Tali Digital (ASX:TD1): Interview with CEO Glenn Smith

February 9, 2022

Tali Digital, TD1, video

Tali Digital

We spoke with Tali Digital CEO Glenn Smith about the progress the company has made in commercialising the Tali Techology, the rise of video-game solutions in ADHD and the Autism Spectrum Disorders, and the very strong potential of the company’s partnership with the Boston-based Akili Interactive.

Full transcription below.

 

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Transcription

 

Stuart: Hello, and welcome to Stocks Down Under. My name is Stuart Roberts and I’m one of the co-founders of our publication. And joining me today on Monday, the seventh of February 2022 from Melbourne is Mr. Glenn Smith, who’s the CEO of Tali Digital. ASX: TD1. Good afternoon, Glenn.

Glenn: Good afternoon, Stuart. Good to see you.

Stuart: And now is a good time to be Glenn Smith, because you’ve spent several years now laboring at Tali Digital to bring the Tali technology for correcting attention problems in children into the mainstream. And suddenly a big shot U.S. phone call, Akili Interactive, wants to use your technology to create the next big thing to treat attention problems to medical-grade standards. It’s been a great 2021, you would agree?

Glenn: I think you’re right. It is a good time to be involved entirely in this digital therapeutics field. This is a really technology-driven high-growth sector. And you’re right we have done the hard yards, the hard graft in terms of being a company that is akin to a medical device biotech company. We’ve done those initial clinical trials, the core research, built the products got the products out there, and have done this IP license agreement with Akili Interactive in North America along with our clinical development program with them. And you’re right, at the core of it is our IP platform, the Tali algorithm platform is going to be the backbone and the game face that we deliver are gonna be the backbone of the next generation products Akili sells to clinicians and potentially direct to consumer in America for children with ADHD and then potentially autism spectrum disorder.

So we’re actually driving, we’re the intel inside, we’re driving these next-generation digital therapeutics, these gamified tools which have even medicine outcomes to them which are proven and we need to you know, in 2022 as part of that, Akili agreement, we finalize the clinical trial program, submit to the FDA and all our milestones payments from Akili’s start to kick in and then the commercialization starts in North America on approval. So it is a good time to be part of the Tali story of a stakeholder in this Tali journey.

Stuart: All right, let’s just jump back in time and talk about the original Tali technology. And then let’s talk about the Akili upside. So the Cornish lab at Monash University developed a video game suitable for kids three to eight, which has some peer-reviewed data showing that with kids with attention problems, particularly ADHD, you can begin to correct those problems with the Tali technology, which is now being used globally in various school systems around the world. Talk to us about how that technology has developed over the last few years.

Glenn: Yeah, you’re right. So that core research is out of that Australian university lab. And what they looked at is whether or not gamified interventions, so that training, so that identification through a diagnostic aid or a test, and then that training, so that therapy outcome could be delivered for inattention. So those children who suffer inattention, and that’s the in lay terms, that’s the ability to stay focused on task, right, being able to complete that, deliver on, and execute on those type of tasks. So that’s the core of inattention. And deploying these types of digital games, which could be widely accessible, easily used by children because of the user interface being so game-based, right, and so non-threatening, and then allowing that to be disseminated through an application that’s available on app stores could mean global accessibility for these tools.

So that lab developed that core research, published those papers, and it showed benefit. It actually showed that delivering out the Tali training program for these individuals within inattention, which is your primary symptom of ADHD and obviously autism spectrum disorder and other intellectual and behavioral disorders, that there was actual benefit to delivering these gamified applications. So not only you’re looking at the symptoms, but treating the underlying cause, that was a big breakthrough. Drugs were just masking the symptoms, so addressing the symptoms of these conditions like ADHD and autism spectrum disorder, right?

So allowing that child to be in different environments, school, or their home and have that symptom suppressed so they could do that. But those drugs weren’t actually treating the underlying core issue of inattention at the brain level. That’s where Tali really made the big breakthrough, treating that underlying brain core issue of inattention, making a substantive physiological change in that brain health is what Tali does. That’s why there’s such a benefit to these digital therapeutics. And that’s why this global accessibility play because they are all application-based and can be delivered on tablets, iPads, and smartphones, will deliver widespread adoption for these medical technologies.

Stuart: Now, it’s interesting, when we were working on the original research report that we were commissioned by you to do for Pittsburgh research, what we learned was that you surveyed a typical cross-section of U.S. parents with kids who got diagnosed with attention deficit hyperactivity disorder. And something like 40% of them will say, “If there was something better than medication, we tried.” Now, for a condition where 5% to 10% of kids more boys and girls have some sort of attention-deficit problem. That’s a huge opportunity with parents looking for alternatives of which you have developed one of them, right?

Glenn: Yeah, yeah, you’re right. I mean, that that was a primary driver is that, can you deliver out non-invasive tools that give parents and also healthcare professionals that first-line option of testing and then treating a child. Don’t fear, we’re talking about children between the age of three to eight. So that really core area of early childhood development, when you brian is so plastic, that you can make these significant differences. But at the same time, if you deliver drugs, at that evolving brain level, we don’t know what the long-term effects are, as yet, through longitudinal studies, and they only treat the symptoms. So giving the option to healthcare professionals and parents to have these non-invasive tools, which they can help deliver out of clinic as well.

So do remotely, which is much better for a child, and get that first-line intervention to address these core underlying issues so that you can provide a much more holistic approach to the care of that child into the brain health outcomes of that child in that early development period is so critical for parents. Particularly those who may have leading to a diagnosis of autism spectrum disorder, or ADHD, or have a diagnosis, you know, in U.S. it’s about 9% to 10%, according to the CDC, it can be different in other geographic regions. But primarily, that’s a large cohort of children who can benefit from these non-invasive tools, and deliver our benefits with a current drug regime as well. So it’s complimentary. But what we’re trying to do is get to a point where these digital therapeutics are the first-line tools. So the new gold standard, so that this initial use of drugs is eradicated in this early childhood population or at least reduced to a level that’s relevant to specific cohorts in that age population group.

Stuart: And then things get really exciting for Tali. Akili Interactive from U.S. comes knocking. And they’ve developed some medical-grade prescription digital therapeutics, like video games as therapeutics in this space, but they’ve discovered that you have something that they don’t have. And that leads to an interesting collaboration. Talk to us about your collaboration with Akili.

Glenn: Yeah, they’re an amazing business. Yeah, they’re very like-minded. Our teams get on really well. They’re looking at the same thing. They’re looking at inattention, so attention as a core tool, that humans use, that the brain uses. And they’ve developed those video games, prescription digital video games, for teenagers, basically, in plus age range where there’s a child who was already diagnosed, or he has this clinical condition and delivering out this prescription therapeutic for. What’s really interesting is that they have that prescription therapeutic for that age range, but they don’t have the diagnostic aid or the assessment tool at the beginning.

So they can’t assess the child through a digital tool like Tali can and get a baseline reading of that child to see where the attention capability is in their cognitive performances, and then go on to their prescription therapeutic. They have to use other tools or other healthcare professionals to get that baseline reading through, really, you know, sometimes antiquated testing methods but other times sophisticated methods, which are really troublesome for the child if they have to spend lots of time in clinics. And we have that assessment part, right. So no one else has that assessment part. We’ve proven that through a clinical trial and using the education system in Australia, but when you combine it with our therapeutic tool as well, we have this diagnostic assessment tool that combines with our Tali therapy tool. And that can service the three to eight-year-olds, right.

And so we can help build up that support Netcare model really early on life for that child, and then if they require ongoing assistance in health, all that data, all that brain data is captured through the Tali system. And then they can feed through to the Akili endeavor product, once I get past eight, nine years of age, then they can continue that came up. So we’re really looking at assisting the family and their healthcare professionals and those around the child right from early childhood, right through three, right through the three or eight range for Tali, plus eight, into the teenage range with Akili and then both companies, and we’ve got big plans to expand our core IP platform into other age ranges as we move across as well. But that’s our blue-sky opportunity moving forward.

Stuart: And what’s exciting about this is, it’s happened in an environment where Wall Street has discovered prescription digital therapeutics. So Akili recently announced they were going public via SPEC on to Nasdaq and the post-money capitalization would be in the order of a billion U.S. dollars. That’s a pretty well-capitalized partner to be working with, I must say.

Glenn: Yeah, I mean, one of the things that is always a risk when you’re a company having a IP and clinical development agreement with another company is, are they gonna be able to pay you? Well, we’ve answered that question quite right, we just keep hitting our milestones, and yell under the terms of that agreement, where they list on the Nasdaq, we’re gonna have access to about $400 million in capital. So we have a lot more surely around the fact that if we hit our milestones, we’re gonna get all those milestone payments, right, and they got a lot of capital to run that commercialization program for the Tali products. So that gives us a lot of confidence about delivering on our own milestone so that we ship the product to Akili and then they have the capital and the expertise to run their commercialization program. Because they’re gonna be listed on the Nasdaq and have very large institutional investors on their registry, you’re gonna have lots more access to capital as well as needed, if and as needed.

So it’s a really interesting story because it’s a really exciting space for digital health and digital therapeutics, massive double-digit growth last 12 months in capital inflows into the sector, huge, you know, 30% to 50% growth in capital inflows into digital therapeutic companies last year. It’s a really exciting space, you know, post this initial COVID period, where telemedicine, digital health, digital therapeutics are really going to become the norm in terms of a whole lot of these mental welfare, brain health, and other type of behavioral conditions. Because they’re so accessible, there are value costs, and they’re proven. And that’s the best thing about it is that they’re evidence by, and they’re proven, and we’re gonna wrap a really good commercialization model around it.

Stuart: And what’s impressive to me is, I wouldn’t be surprised if there was a time when agencies like the FDA were a little skeptical of the idea of video games as therapeutics, we grew up in an environment where our parents wanted to stop playing video games because it was gonna be bad for our mental health. Now, flip the switch, you’ve got video games, which are good for brain training, that would have required a bit of education on the part of the regulators. And yeah, with the first of these getting approved the time, it’s perfect for you.

Glenn: Yeah, absolutely. I mean, we’ve spent a bit of time with the FDA, but I’ve been working with Akili and others, really getting them across how these tools work and what the evidence is behind them. But our first-generation product received Class II FDA two years ago. So we’ve been, had the capacity to really do market testing and deliver that product outside so there was a lot of learning during that period. And that’s allowed us to deliver on the promise of what we’ve got through this Akili partnership and move to a larger FDA submission so that we can generate significant reimbursement models around what we do because the FDA and Medicaid and Medicare and insurance groups and payers in the U.S. are now fully across the actual value and the benefit in the drivers behind these new digital diagnostic aids and therapeutic tools delivered as video games as you say,

Stuart: Right. And 2022 is a good year because it’s a fair bet that before Christmas of this year, you and Akili will be in a position to make your first filings with the agency.

Glenn: Yeah, I mean, we put out a really good update like last year whoever mapped out what we’re doing. We’re right in the middle of our first part of our clinical trial program now. So that’s been run through our great partner do clinical research institute in the U.S. is effectively the largest clinical research institute on the planet preeminent in this digital therapeutic ADHD space. So I have great confidence around what we’re doing there, but we deliver we’re in that phase right now, we move into the next phase of the clinical trial in a few more months, once we complete that, and don’t forget, these are digital tools. So we’re running the program really quickly. And that we do the test, which takes 20 minutes, and then we do the program for five weeks, right. And then we collect that data, then we do a post-follow-up. So really able to do these clinical trial programs really quickly.

So by midyear, we’ll be right in the midst of that pivotal clinical trial of, you know, that early data with us, and if all goes to plan and we get the results, everyone, we’ve already started discussions with the FDA have a team in place during the pre-work on our submission, and no doubt, as long as the clinical trial program does what you think it’s gonna do because don’t forget, we’ve done nine clinical trials before, and we’ve had really great results previously, that will submit to the FDA. And that’s in this calendar year. So that triggers a whole lot of development payments to us from Akili because we’re in the clinical trial program. And then once we submit to the FDA and get that approval, we get another U.S. $2 million payment. Plus, it then triggers a whole lot of first payments, because we’ve run into the commercialization phase.

So there’s a substantive amount of money coming in, which is going to be receded as revenue for Tali. So during the forward periods of this calendar year, and next financial years, we’ll be reporting substantive revenue, I’m really driving this company towards profitability, break-even, and profitability. And that’s gonna be a great period of growth for us, I still haven’t even spoken about our plans in India and Australia. And what we’re gonna do there with marketing our products in 2022, as well.

Stuart: Well, let’s conclude with a discussion of that. You did a very interesting partnering deal, I think it was early 2021. With the group that owns The Times, “The Times of India” is the largest English language newspaper, in what would arguably be the largest English language market in the world, owned by the Jain family, I think since the 1940s. So their family offices invested in Tali stock. And the idea is to take the Tali product into the Indian market. Deals like that can be replicated in multiple other markets, given the problems, you’re facing at global, and it’s relatively easy to adapt the product to specific market conditions locally, right?

Glenn: Yeah, I think just on that product bit, what we’re doing is a beautiful thing, we’re building gamified applications which are attractive across geographic regions and going across demographics, so in cultures, So we’ve got that ability to deliver the game, and we just need to identify language translation, which helps with that customer and user journey. So we can do that. But we’ve got a beautiful baseline algorithm set and game set that we can deliver in multiple jurisdictions. But you’re right, that deal that we have with Brain Capital Times Group in India allows us access to the consumers and the parents in India, right. Probably one of the most exciting largest markets that we could enter. We’ve had a small issue during 2021 because of COVID. And don’t forget, India had the world’s largest COVID-19 outbreak during 2021 and put us on the back foot but yeah, we sort of learned a lot from that because we did some pre-marketing activities and sold the product in early on, and knew what advertising and marketing below-the-line-type activities work, you know, those digital communication activities.

So we’re gonna rent them up in 2022, start to accelerate the direct-to-consumer model, work with education providers there as well, and start to generate actual acquisition and then conversion and then payments so revenue in the Indian market. And I think you’re right, because we will deliver in that market and hopefully, prove out that conversion model, we’ll just replicate that in other life-alike markets. And that’s really exciting because we can take all those lessons, we know what works, and then we can put the plan in place in another market with the right partner and then deliver out again.

Stuart: Well, Glenn Smith, well done on what you and your colleagues at Tali have achieved. And here’s to a great 2022. Keep up the good work.

Glenn: Thank you, Stuart. Appreciate your support, and take care.