products. But still, chemical therapeutics have been around for hundreds of years whereas our technology has only existed for a few years, so there are certainly skeptics that are slow to adopt new things in medicine.
We always bring it back to the two pillars that our company stands on — scientific rigor, and fun, engaging entertainment — and we've got to keep going back and forth between the two to get people to fully appreciate what we're doing. As soon as physicians and caregivers see that the product is backed by science, we’ve found that they are more than happy to use it, especially given the low risk it presents. From a patient perspective, this represents the end of paternalistic medicine. We’ve introduced a medicine that was purposefully designed to fit into their lives, a medicine that is actually enjoyable. We’re seizing an opportunity at Akili to continue to push boundaries when it comes to marrying medicine and entertainment, and an obligation to frame the conversations we have with different stakeholders to make sure they fully appreciate the product we’ve brought to the market.
Scott: I can certainly see how it needs to be audience dependent, and it reminds me of conversations we’ve had at Luminopia with doctors about our digital therapeutic for amblyopia. If we go in and tell them we’ve got cutting edge technology that uses VR, their reaction is typically, what’s VR and why should I care? But if we lead with the clinical outcomes, then it doesn’t really matter what the technology looks like.
I want to switch gears a little and dive into Akili’s launch of EndeavorRx, your video game treatment for ADHD. One question that many people have about digital therapeutics is what the business model looks like, especially for prescription digital medicines which come with higher R&D costs and longer R&D timelines. Could you share a bit about your team's thinking on bringing this product to patients?
Santosh: Yeah, for sure. If you take a novel digital therapeutic and distribute it through a traditional pharma model, you stifle the full potential of the products. We have an opportunity to find new ways to bring products to the market, by leveraging the best of both tech and pharma product launches. With the former, you would probably start small as you look for product market fit, and quickly iterate from there, whereas with the latter, it’s like a rocket ship taking off the day after FDA clearance. We don’t want to just take the rocket ship approach, because we lose the ability to quickly learn and adapt. Another difference with our launch strategy is we don’t believe we’ll need the large sales forces you would expect in pharma. The world is changing, and since ADHD is such a consumer driven market, we’re looking to take a more consumer driven approach, supported by physician involvement and education.
Scott: For EndeavorRx to be successful, I suspect that getting payers on board will be critical. What has their feedback been on the product? What are they excited about and what are they concerned about?
Santosh: Although payers might not be known for being early adopters, there are a few large groups taking a serious look at technology like ours, especially because of the impact it can have on mental health. They have a hypothesis that if you can address mental health issues early on, you can also delay the onset of other diseases, and cut down on overall costs. This is augmented by the fact that people are focusing on mental health much more now than before the pandemic, and that’s true with payers, physicians, and patients.
Payers are also intrigued by the safety profile of digital therapeutics. With chemical therapeutics, they have to think about the underlying disease, but also the side effects and complications of treatments. The safety profile of digital therapeutics is hard to beat. Lastly, we’re able to benefit from the market we’re starting in again. ADHD is an essential benefit and a pediatric condition, so payers are constantly evaluating new drugs and trying to figure out which one works best. I think that leads to more appetite for a product like ours as well.
Scott: That’s great to hear. I assume another important consideration for payers and how they think about EndeavorRx will be pricing. How is your team thinking about pricing for digital therapeutics, and how does it compare to pricing models for traditional pharmaceuticals?
Santosh: I think we have an opportunity to do things differently with pricing as well. We are making pricing much more transparent, not just to payers but to consumers as well. Pharma pricing is so confusing that no one knows how it works. Beyond that, we want to find a price point that is affordable to consumers and payers, so that more patients can benefit from what we’ve developed. We’ve used the price of branded generics as a benchmark, to make it easy for payers to understand. I do think pricing is one area that will evolve over time as digital therapeutics become more mainstream, but for now we’re trying to keep it simple.
Scott: That makes sense, and the focus on accessibility is admirable. That’s all the time we’ve got today, but thanks again for joining us Santosh. It was great to hear your thoughts on what’s in store for digital therapeutics, and I wish your team all the best with the commercialization of EndeavorRx.