Alex: Do you have any bad habits?
How do you break a bad habit? It’s a question an all but limitless amount of self-help books and apps is trying to figure out. In the healthcare sector, Cognitive Behavioral Therapy (CBT) is the preferred option. CBT is a talking treatment that can help break a vicious cycle of negative thoughts. The issue: healthcare budgets are increasingly overstretched and CBT is costly and time-consuming. Everyone has bad habits, some more severe than others but in the end, everyone would be better without them - no matter how serious.
Can AI help break your undesired habits? The Swedish startup Alex thinks so and Läkemedelsverket (the Swedish medical products agency) seems to agree. Alex has together with psychologists developed an AI-powered app that will help people through computerised Cognitive Behavioral Therapy (cCBT) and Läkemedelsverket have CE labelled it ahead of its launch.
Like other similar apps, Alex helps you find your behavioural triggers followed by a personalised plan to break them. What differentiates Alex from the rest is machine learning, it will respond in real-time and continuously improve your treatment. Like having a therapist in your pocket.
Alex raised £128,000 in pre-seed capital ahead of its planned Q4 2018 launch. The initial focus is on smoking cessation but other bad habits (e.g. alcohol, stress, sugar and overeating) are in the treatment pipeline.
Team
(According to LinkedIn.)
The two entrepreneurs combine business and psychology skills with technology and machine learning expertise:
- One has startup experience both as a founder and an employee (8 years) and worked with executive recruitment prior to Alex (2 years). He holds degrees in psychology and economics from top-tier universities.
- The second has +6 years of machine learning experience, both as a developer and technical team leader. He is combining Alex with a PhD in Theoretical Computational Biophysics at a top-tier university.
Alex is incubated at Sweet Capital’s Venture Studio, enabling the founders to take advantage of its experienced in-house team of designers, developers and marketers.
The first hire has been a senior business development manager with +8 years of experience at market leading international companies.
Market
Alex is a digital therapeutic app, which is different from various wellness apps that helps people maintain a healthy lifestyle. Digital therapeutics are generally validated through clinical trials, like conventional medicines. The market has enormous potential, for example:
- Around 80% of healthcare budgets goes to chronic health issues, the majority of which can be treated either directly or indirectly by cCBT.
- Approx 1 in 15 Europeans suffers from a depressive disorder.
- The global market for smoking cessation (including the nicotine de-addiction market) is valued at over $7 billion.
- The total socio-economic cost of smoking in just Sweden is 31.5 billion SEK (£2.7 billion) each year.
The Potential Available Market for global digital therapeutics is £1.61bn ($2.1bn). It is estimated to grow with a 21% CAGR until 2025. Europe has the highest CAGR due to its many initiatives for increasing awareness about mental health.
(Granular data on regions and specific CBT treatments can be purchased on e.g. Grand View Research.)
Pharmaceutical companies are unlikely to drive innovation on the market, as they are structured around developing one pill, producing it and selling it to as many as possible. Startups, on the other hand, are structured around digital delivery methods where treatments can evolve continuously, as it’s easier to collect and analyse patient data to iterate and refine a treatment.
Competition
The digital therapeutics market consists of apps that facilitate patient-doctor contact, independent self-management or a combination of both. Alex additionally competes indirectly with unverified wellness apps, from mindfulness to mood tracking and peer support.
Direct competition:
- cCBT solutions combining AI and psychologists, e.g. Ieso.
- Digital smoking cessation solutions, e.g. QuitGenius.
Indirect competition:
- eHealth solutions with patient-psychologist contact, e.g. BlueCall, Kry, MindFam, MinTerapi.
- cCBT solutions for individuals, e.g. Braive, HelloSelf, Moodnotes, Moodpath.
- cCBT solutions for organisations, e.g. CheckWare, Soma, Unmind.
- Non-CBT addiction solutions, e.g. Cairy.
- AI-powered therapists, e.g. Shim.
- Mindfulness and mental wellness, e.g. Calm, Headspace, Stigma.
There are over 318,000 health-related apps available to date. Separating an app with no proven benefits from a clinically viable app is very difficult for consumers. The barriers to entry for unverified apps are extremely low, it is enough to meet the technical requirements to be listed in an app store.
Having a stamp of approval from a national health agency or being recommended by a pharmaceutical company is crucial to breaking through the noise.
Risks
Defensibility. The digital therapeutics space is crowded with several well-funded innovative companies offering cCBT, often in combination with access to a medical professional. Alex needs to be laser-focused on accessing pertinent test data to train and develop real AI, which is difficult to mimic and would differentiate it from other cCBT tools. A medical evaluation takes time, yet Alex was able to obtain a CE label in what appears to be less than 3 months, which is a bit disconcerting.
Go-to-market strategy. Alex needs to appeal to many different stakeholders to become a success, from doctors to patients to regulators. The user case and benefit to the end consumer might appear obvious but another entity is often the gatekeeper. Alex might have to focus on selling to employers, hospitals or other healthcare providers for its technology to be widely adopted.
Security. Data privacy and IT security are critical for any new and unknown startup and in particular for a healthcare provider. Alex does not work if users do not share sensitive and private information regarding their personal profiles and habits. Technological resilence and how it will safeguard the information is not clear at present.
Technical approach. Digital health startups often fail because they have a technical rather than needs-based approach. Innovators need to interview doctors, patients, and other stakeholders, do in-person observations and preferably also pilot studies to develop a technology that is uniquely suited to solve an unmet problem. Alex has been developed with therapists and clinical experts but none of the founders has professional experience from the mental health sector.
Summary
Depression, obesity, stress and various forms of addiction are widespread health issues across the globe. Many can be directly or indirectly treated with CBT. The individual and socio-economic benefits would be astonishing if CBT could be delivered on-demand without human interaction.
Alex vision is to enable everyone to break a vicious circle of thoughts and behaviours. Not only people with serious mental health issues or the lucky few that get access to traditional CBT. Its addressable market will increase exponentially when expanding to, for example, alcohol abuse, stress and overeating treatments.
The people behind Candy Crush are advising Alex and they know how to market and (ironically) make an addictive app. This is key as any treatment is a continuous process. Users have to apply and practice new skills in their daily lives to break their habits and achieve lasting change, not only use it sporadically.
Lasting success for Alex can be achieved if it manages to:
- Create a real AI cCBT solution, not just another cCBT algorithm.
- Get recommended and adopted by several actors across the medical landscape.
Alex has already secured a partnership with a medical provider and its CE label verifies its medical benefits. The founders still needs to figure out how to monetise (most likely a combination of B2C and B2B2C) but I believe Alex can become a real game changer for everyone with bad habits and increasingly cost-conscious health systems.
