This $2 Billion Digital Health Startup Aims To Reverse Type 2 Diabetes

Virta Health just raised $133 million to expand its services to help diabetes patients wean off of medication with lifestyle changes.

Being overweight and inactive are two of the biggest risk factors for prediabetes, which is why Sami Inkinen was surprised to get that diagnosis from his doctor a decade ago, given he was a competitive triathlete. The culprit, he discovered, was his low-fat, high carbohydrate diet.  Now Inkinen, a nutritional ketosis evangelist, is flipping conventional dietary wisdom on its head—and has the science to back it up. His company, San Francisco-based Virta Health, is helping tens of thousands of people reduce or get off medication and reverse the disease by restricting their carbohydrate intake.

More than 88 million Americans have prediabetes and 30 million have diabetes, a chronic condition where the body has trouble regulating blood sugar. Type 2 diabetes, which is largely preventable, makes up around 90-95% of all cases, according to the CDC. It’s a seemingly intractable problem that costs the health system $300 billion a year. Existing solutions “are treating Type 2 diabetes as a chronic progressive disease where the end game is death and amputations,” says Virta cofounder and CEO Inkinen. “I know exactly how to solve it and now we’re at the point where all the proof points are there, we just have to scale.”

On Monday, Virta announced a $133 million Series E round led by Tiger Global valuing the 5.5-year-old company at $2 billion. Inkinen is no stranger to the behemoth investment firm, which invested in his first startup Trulia, an online real estate marketplace company that he cofounded, took public and was later acquired by Zillow for $2.5 billion.

While it may seem a strange leap to go from real estate to healthcare, Virta is a more personal mission for Inkinen, since it evolved out of his own experience. His search for answers as a prediabetes patient led him to meet his two scientist cofounders, chief innovation officer Stephen Phinney and chief science officer Jeff Volek. Phinney, a professor emeritus at the University of California Davis, and Volek, a professor at Ohio State University, had published extensive research on nutritional ketosis, which occurs when people restrict carbohydrate intake to the point of burning fat instead of sugar. These diets allow people to eat foods like cheese and meat, while cutting out bread and sugar. “The way we fix your biology, you don’t have to be hungry,” says Inkinen.

The conventional wisdom for managing prediabetes is first diet and exercise and then, when the body’s insulin production decreases significantly with full-blown Type 2 diabetes, management through daily insulin injections, which help control blood sugar levels. When Inkinen first approached Bob Kocher, a medical doctor and partner at Venrock, about funding Virta’s seed round, Kocher passed the deal. “I don’t think any normal person would do this,” he recalls.

But Inkinen set out to prove him wrong. In Virta’s first trial with a dozen patients who were morbidly obese, they all succeeded at maintaining ketosis, getting off diabetes medications and having normal blood sugar readings, says Kocher. He called each of them asking how they did it. Many people said they didn’t think it was possible at first, but their lives had been changed. “It was like a religion,” says Kocher, who now sits on Virta’s board and subsequently led the company’s Series A and B rounds.

When a patient starts with Virta, they are sent a starter kit that includes a way to measure blood glucose, blood ketones and a scale for weight. The program, which is accessed through an app, has two main components. The first is modifying the patient’s diet through daily virtual coaching to ensure they remain in the nutritional ketosis zone. The second is virtual communication with a doctor, who is monitoring blood glucose levels and de-prescribing diabetes medication like insulin as the patient’s health improves.

Sixty-three percent of Virta patients eliminated diabetes-specific medications at the end of a one-year non-randomized clinical trial, and 94% of patients eliminated or reduced their insulin usage. Retention is also quite high, with 83% of users still participating after one year. Patients also see health benefits like weight loss and improvements in blood pressure. But what has caught the attention of investors and customers is that patients also save thousands of dollars in medical costs. There are no upfront costs for users, but employers and insurers pay per patient. Virta has what one customer referred to as “bullshit insurance,” says Inkinen. “We only get paid if we achieve certain clinical and economic outcomes.”

While Virta bills doctor visits as fee-for-service, everything else is a bundled payment tied to a patient hitting certain milestones. Virta started with self-insured employers and has since grown to include health insurer customers and government contracts with the Veterans Administration and Indian Health Service. “It’s time to take Type 2 diabetes reversal mainstream by scaling, but there is lots of work ahead of us,” says Inkinen. Virta is hiring more engineers to build out its platform and attract more customers. Providing continuous remote care is no small feat, as the company has built its own in-house electronic medical record system. Plus, it will also continue to invest in more research and trials. The ultimate goal is to eventually apply the Virta model to other complex chronic conditions, Inkinen says, though he declined to specify which ones.

Having taken one company public before, Inkinen is taking his time. “It’s really just one of the tools in your toolkit,” he says when asked if Virta will pursue an IPO in the near future. “You have to make sure that it serves the long-term journey, as opposed to some, sort of, day trading approach. So I’m definitely taking a very long-term view and not rushing.”

The original article can be found at: Forbes (Innovation)