IBM collaboration is Medtronic's fifth diabetes deal in a month

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A disease of wealthy nations is always going to appeal to device makers, and judging by its recent activities Medtronic really, really wants in on diabetes. The world’s largest medtech company has signed five agreements of various stripes in the last month to boost its diabetes technology and ideally allow it to create something approaching an artificial pancreas.

Three of these deals, including the one signed yesterday with IBM, point to the vital role of data management in this space. Various biomarkers in diabetic patients must be not just constantly tracked but predicted if an artificial pancreas is to do its job. That requires computing power, and IBM will be supplying it in spades in the shape of the artificial intelligence known as Watson.

The idea of an artificial pancreas is to combine a blood glucose monitor with an insulin pump to treat insulin-dependent diabetes without any input from the patient. Medtronic is already in the vanguard here with its MiniMed 640G system – approved in Europe but not yet in the US – which predicts low glucose levels and automatically pauses insulin delivery before the patient reaches hypoglycaemia.

Elementary

Now, Medtronic and IBM will use IBM’s Watson – the computer system specifically designed to compete in the quiz show Jeopardy – to improve Medtronic’s closed-loop algorithms. These algorithms are ultimately intended to enable an artificial pancreas to anticipate not only troughs but also peaks in blood sugar levels, pausing or releasing insulin or glucagon automatically to head off glycaemic episodes.

The Medtronic-IBM collaboration will also see the companies pull in electronic medical records, health insurance claims and population health data, the analysis of which, Medtronic says, will uncover patterns and predict health risks. The data will be stored in IBM's Watson Health Cloud platform with the companies promising that it will be anonymised.

The need to improve algorithms is also behind another of Medtronic’s deals. Last week it licensed the MD-Logic Artificial Pancreas algorithm from Israeli start-up DreaMed in exchange for undisclosed royalties on future sales of any Medtronic products that use the algorithm.

It also invested $2m in DreaMed, which has CE-marked software called GlucoSitter which links glucose sensors to insulin pumps and employs the MD-Logic algorithm.

Medtronic’s other tech-based deal was with the pleasingly named app developer Glooko, in whose $16.5m series B round it participated in mid-March. Glooko said it would use the cash to update its eponymous FDA-cleared app so it can accept data from more insulin pumps and continuous glucose monitors, and integrate predictive algorithms.

Cost

The thread linking these three deals is not just data but health economics. Hyper- and hypoglycaemic episodes are not only dangerous but expensive to treat, so these technologies offer a cost-saving opportunity.

But it is more than that: software requires no raw materials or manufacturing plants and is stored and transported at negligible cost. This is why digital health companies were such a focus of venture investment last year (Digital and genomic investments help hold up medtech VC funding in 2014, January 22, 2015).

Diabetes itself is an area of huge opportunity. Many of the drugs approved to treat the condition over the past decade or so work very nicely at lowering blood sugar, but have not been proven to have an effect on the rates of diabetes complications such as heart attacks or strokes. The point of a fully functional artificial pancreas is that it would work exactly as a healthy native pancreas does and should therefore improve clinical outcomes as well as the surrogate marker of blood sugar.

Early-stage activity

Medtronic’s other diabetes deals are less data-driven. Arguably its venture investment in Semma Therapeutics is a way of approaching an artificial pancreas by partly biological means (Semma pulls off a near-miraculous series A, April 7, 2015).

Medtronic's recent diabetes deals
Date Company Type of agreement Technology 
March 17, 2015 Glooko VC investment - $16.5m series B round   App
March 24, 2015 Semma Therapeutics VC investment - $44m series A round   Insulin-producing cells
April 2, 2015 Diabeter Acquisition Care management services
April 6, 2015 DreaMed Licence plus $2m investment Artificial pancreas algorithm
April 13, 2015 IBM Collaboration Diabetes management systems

Two weeks ago the company bought Diabeter, a Dutch clinic and research centre through which it intends to offer care services, for an undisclosed amount. This is not the company’s first push into patient care: in 2013, for example, it agreed with the UK NHS to take over cardiology services at two hospitals in Manchester and London. It is also similar to the Glooko deal in that it gives Medtronic a stake in management of the condition.

Medtronic said Diabeter would be able to “maintain its professional autonomy and independence in clinical decision making, therapy and brand choice”, but it seems unlikely that, when ordering diabetes devices, Diabeter would bypass its parent company.

At a time when little early-stage funding is available and few small buyouts seem to be occurring, Medtronic’s activity in this space is notable. Following its absorption of Covidien, Medtronic has cash with which to speculate, and it obviously believes that this area is worth a few relatively risky punts.

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