Case study 2: Limbix

5.2.1 Foundation of the Business Model

Limbix is a company which develops digital therapeutics for adolescent mental health, with its primary focus being on their lead-product Limbix Spark, a CBT-based mobile app targeted towards teenagers suffering from depression. The team of 27 people, consisting of clinicians, product designers, researchers, and engineers, is based in Palo Alto, United States. What makes Limbix (Spark) an especially interesting case, is the fact that it is not on the market yet: the product is currently in the process of getting FDA clearance as a digital therapeutic, which will presumably take place in early 2022. The journey towards FDA clearance, the “evidence generation pathway”

consists of 3 stages: (1) a feasibility clinical trial, (2) a COVID-19 randomised controlled clinical trial (RCT), and (3) an FDA pivotal RCT. The company has already completed a feasibility study among 30 participants aged 13-21 which showed a clinically meaningful reduction in adolescent

depressive symptoms, and is currently in stage 2, assessing the app among adolescents during the COVID-19 pandemic. The preliminary results of the study, which includes 235 participants aged 13-21, show a clinically significant reduction in depressive symptoms, as well as a statistically significant reduction in depressive symptoms. The third and final stage beginning in 2021 will be a large-scale pivotal trial in partnership with the Duke Clinical Research Institute, the world’s largest academic research organisation and a leader in the advancement of digital health technologies (Limbix, 2021). The Limbix-DCRI pivotal RCT has received a Fast Track Phase I/II Small Business Innovation Research (SBIR) grant from the National Institute of Mental Health (NIMH), providing up to $3.6M of funding to support the clinical validation of Limbix Spark.

Hence, in terms of how the product’s medical effect is demonstrated, Limbix Spark is without a doubt the app reaching the highest clinical bar (and validation) in our case selection.

The app is specifically targeted towards adolescents (“our sweet spot is exclusively focusing on adolescence and building all of our products with adolescents in mind”). According to Lake, the app/treatment is “most impactful for kids who are first identified as having behavioural health needs within primary care”. Since the company sees the access to a mental health professional as the main barrier both in the US and in other countries, the company positions the app as either a

“a stopgap before they're able to access additional support”, or a form of treatment in itself, “under the purview of a primary care provider”. The product itself, Limbix Spark, is a 5-week cognitive-behavioural-therapy-based program that is built on the idea of completion of different “value-based activities that spark feelings of pleasure or mastery” (Limbix, 2021). The app also includes elements of gamification, e.g., a reward system within the app used to drive engagement, as adolescents are particularly motivated by rewards, Lake stated. However, she stresses that the app is not entirely game-based, as “Mental health isn't a game. /.../ Our app isn't a game. So, we pick and choose the elements of gamification that we think are appropriate.”

5.2.2 Revenue Model: Structure, Rationale and Strategic Implications

Once Limbix gets the FDA approval it is currently seeking, the mobile app-based 5-week-program will be a “prescription medical device” prescribed to teenagers by clinicians as a prescription-only digital medicine and reimbursed by insurance (who in the US healthcare system, are often collectively referred to as “payers”), more specifically by either private payers (insurance

companies), or public payers, such as “state-based Medicaid offices”. Health insurance - be it public or private - is a complex concept to grasp in any country, but it is especially true for the US healthcare system (Woods 2017; Camillo 2016; Leonhardt 2017). That being said, it is not in the scope of this study to delve into the specifics of the barriers to insurance reimbursement presented by the US health insurance system: only the insights generalisable to the broader context will be considered and discussed.

Although the author has not encountered such classification in the context of business models in academic literature (with the exception of Berry & Shah (2020) using the same wording to describe the target audience of certain mental health start-ups), Limbix Spark’s business model will hereby be classified as “clinician-to-patient”, as the author believes it to be the most accurate in the case of Limbix. However, according to Lake, Limbix is “looking to target being reimbursed by insurance” as their business model, thus, another wording for the classification of the business model could be “reimbursed-by-insurance”. According to Lake, the main rationale behind the given business model is rooted in the company’s mission to build accessible technology (“the problem we're trying to address with our app is an access to care issue”). As Lake believes that accessible technologies have to be affordable, they are “looking to have insurance reimbursement as a way to have the products be accessible”. However, getting approval by the FDA does not mean the product will be reimbursed instantly, or as a result. As Lake elaborated, the journey to insurance reimbursement is complicated and requires negotiation with various stakeholders:

“Speaking and negotiating with public as well as private payers so that we are an affordable option for all teens in this country, and then beyond when the time comes. /.../ Right now, we're in early conversations with some private payers to negotiate reimbursement for our product Spark once it's cleared, and in very, very early stages in talking with the public payers (Medicaid offices) and looking to better understand what data and evidence they want to be able to see that we can meet in order to reimburse for our app”.

There is yet another major reason behind the choice of the behind the current business model.

Given that the Limbix Spark’s mobile app-based program already exists, the company could have also made the app commercially available, meaning that as an alternative or a substitute to the existing, “clinician-to-patient” business model, a direct-to-consumer model could have been a

potential path to pursue. Although Lake does not rule out that option in the future (“Our long-term goal is to be able to make it an over-the-counter solution”), she presents a strong argument against the D2C approach in the stage they are at now: “There certainly are companies that have followed that route, where they go to market first with a commercial product that they don't make medical claims about, and then they look to strengthening their clinical evidence and going to market. /.../

I think from our perspective, that would dilute our brand, as we are looking to be seen as meeting a really high clinical efficacy bar. /.../ We want our products to be seen as medical devices rather than another app on the App Store”. Another reason for pursuing the reimbursed model lies in the limited resources: “Having an app on the App Store is not a trivial thing to maintain. /.../ As a small start-up, simultaneously support customers in a commercially available product while also pursuing the FDA clinically rigorous pathway, we thought was going to take our team's attention away from that goal in supporting a commercially available product.” Lake adds that the financial runway provided by VC allows them to pursue the longer path and “focus on the one goal without that beginning revenue stream from a commercially available product”. To sum up, the clinician-to-patient or reimbursed model, although it is a long, difficult path, is strongly based on the company’s aim to provide accessible products that are reliable and credible medically.

As Lake stated, Limbix charges a “one-time payment” for the access to the app’s content. Thus, the revenue model of Limbix can be classified as “pay-per-program”, as the app is designed to be a 5-week intervention, consisting of 5 levels, with each of the levels recommended to be completed weekly (“that's a recommendation rather than a prescription in itself”). Completing the 5-week program will hopefully be sufficient to most teens, and “obviate the need for additional support”.

The company is, however, contemplating implementing a continued care solution based on a subscription model in the future: “We are looking to expand the resources that we can provide so that kids can continue to use the app for a longer duration of time to help them maintain their mood. /.../ Having features that can be used beyond the initial time window. /.../ Right now, our product is a 5-week intervention, but we want to build out additional content so that it can continue to be impactful as a solution beyond five weeks, and to help serve maintenance of symptoms.” She highlights the importance of further research investigation in order to be able to offer such a subscription-based continued care model.

5.2.3 Challenges

As already discussed, the biggest industry-wide challenges presented by the clinician-to-patient business model are related to reimbursement: “There right now really isn't a player in our industry, specifically about prescription digital therapeutics, that has cracked the code here... That has negotiated reimbursement by a large commercial insurance company or a public payer at this point.

However, Lake is hopeful that Limbix will be the first to “crack that code”. Another challenge directly tied to the reimbursement issue, is the wider acceptance of digital health interventions as adequate solutions to health problems and demonstrating real value to payers/insurance companies: “I think a larger question is what is the value that we add to those major payers too.

And so, I think that's the biggest issue in this space. If people don't figure out how our products fit into that larger health ecosystem, then we won't be able to be successful”. Yet, Lake is under the impression that the past year in particular (due to COVID-19) has well demonstrated the value that digital health can play and is optimistic that Limbix will find that path to a successful business model. The main challenge the company is facing product-wise, is to do with user behaviour on the app. Lake elaborates that although the research on digital health interventions implies that using digital health tools is helpful, problems can arise in terms of engagement (“If people don't use your product, then it won't be helpful”). Lake also emphasises that adolescents represent a very distinct demographic to build technology for, and “are not just smaller adults”. Therefore, to make sure they are building a product that is engaging to the audience they are looking to target their intervention to, the company has included both experts focusing specifically on that age range, as well as their target demographic (teens) in the product and content development process since day one.

5.2.4 Alternative Revenue Models

When it comes to alternative business and revenue models, the potential routes towards a direct-to-consumer, over-the-counter business model, as well as an additional subscription-based revenue model were already covered in the previous chapters. As another alterative, Lake mentions being open to a more “value-based model”. Lake is hopeful that the value-based care model will become more accepted in the United States. Furthermore, as a supporting argument to the subscription model, Lake is hoping that their product will have features “that are geared towards preventing relapse or supporting if there is a relapse in symptoms” and which allow continued use beyond the

5-week program. However, Lake acknowledges the threats that a subscription-model and apps’

efforts to optimise user retention might present: “It can be seen as problematic when continued use of the app is driven more by a bottom line rather than the patient's or person's best interest. /.../ I think it's about ensuring that the maintenance of the use of the app is geared towards helping them maintain health, and not just maintain use of the app”. Although the app is currently based on a program with a beginning and an end, she argues that continued maintenance of the achieved results is necessary (“You can't just have a restart at the end of a program and be good to go”) and emphasises, that “Health is something that has to be maintained. /.../ I think that's true for physical health and mental health, that it is a continued thing that needs to be invested. /.../ The way we treat physical health as something that you need to constantly maintain with exercise and healthy eating; we should [approach] mental health the same way.”