Second Drop

There is nothing quite like a hot sector, an upcoming IPO and lots of hype to boost investor interest. This is exactly what’s happening with digital health a sector that’s hotter than Georgia asphalt. And nowhere is digital health hotter than in our wacky world a world where the investors just love the toys in the toy chest. As we noted during the ADA conference one question, we kept getting was about Livongo. Is this company really worth a billion dollars? Is there any there there or is this just an old idea in a shinny new box?

Do we believe the company is worth a billion, nope. Is there there there, sort of. Is this an old idea in a shinny new box, absolutely. But none of this really matters when the digital health sector is a blazing forest fire completely out of control. Everyone yes everyone seems to believe that digital health will solve all the problems in diabetes. That patients will use all these way cool whiz bang toys that come with way cool whiz bang apps which provide coaching to help the patients better manage their diabetes.

Now before we go any further let’s state empathetically that digital health has the POTENTIAL to do a world of good. That when used as designed consistently digital health can and does help the patient manage their diabetes more effectively. As everyone knows we are huge fans of Tyler. However, the key here as always is not just to get these toys into the hands of patients but to make sure the toy company is around for a while.

Watching Livongo as they march towards their IPO, and damn we really want to see that S-1, are our friends at OneDrop. Although we aren’t huge fans of OneDrop we know a smart management team when we see one. Just as Livongo created lots of noise by doing lots of deals OneDrop is doing the same. Check out this from a press release issued late last week;

“Springbuk, the employer-facing health intelligence platform, announced a national preferred partnership with One Drop, a leader in healthy lifestyle and condition management programs for employers. Through this partnership, the companies will enable employers to take control of their healthcare costs while at the same time empowering employees to make more informed decisions to live healthier lives.”

But wait there’s more for just as Livongo comes out with lots of useless studies or “innovations” which are equally useless check this out from OneDrop;

“ One Drop, a leader in the development of digital therapeutics solutions for diabetes and other chronic conditions, today announced the expansion of their AI-powered Predictive Insights to include 8-hour blood glucose forecasts for One Drop | Mobile iOS users with type 2 diabetes, including those on oral medications and/or basal insulin regimens. One Drop is now the only provider of blood glucose forecasts for people with type 2 diabetes.”

Now before everyone starts doing the hippie hippie let’s get real here. In the real-world predicting glucose forecasts for a non-intensively managed Type 2 patient is like forecasting the weather in Chicago, pretty much an exercise in futility. Pardon us for asking but what value is this forecast to a patient on orals alone even if it is accurate. The same can said for a patient using a basal insulin. As we noted during the conference a patient using basal insulin alone or in combination with orals will dose what their doctor tells them to dose and is unlikely to make any changes because their app tells them to.

But heck what happens in the real world has zero to do when a sector is hotter than Halle Berry in a bikini. Never mind what actually goes on with the patients who are supposed to use all these shinny toys, nope that does not matter when companies, their management team and investors can cash out big time with an IPO. Think the investment bankers who are earning some nice fees from taking the company public care about any of this? If you said yes, please head to the nearest cannabis dispensary for a refill.

Listen the gentlemen who run Livongo and OneDrop are many things but stupid is not among them. These guys know exactly what they are doing and while already wealthy are about to buy another boat. Yep they will watch their IPOs take off like a rocket, then hit the jackpot on the same machine when a bigger company comes along and buys the company. Is America a great country or what?

Then after being acquired they will move on looking for the next “big” thing. More than likely the company they leave behind won’t live up to the hype but being the super salesmen they are they’ll say hey it’s not my fault it was the other idiots who screwed it up.

Now we sure hope the folks at OnDuo are reading this as damn this is the perfect exit strategy for the mess they created. Google and Sanofi need a way out and what better way then to dump this dog on someone else. Just as Livongo and OneDrop have lots of shinny toys so too does OnDuo. Just as Livongo and OneDrop have made lots of deals so too has OnDuo. Useless studies you can check that box as well.

Because we’ve been around a while, we also have some free advice for the folks at OneDrop and OnDuo, don’t screw around as this window of opportunity will NOT be around forever. Way back in the day when BGM ruled the world there was a company that looked like a sure-fire hit. It had a way cool whiz bang toy. They raised a ton of private money, were making deals everywhere and even better Abbott had just spent over a billion bucks to buy Therasense.

Unfortunately the talented management team, and they were extremely talented, could not control events as the BGM market collapsed and they missed their window to go public. Being the smart guys they are they left and moved onto greener pastures. This company which was once hotter than Raquel Welch in One Million Years B.C., for all the millennials who have no idea who Raquel Welch is Google it, fizzled out.

But just to show there is still hope the company although mortally wounded did not die and now has … wait for it … a CGM. So that big pay day just might come after all. Good luck AgaMatrix don’t make the same mistake twice as CGM is as hot possibly hotter than digital health.