Can Omada do a Livongo?

Omada is better funded than its digital health rival Livongo, but can it achieve a similar valuation?

Trial Results

The management of the digital health company Omada Health will be keenly aware of the $18.5bn takeout of its rival Livongo by Teladoc in August, and might well be hoping to pull off the same trick. New data on Omada's diabetes management programme could help.

But the hit in the Predicts trial looks like an easy win considering the fairly basic treatment on offer in the control group. If Omada is hoping to score its own billion-dollar deal, more concrete data might be necessary. There are, however, hints that its future lies in remaining independent.

Results of the 600-patient Predicts trial, presented yesterday at the Obesity Week conference, show that patients with prediabetes using Omada’s Digital Diabetes Prevention Program (d-DPP) achieved a statistically significant improvement in haemoglobin A1c and weight loss over the course of a year, versus a control group.

The d-DPP includes weekly video call sessions with a health coach, lifestyle coaching, virtual peer support via interactive group message forums and behaviour tracking tools such as internet-connected scales, activity trackers, blood pressure monitors and blood glucose meters. 

The patients in the control group, meanwhile, attended a single 90-minute diabetes prevention class. 

It is therefore hardly surprising that the 300 or so patients in the d-DPP group reduced their blood sugar further and lost more weight than the control patients. 

Predicts data
Endpoint
Omada d-DPP Control P value
HbA1c reduction (primary endpoint) 0.23% 0.15% <0.01
% of participants who reduced HbA1c to within normal range 58% 48% <0.04
Average weight loss 5.4% 2.0% <0.01
% of participants achieving weight loss of 5% or more 44% 21% <0.01
    Among participants aged 65 and older      
HbA1c reduction 0.28% 0.14% <0.05
Average weight loss 6.1% 2.1% <0.05
Source: Company press release. 

Omada did not mention another secondary endpoint listed on the clinicaltrials.gov entry: cardiovascular risk. This was to have been assessed using the atherosclerotic cardiovascular disease risk estimator algorithm. The d-DPP might have been expected to show a benefit here too, so its absence from the Obesity Week presentation is intriguing. 

Omada claims to be “the first, and only, company in our space to invest in a trial of this magnitude that shows sustained, meaningful outcomes”, and this is fair: the largest trial of Livongo’s diabetes management tool recruited just 300 patients. But at least that trial, Sugar, had a slightly more robust comparator: patients in the control group used iHealth’s blood glucose monitor to manage their type 2 diabetes. 

Future

Perhaps Omada cannot really be blamed for setting itself a low bar: having raised more venture funding than Livongo Omada will need to placate its investors, and the most obvious way to do this would be scoring a huge trade sale. A clinical success could help hook a buyer.

But a look at Omada’s venture backers might suggest a different path. The crossover investors Perceptive Advisors and Wellington Management have both led recent rounds, possibly suggesting that Omada sees its future on the public markets. This could still mean it follows Livongo's example – that group raised more than $350m via an IPO in summer 2019. 

With demand for digital health management technologies spiking during the Covid-19 pandemic there will surely be interest in Omada. Still, the vast size of the Livongo acquisition will prompt questions over Omada’s potential valuation and whether this can be realised via an IPO. 

Livongo's VC funding
Date Round Investment ($m) Lead investor
Apr 11, 2018 Series E 105.0 General Catalyst Partners; Kinnevik
Mar 16, 2017 Series D 52.5 General Catalyst Partners; Kinnevik
Apr 12, 2016 Series C 44.5 No lead
Apr 7, 2015 Series B 20.0 Kleiner Perkins
Jul 10, 2014 Series A 10.0 General Catalyst Partners
  Total 232.0  
 
Omada Health's VC funding
Date Round Investment ($m) Lead investor
May 19, 2020 Undisclosed 57.0 Perceptive Advisors
Oct 10, 2019 Undisclosed Undisclosed Intermountain Ventures
Jun 26, 2019
Series D
73.0 Wellington Management
Jun 14, 2017
Series C
50.0 Cigna
Sep 16, 2015
Series C
48.0 Norwest Venture Partners
Apr 9, 2014
Series B
23.0 Andreessen Horowitz
Mar 21, 2013
Series A
4.7 US Venture Partners
  Total 255.7  
Source: EvaluateMedTech, company website. 

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