The FDA declined to approve what would have been the first mass market drug to incorporate Proteus Digital Health's ingestible sensor. The drug, a collaboration between Proteus and Otsuka Pharmaceuticals, combines the Proteus system with the antipsychotic pharmaceutical Abilify.

“While we are disappointed in the FDA’s decision not to approve this digital medicine at this time, both Otsuka and Proteus are committed to working with the FDA to address its questions and provide the additional data that has been requested,” Robert McQuade, executive vice president and chief strategy officer, Otsuka Pharmaceutical Development & Commercialization, said in a statement. “We believe in the potential of this product to help people with serious mental illness manage their daily medication, which remains a serious unmet need.”

Proteus and Otsuka submitted the system as a new drug application (NDA) in September 2015. Because both halves of the system are already cleared or approved by the FDA, the companies expected a swift approval. Instead, they were issued a Complete Response Letter (CRL), a non-public document issued by the FDA that lays out the additional steps a non-approved drug must take to secure approval. 

In the case of the Proteus-Otsuka collaboration, the FDA asked for "data regarding the performance of the product under the conditions in which it is likely to be used, and further human factors investigations," according to a joint statement from Proteus and Otsuka. Human factors investigations screen for risks related to human error and are meant to confirm a product can be used safely and effectively.

This is a setback for Proteus, but it comes at a bullish time for the company, which has also recently partnered with its first US provider partner, Barton Health in Lake Tahoe, California. Proteus also raised $50 million just two weeks ago from undisclosed investors, bringing its total funding to at least $450 million.