In Mid-November, Tandem Diabetes (TNDM) launched its IPO at $15, and the stock has gone on to post a gain of 45%. The company develops an Apple (AAPL) iPhone-like device for diabetes patients. (I wrote about the company for the IPO Playbook). So is this the start of a new revolution in healthcare — and an opportunity for investors?
To get some answers, I recently interviewed Chase Curtiss, who is the CEO & founder of Sway Medical. His company builds regulated applications for diagnostics. In fact, its flagship app assess the effect of concussions, whether on the sports sidelines or to help seniors.
Sway is working on other capabilities as well. Some projects include: evaluating the progress in physical therapy, tracking Alzheimer’s and Parkinson’s and determining neurological side effects to medications.
So here’s what Curtis had to say:
Q: What are your thoughts on Tandem? Why the excitement?
A: The excitement is centered around what appears to be the beginning of explosive growth in digital health revenue. Yet Tandem is much more of medical device company that uses a digital platform than a disruptive digital health company. For the most part, [Tandem] is only replacing existing daily monitoring devices with a digital product, it is not extending the engagement of the general consumer into the big healthcare data grid. The driver of digital health IPOs over the next five years will be the ability to engage patients in self quantification.
Q: How will mobile technologies shape healthcare? Advantages? Lower costs in the future?
A: Mobile technology will completely disrupt healthcare and how it is currently practiced. We have built a healthcare system on periodic check-ups, little accountability and a business model incentivizing medical professionals to manage clinic operations over patient health. Mobile technology will drive a new era of big healthcare data, with patient accountability to a digitally connected medical home and a changing reimbursement currency from service to performance. This transition will provide the data necessary to quantify patient outcomes and allow medical professionals to treat towards improving health over documenting services performed, which currently accounts for one-third of healthcare costs. Mobile data collection and remote monitoring will lower costs through earlier detection of problems, reduction in unneeded procedures and better identification of successful treatments.
Q: What about the idea of mobile apps becoming the second toolkit for doctors?
A: Yes, mobile apps will become a go-to Rx platform to better manage communication and assessment of patients, but the detrimental movement of the mHealth industry towards avoiding the FDA will bring serious consequences of increased litigation opportunities and uncertainty among physicians in what they can and can’t use. This will cause a delay in adoption in the clinical setting.
Q: What about how the problems with concussions with the NFL will impact Sway Medical?
A: The NFL has teamed with GE (GE) and Under Armour (UA) in giving up to $20 million toward the development and deployment of new concussion-related products. While the NFL clearly has a huge marketing awareness and prestige, the Sway Medical focus is more heavily geared toward the community aspect of concussion awareness through sports medicine and concussion-specific clinics that treat youth sports, high school and collegiate athletes. More importantly, Sway has the ability to permeate deeper into the clinical realm to help patients suffering from multiple debilitating diseases and injuries, both orthopedic and neurological.
Q: What about the recent decision of the FDA to suspend marketing of gene-testing system 23andMe?
Curtiss: The FDA warning letter very clearly spelled out the frustration with 23andMe. The claims 23andMe has made in marketing their product and the complete lack of “any evidence that it has tested the accuracy of (the product)” should be the focus. The outrage over the FDA’s treatment of 23andMe is the wrong response and completely unfounded. We should be holding 23andMe accountable for the claims they make in marketing their product. Even a product with such great potential should have to validate the claims it makes [when] selling its product.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.