Venture capitalist Tom Loverro predicted an impending mass extinction event for early and mid-stage companies last year, forecasting that the years 2023 and 2024 would surpass the impact of the 2008 financial crisis on startups. According to PitchBook, over 3,200 startups worldwide closed last year, resulting in more than $27 billion in lost investment funds. Despite this global crisis, South Korean startups are garnering attention for their technological prowess, acknowledged by major domestic IT giants and honored with the CES Innovation Award. ChosunBiz conducted interviews with some of these startups to explore their distinguishing factors. [Editor’s Note]
The global digital therapeutics (DTx) market is rapidly growing, but no company has yet succeeded in establishing a strong foothold. A notable example is Akili Interactive, which gained industry attention in 2020 after receiving FDA clearance for EndeavorRx, the world’s first game-based ADHD treatment. Earlier this year, after announcing it would sell its assets and lay off nearly half its staff, the medical app developer was acquired by Virtual Therapeutics for just $34 million.
Before Akili Interactive’s troubles, Better Therapeutics, the developer of an FDA-cleared app for treating type 2 diabetes, shut down operations. Almost exactly a year ago, Pear Therapeutics sold off its assets in a bankruptcy auction. The medical community attributes the failure of these companies to their inability to enter the insurance market. Reimbursement status is crucial because it affects patient accessibility through pricing. For instance, cognitive behavioral therapy for insomnia (CBT-I), considered a model for insomnia DTx, costs around 40,000 to 50,000 won (approximately $28~36) per session under insurance. This means a typical six-week course of insomnia DTx costs around 300,000 won. For patients to see cost benefits, the final price must be lower, but setting prices too low could undermine patient trust in the product. Additionally, low reimbursement rates might deter doctors from prescribing DTx due to insufficient financial incentives.
In response, many developers are turning to digital healthcare solutions that can reach patients directly without the need for insurance or medical intermediaries. This approach aims to generate revenue by predicting personal health status and managing conditions in daily life. One such story is that of eMotiv, which is targeting the children’s ADHD market. Founded by former Hyundai Motor research fellow Jung Sang-min in 2020, eMotiv launched JoyCog, the first digital healthcare solution to integrate cognitive modeling, last year. The company is now conducting confirmatory clinical trials for its first DTx, StarRuckus.
eMotiv plans for StarRuckus to account for 40% of its total revenue and JoyCog for 60%, focusing more on revenue generation from JoyCog. In a recent interview with ChosunBiz, Jung explained, “Akili Interactive initially focused solely on the DTx business model but eventually switched to an over-the-counter model. Learning from their experience, eMotiv has pursued a dual-track approach from the start.”
He added, “Our goal is to temporarily register our DTx (StarRuckus) in health insurance in the first half of next year and apply it on a pilot basis in medical settings. As for the digital healthcare solution (JoyCog), we expect revenue to be recorded after the EBS launch.” On June 10, eMotiv launched JoyCog on a website for elementary students operated by EBS, South Korea’s educational public broadcaster and radio network. Although JoyCog was first introduced to the market last year, it was distributed for free.
Once StarRuckus obtains approval from the Korean Ministry of Food and Drug Safety, eMotiv will further penetrate the overseas market. Having already secured several partners in Japan and Europe, eMotiv eyes North America. “In 2022, we drafted a proposal with the University of Utah for FDA 510K approval. We aim to submit the final version next year. With the precedent set by Akili Interactive and recognition from the Korean Ministry of Food and Drug Safety, we expect a smooth approval process.”
What are the main features and differences between JoyCog and StarRuckus?
“JoyCog is a game-based implementation of certified ADHD assessment programs such as the Continuous Performance Test (CPT) and the Attention Deficit Test (ADS), integrated with cognitive modeling. It measures various cognitive abilities in children aged 6-12, including working memory, inhibitory control, cognitive flexibility, processing speed, and attention span. Completing all tasks takes about 15 minutes, and the results are provided to parents in a report. This report indicates the chances of the child being diagnosed with ADHD, and based on the results, cognitive training can be conducted. It is recommended to play for 25 minutes daily, five times a week, for over six months.
StarRuckus, on the other hand, is an advanced version of JoyCog designed for children diagnosed with ADHD. As a medical device rather than a digital healthcare solution, it requires a code prescribed by a doctor for use. We plan to make it adjust task difficulty to the child’s condition. Clinical trials are currently being conducted with 25-minute sessions, five times a week for four weeks, to observe treatment effects.”
eMotive is the first to introduce cognitive modeling technology in the industry. How is it utilized?
“In JoyCog, cognitive modeling replicates the child’s cognitive state after completing tasks, essentially creating a digital twin. This significantly reduces the time needed for assessments, which traditionally take about two hours. In StarRuckus, this technology will be used to create personalized treatment solutions.”
How accurately does JoyCog assess a child’s cognitive state?
“JoyCog differentiates between children with ADHD and those without ADHD with about 96% accuracy. In pre-launch tests with 200 children, it misclassified six, but two of those were borderline cases.
What is the treatment efficacy of StarRuckus?
“We can’t disclose precise figures yet as trials are ongoing. However, we can reference a North American company with FDA approval that achieved around 60% efficacy.”
How does DTx compare to medication, which shows over 80% improvement?
“DTx naturally has lower efficacy than medication, which is why we see DTx as a complement to drug therapy. For severe ADHD, medication is essential, but DTx can help reduce medication dosage for less severe cases.”
Taking medication regularly is challenging for children with ADHD, and it could be similar with DTx. How does eMotive address this issue?
“Gamification. StarRuckus features high-quality characters and game stories, akin to regular mobile games, to engage children voluntarily. We even consulted the creator of Warcraft’s ‘Fight of Characters’ for character design and game elements.”
What are your revenue models?
“JoyCog charges 15,000 won per session for assessments and 15,000 won monthly for cognitive training. We are continuously upgrading content, so prices may change. Additionally, we are developing an interface for teachers, making it an attractive solution for schools. StarRuckus will likely adopt a subscription model, which we will refine over time.”
You’re already expanding beyond Korea to Japan and Europe. What’s the plan?
“In Japan, some schools and hospitals in Fukuoka, Nagasaki, and Shizuoka are already using JoyCog. We are also collaborating with companies like Uchida Yoko to expand our customer base, and we participate in exhibitions like SusHi Tech in Tokyo to introduce our products.
In Europe, we are focusing on Germany and the UK due to their supportive digital health policies. We recently participated in London Tech Week to increase our contact points with local companies.”
What are your future plans?
“We are developing DTx for adult ADHD, which will function similarly to the children’s version but with added features like biosignal integration through smart devices. We aim to detect pre-symptoms of ADHD and monitor frontal lobe improvement after the user plays the game. We are also working on products for autism, with prototypes ready for clinical trials this and next year.”
After raising 2.7 billion won in seed and pre-A rounds, are there plans for additional funding?
“We are currently in a bridge round and hope to raise 3 billion won, mainly to cover clinical trial costs. Additionally, we are discussing a partnership with a domestic car manufacturer to integrate JoyCog into electric vehicles, which will require additional personnel.”
With sales starting this year, what are your financial targets?
“We aim to generate over 2-3 billion won in revenue next year. If international sales meet expectations, we could achieve over 10 billion won the following year. With these milestones, we could consider an IPO around 2029-2030.”
