The object of the latest investment by Merchavia Holding & Investments Ltd. (TASE:MRHL) is not exactly a startup; it is a reincarnation of an old company - RMDY, which began operating in the late 1990s during the Internet boom. The company initially developed websites for drug companies through which the companies could both maintain contact with patients and connect patients with each other in order to create a supportive community. This was many years before the emergence of today's social networks. Among other things, RMDY's systems contributed to the successful marketing of Copaxone, Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) drug.
Today, after several quite successful incarnations in a market that changes dramatically ever few years, digital therapeutics company RMDY is returning to its roots - management of patients for drug companies, but in a much more sophisticated way and in a world much better prepared to accept it.
"I got into this field half by mistake," says RMDY CEO Amir Kishon. "I come from the computer sector. In 1995, after working a while at Efraim ("Efi") Arazi's Electronics for Imaging (EFI) in Silicon Valley, I came back to Israel and wanted to found a venture that would contribute something to humanity. Entrepreneurship in Israel was only at the beginning then. There were only a few funds here.
"I founded a company named Soft Watch through which drug companies could connect with our patients online at a level that could be accomplished at that time (usually only in text, and slowly). The websites provided information to patients, enabled them to monitor the taking of the drugs and appearances of the disease, and connected patients to communities. At that time, many drug companies maintained wonderful patients' communities, but then the question of regulation arose. Is a drug company responsible for the information that patients pass among themselves on its website? Is it required to report every pain that a patient describes on its site as a potential side effect? The companies were alarmed, closed down the websites, and got rid of the communities." Kishon says that this concern was excessive, but the change was unequivocal and extended to all of the drug companies.
Kishon and his team, who were aware of the change, managed to sell the company on time. They moved to the "soft" side of health communities and started a company for online dieting. "Our product provided tools for monitoring nutrition, nutritional information, a link with nutritionists, and a community of dieters, just as we did for the drug companies," he remembers. "In the early years, we operated independent websites. Later, when free diet websites came along, we changed our approach and became a back office of dieting companies such as Atkins, US company 'The Biggest Loser,'" and others. In 2013-2017, we were the leading player in the market, and reached a peak of $5 million in annual revenue."
Then the market changed again with the advent of mobile phone dieting applications. "The large companies we supported developed simple applications without communities, which to a large extent moved to Facebook and other social networks. We found ourselves at a crossroads again. We searched for a large market more resistant to changes. The health market changes slowly, and you have to know it well in order to operate in it. Not everyone can do it."
"Globes": Before describing what you are doing now, talk about how you managed to adapt yourselves to changes in the market so many times.
Kishon: "They call it survival. We had no choice but to look reality in the eye."
The Wix of patients' management
RMDY's current product is cloud-based software that enables drug companies and medical clinics to manage their connection with patients and patient monitoring. "All of the companies know that it is time again for a deep digital connection with the patient. We're the Wix of this field. With a minimal adjustment process, any company can quickly set up a system like this, whether it works with diabetes, mitral insufficiency, or multiple sclerosis," Kishon says.
"In 2016, we began the transition to a new strategy. One of the first customers was Medtronic - a guide for remote management of patients. They asked us to set up a system within four months for monitoring high-risk diabetes patients released from the hospital, including taking medications, nutrition, sports, etc. Within six weeks of the handshake, the patients were really being monitored.
"Sometimes the patient can get a response to his questions completely online or from another patient. Sometimes the system warns that a doctor's intervention is needed. The system studies your response gradually in order to tailor the response better, whether by providing motivation for the right treatment, providing suitable prompts, or in the type of response to the questions.
"In a trial we conducted with Medtronic, they measured a two-point decrease in a1c, an index for severity of diabetes. This is regarded as an especially good figure, even for a new drug."
Who are your customers now?
"We have several projects with Medtronic, the World Heart Federation, drug company Novartis, the Village Care non-profit organization, which treats chronic patients, and several more diet companies - a total of over 20 customers from which we derive a few million dollars in annual revenue."
In its previous incarnation, the company raised $2 million for development in the online dieting sector, but after recently realizing that the patient management market is big and the company can develop in it, RMDY decided to hold another financing round. The investor leading the round is Merchavia Holding & Investments Ltd. (TASE:MRHL), together with another private investor.
Merchavia, whose market cap is NIS 36 million, recently decided to also invest in the health field, in addition to its holdings in prostate cancer diagnosis company CDX and heart arrhythmia company CardiacSense. In March 2018, Merchavia invested $500,000 in RMDY, as part of a $1 million financing round, for 6.45% of the company.
"We are currently assessing how many patients one doctor can treat using the system," Kishon says. "The number right now is 500-1,000, but the goal is to reach a situation in which a doctor can treat 4,000 patients simultaneously through the system."
Published by Globes [online], Israel business news - www.globes-online.com - on May 16, 2018
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