Blue Cross-backed diabetes startup files for bankruptcy

Ann Arbor-based Hygieia Inc. — a company named after the Greek goddess of health — is on life support. 

The maker of a digital insulin management software filed Chapter 7 bankruptcy on Oct. 31 after 16 years of trying to commercialize their product. 

Related: Many digital hypertension tools are costly, not effective: study

Eran Bashan, CEO, co-founder and executive chairman of Hygieia, told Crain’s the company had “more creditors than we can support” and that the company struggled to raise new capital coming out of the pandemic.

“In the area of growing companies, you need access to funding,” Bashan said. “In 2020, 2021, most of the entities that would invest in companies like Hygieia lost most of their investments because of what happened to the market (during the COVID-19 pandemic). As a result, in the medical device/digital health space, there has been a dry out of funding. We ran out of money and ran out of the ability to raise money.” 

Bashan declined to reveal how much the company owed creditors, but in its bankruptcy filing in U.S. Bankruptcy Court in Detroit, liabilities were listed in a range between $10 million and $50 million with fewer than $50,000 in assets. 

Hygieia’s d-Nav system, which is about the size of a cellphone, uses cloud-based software to analyze blood sugar levels, or HbA1c. With the help of health care professionals and primary care doctors, the device recommends to patients how much dosage they should give themselves based on body chemistry. The d-Nav device was approved for use by the U.S. Food and Drug Administration in February 2019 and is the only one cleared for autonomous delivery of insulin dose recommendations for patients with Type 2 diabetes.

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The company ceased operations a few months ago, Bashan said, terminating its roughly 40 employees.

Hygieia had raised $34.25 million since its founding in 2008. It was developed by two University of Michigan researchers.

Most recently, it raised $22 million in Series B venture funding led by Israeli venture firms FirstTime and GlenRock Israel in May 2023, according to data from Pitchbook. 

Its other investors include: Michigan Life Ventures — the investment arm for Charles Bisgaier, who founded Esperion Therapeutics and helped create Lipitor and other drugs; California-based Silicom Investors; and Blue Cross Blue Shield of Michigan, who supported Hygieia with a $1.52 million venture investment in 2017.

In a statement to Crain’s, BCBSM said patients are still using the d-Nav device.

“Blue Cross Blue Shield of Michigan worked with Hygieia to support a pilot program that would help people with Type 2 diabetes better manage their glucose and insulin levels through remote monitoring,” the Detroit insurer said in the statement. “The d-NAV device performed as expected for our members and as of this summer we had members still using the device.”

Hygieia believed the use of the d-Nav service could save up to $100 million in pharmacy and other health care costs for diabetic patients in Michigan, as well as provide better care for the more than 8 million people in the U.S. with diabetes taking insulin. 

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BCBSM said it is not aware how the bankruptcy will impact the patients using the device.

The company had hoped it could expand use of its d-Nav system through partnership deals with specialty physician groups or through an acquisition by a larger entity like CVS and Amazon, its former CEO David Lawrence told Crain’s in 2022. The insulin drug category was a $50 billion market, he said. The company had been in growth mode; in 2022, Metro Detroit Endocrinology Center, one of the largest endocrinology practices in Michigan, incorporated the d-Nav program into a standard protocol for its eligible patients. 

But instead, Hygieia will be liquidated. Its only material value is in its eight patents. The bankruptcy trustee will likely try to sell the patents to return some investment back to the creditors. 

“I don’t think it’s a unique story,” Bashan said. “Unfortunately, in our world, with growing companies, more often than not it ends this way.” 

This story first appeared in Crain's Detroit Business.