Livongo Health launches new cloud-connected meter and platform for diabetes – September 25, 2014

On September 10, Livongo Health announced the launch of a new digital health platform for people with diabetes. The system, called Livongo for Diabetes, includes a cellular-enabled touchscreen meter (see picture below), a “smart cloud” with software algorithms, and an on-call remote care team. FDA clearance came on September 8 following a somewhat lengthy ten-month application review. The entire platform will be priced at ~$70/month (meter + software + lancing device + unlimited strips) and the company hopes to drive down that cost further as production scales up. From an access standpoint, we appreciate the move away from charging per-strip; it remains to be seen whether this strategy will be economically feasible. Livongo for Diabetes will initially be targeted at payers and self-insured employers, who will contract with Livongo on an organization-wide basis. The company reportedly has orders for “thousands” of units already and has established strategic partnerships with HealthCare Partners and Office Depot. A consumer platform is under development.

Livongo has an informative video about the platform, which emphasizes the goal of easing the burden of managing diabetes and giving patients solutions. In speaking with management, we heard that Livongo for Diabetes is more of a service than a device – the cloud-connected meter really enables the back-end software, which is the crux of the program. The meter uses a cellular network to transmit blood glucose readings to the cloud, enabling the interactive smart software to provide actionable information and instant feedback to patients. The feedback is based on pre-programmed “clinical rules” and information set by physicians. It does not provide insulin dosing recommendations, but can do trend analysis (e.g., “You are consistently low in the afternoon”). This use of algorithms to improve patient outcomes strikes us as the natural next step in the progression of cloud-connected meters (see our appendix for a competitive landscape of the industry). Finally, the Livongo platform also provides users with a remote care team, a group of on-call diabetes educators whose role is to provide support to patients and intervene if shared data requires clinical attention. We’d note that Livongo has not published any clinical trials of its system, so the clinical efficacy of this approach is an important outstanding question.

Notably, the launch of Livongo for Diabetes coincided with the launch of Livongo Health itself, a new digital health company focused more broadly on chronic conditions. The company secured initial funding from 7wire Ventures and recently received Series A funding of $10 million from General Catalyst Partners. CEO Glen Tullman, who has a son with type 1 diabetes, brings a highly impressive background to the company – he was formerly the CEO of Allscripts and Enterprise Systems, companies that were both taken public under his leadership; Mr. Tullman currently serves as a Chancellor to the International Board of JDRF.

• The cellular-enabled InTouch BGM (see picture below) features a color touchscreen and automatically transmits blood glucose readings to the cloud. The device fits in the palm of a hand and incorporates a smartphone-esque, icon driven interface that includes a built-in pedometer. It enables users to check blood sugar, message other users, track activity, or view blood sugar trends. The meter includes an on-board pedometer, representing the first launched meter we’ve seen that incorporates this feature (YOFImeter also has a built-in pedometer, though that has not yet launched). We have not yet tried the meter but look forward to seeing how its user interface compares to smartphones.
• Livongo for Diabetes’ “smart cloud” is the hub of the system. Based on pre-programmed “clinical rules” and information from a physician, this platform seeks to provides actionable information and instant feedback on glucose readings. Though the platform does not provide insulin-dosing recommendations, it does provide trend information (e.g., patient is consistently low in the afternoons) and will encourage a patient to alter behavior accordingly. The software reportedly “gets smarter and more personalized” over time as it learns from a patient’s history to provide individualized feedback; we’re not sure what this entails but look forward to trying the system to assess.
  
  • WellDoc has taken a more robust approach with its BlueStar mobile prescription therapy product for type 2 diabetes, which is RxOnly and provides fully automated, highly personalized coaching (including insulin dosing), as well as, clinical decision support for the patient’s doctor to help optimize the treatment plan and achieve key Quality Measures. WellDoc recently began a regional launch and one must commend the company for conducting robust clinical trials of BlueStar, a rarity in digital health; to our knowledge, Livongo has not yet published any clinical trials of its diabetes platform. As of the last public update on WellDoc in January, the company had closed a $20 million Series A round of financing led by Merck’s $500 million Global Health Innovation Fund (Merck GHI). These funds were expected to contribute to the launch and commercialization of BlueStar, WellDoc’s FDA-cleared, personalized Mobile Prescription Therapy for type 2 diabetes (see our detailed report when it was announced in June 2013).  BlueStar also has a unique reimbursement code allowing for nationally scalable pharmacy dispensing and health plan/PBM claims adjudication.
• Livongo for Diabetes also includes a “virtual care team” that includes remotely located Livongo-sponsored diabetes educators that provide support and education to patients. Patients will be able to share data with this team – only if they choose to – enabling the educators to reach out (within 60 seconds) if readings require clinical attention. The scalability and economic feasibility of this approach are a major question if a huge volume of patients get on this system. The data-sharing platform also enables patients to share blood glucose information with friends, family, and caregivers. We think this platform will appeal to many patients, especially elderly type 2s, and may be reassuring for patients (and families) as a safety system.
• Management plans to announce additional partners in the coming weeks and emphasized that a consumer platform is under development. Livongo Health has signed a novel agreement with the College Diabetes Network to supply a subset of college-age patients with the product free-of-charge. The company hopes to collect feedback and to generate interest in the platform in this target demographic; in particular, the cloud-connection capability is expected to appeal to this population as it enables easy sharing and comparison of glucose data, ideally to be used as a motivational tool. The marketing strategy is unique and quite brilliant in our view, since this is a key demographic that would appreciate this system – tech-savvy, seeking independence from parents, but where affordability is a concern.
• FDA clearance of Livongo for Diabetes came on September 8 following a somewhat lengthy ten-month application review (average review time for this division is a bit less than six months). We understand the delay was linked to an application revision to meet (and exceed) the FDA’s most recent BGM guidelines, which are still in draft form. Per Dr. Courtney Lias’ remarks at Friday’s Endo Society Policy Summit, the FDA is still reviewing the comments from the BGM draft guidance; we expect the final guidance will have some noticeable changes.   
• Livongo Health, a rebrand and expansion of what was formerly EOS Health, launched on September 10, with last week’s Livongo for Diabetes announcement. The company seeks to empower people with chronic conditions by combining technology with personalized support and will initially focus on diabetes. Management sees the enormous financial healthcare burden of diabetes ($245 billion per year) as an opportunity to make a significant difference in healthcare. The company secured initial funding from 7wire Ventures and recently received Series A funding of $10 million from General Catalyst Partners. Livongo also has multiple clinical research programs underway at institutions including the University of Massachusetts and University of South Florida.

Close Concerns Questions

Q: The product has similarities to TelCare – will the on-call educators provide a meaningful competitive and clinical advantage?  

Q: What is the clinical efficacy of Livongo for Diabetes? Are any clinical trials of the system underway?

Q: Is an unlimited strips model – with a monthly subscription fee – economically feasible?  

Q: Is the target market niched to type 1 patients?

• because type 2 patients (even those on long-acting insulin) typically don’t purchase $70 of strips per month
• how would the service of on-call educators scale to the 27 million type 2s?

Q: How will Livongo coordinate with providers?  (i.e., providing clinical advice is a challenge without incorporating the providers on-going and evolving treatment plan)

Q: Without a unique reimbursement code, will Livongo be able to scale to manage unique payment streams from the thousands of employers and health plans?

Q: Will Livongo end up competing with case managers at disease management companies, health plans, and ACOs?

Appendix

Picture of InTouch Meter

Smartphone/cloud-connected Meter Competitive LandScape

• Livongo for Diabetes builds on an emerging trend of increasing interest in smartphone/cloud-connected meters – below is a non-exhaustive, alphabetically-organized list of those we are aware of (we acknowledge there are likely others in development). We believe much of the diabetes device industry is moving in this direction, and it will only be a matter of time before a large number of devices (BGM, CGM, pumps) are cloud connected.

-- by Varun Iyengar, Adam Brown and Kelly Close