cimit high impact innovations 2008
TRANSCRIPT
High-Impact & High Value
Medical InnovationZen Chu
CIMIT ForumHarvard Medical School
Beth Israel Deaconess Medical Center
Discipline of Clinical Innovation
• Physician/inventor & role on the team
• Innovation landscape
• High-impact innovation
• Matching opportunity to funding and teams
• Disciplined development process
• Techniques for clinical innovation
• Panel discussion & examples
Innovation without Impactis Worthless
“Unmet Clinical Needs”– Cliché, not useful metric
“Translational Medicine” muststrive to become Standard of Care
Clinician InnovatorsCritical to Medical Technology
• 22% of surgeons innovate - von Hippel, 2003
• Physician-invented = higher impact - Chatterji, 2008
• 99/100 top Medtronic products originated by MDs© [email protected]
Anticipate Path Standard of Care
Why MDs Must Innovate• False argument that Big Opportunities already identified & tried
– 99/100 Top medical products invented by practicing physicians (Medtronic)– Think of big companies as funders of large clinical studies, tech integrators,
manufacturers, regulatory & sales machines– Not efficient at identifying and testing clinical gaps– Very high market opportunity thresholds of $100+MM
• Need for Clinician Innovators– Evidence: Invent most important new products– Understand clinician frustrations, untreatable segments, adoption– Largest cost component of Healthcare = Physician & Facilities– Critical User & Recommender, under pressure to solve quickly– Efficacy and patient care paramount– Invention includes reapplying existing therapies in new ways
Physician’s View of Value
Market Introduction
FDA Approval
Patent grant First in Man
Animal testing Patent disclosure
Prototype/Reduction to Practice
Idea
Milestones
Val
ue Conflicts of Interest perceived & real
Hand off to Licensing office
Investor’s View of Value
Val
ue
TimeMilestones
Acquisition/IPO Exit Reimbursement Published clinical results Market Introduction
Salesforce hired Europe & Japan distribution
FDA Approval
Manufacturing ramp Human pivotal study Corporate partnership First human data First Hiccup & Danger of Momentum Loss
Management team hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinionsCEO hired
Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market AnalysisIdea
Anticipate Potential Exits
Which Risks to Prioritize?V
alue
Time
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Regulatory RiskSafety & Efficacy
Management Risk
Technology Risk
Which Risks to Prioritize?V
alue
Time
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Regulatory RiskSafety & Efficacy
Management Risk
Technology Risk
Largest Risks Must Be Addressed & De-Risked Up Front Before Funding
Team, VCs & PartnersManage These Risks
Myth of the Lone Inventor
• Initial invention & patent is only 1st step
• Value created far beyond lab or operating room
• Success takes Team, Experience, Focus
– Partnership toward common goals
– 10,000 ways to fail if mismatched
“I have not failed. I've just found 10,000 ways that won't work.” - Thomas Edison
“Physicians and engineers often have no sense of the requirements to create a company…In a start up environment, more is not always
better. Hiring the appropriate people at the right time can determine
success or failure.”
- Thomas Fogarty, MD –
Founder & investor in over 30 medical companiesProfessor of Surgery, Stanford University
Building Teams
• What’s your desired role?– Understand own strengths & weaknesses
• Match milestones to right people & skills• Choose & pay for the best people
– Analytical, revisit assumptions– Honesty amid new information– Agile of mind & adaptable
• View Board & Investors as Partners• Maintain focus
Cultural Barriers to Med Innovation• Interdisciplinary collaboration takes extra effort• Culture of Academic & Clinical Research
– Grant treadmill and publishing mentality– Leads to secrecy, slow progress– Defining Conflicts of Interest too broadly (Stossel, NEJM 2005)
• Fear of Failure– Better to fail quickly and learn faster
• Experimental Model Bias– Human data of efficacy paramount– Only use predictive animal models that FDA accepts
• Physician’s acceptance of current Standards of Care• Overvaluing initial Intellectual Property & Patents
Development Best Practice
Val
ue
TimeMilestones
Acquisition/IPO Exit
Published clinical results Market Introduction
Salesforce hired Europe & Japan distribution
FDA Approval
Manufacturing ramp Human pivotal study Corporate partnership
First Hiccup & Momentum Loss Management team hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinionsCEO hired
Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market AnalysisIdea
2) H
ire te
am &
Exe
cute
1) P
lan in
Rev
erse
Traction for New Technology
• Best to start with clinical need, but…• Many start with new technology and
look for applications• Beware of inventor bias and blinders• Map tech advantages to clinical apps
– Key sustainable advantages– Clinical trends that will drive adoption– Beware learning curves, adoption barriers
Innovation Landscape
“If you don’t know where you are going, you might end up
someplace else.”
- Yogi Berra -
Innovation LandscapeMatch Resources to Opportunity Size
Market Size of Opportunity
Low
C
apita
l Req
uire
d H
igh
Big OpportunitiesComplex Solutions,
Fragmented Services
Philanthropy/NIHBasic Research
Unknown Mechanisms
$100MM $500MM
Large EstablishedCompanies
Venture-BackedCompanies
Focused Teams to Prioritize, Execute
Equity
Discrete Product
Product-Line ExtensionsLicense or Product Acq
Royalties
Innovation LandscapeAdapt New Info to Larger Opportunities
Market Size of Opportunity
Low
C
apita
l Req
uire
d H
igh
Big OpportunitiesComplex Solutions,
Fragmented Services
Philanthropy/NIHBasic Research
Unknown Mechanisms
$100MM $500MM
Large EstablishedCompanies
May Discover
New Applications
& Technologies Venture-BackedCompanies
Focused Teams to Prioritize, Execute
Equity
Discrete Product
Product-Line ExtensionsLicense or Product Acq
RoyaltiesMay Discover
New Larger
Opportunities
Philanthropy/NIHBasic Research
Unknown Mechanisms
Gates Foundation
Off-Label Uses
Ortho LumbarDisc
Innovation LandscapeMatch Resources to Opportunity Size
Market Size of Opportunity
Low
C
apita
l Req
uire
d H
igh
Big OpportunitiesComplex Solutions,
Fragmented Services
$100MM $500MM
Stem Cells
RNAi for AMD
Cystic Fibrosis
IschemicStroke
Gastric Bypass
Unfocused & Requires
Segmentation
AorticAbdominalAneurysm
Incremental vs Breakthrough
METRIC INCREMENTAL BREAKTHROUGHFunding $$ $$$$$$
Market Size Varies depending on funding needed
>$500MMNo current therapies
Time NeededAdoption & Exit
ShorterMatch opportunity to strategy
LongerRegulatory path dependent
Value @ Exit Less More
Major Risks Window of opportunityExecution quality & critical pathCompetition
Technical/Clinical unknownsMarket adoption hurdlesReimbursement
Success Factors Focused executionManagement experienceManufacturing economics
Patents, Franchise ValueMarket adoption, Std of CareInvestor expectations
Patent Protection Less More
Competition More Less© [email protected]
Valuable Incremental Products
• Huge companies built on incremental innovations• Fast followers can succeed• Fill existing company’s product line in
hot strategic areas
• Match best mode, milestones & resources• Creating a company may doom product
Time is LifeACCELERANT DECCELERANT
REGULATORY Device 510(k)Predictive animal models
New materials & claimsUnclear endpoints
CLINICAL Existing human dataReproducible published studies
Non-superiorityEntrenched behaviorNo practice benefit
REIMBURSEMENT Existing Codes DRGsPrivate-pay, consumer
Cost-Benefit Studies
MARKET Reduce skills neededPhysician buying powerUnambiguous diagnostic
Capital equipment purchase
SALES Focused physician popul.Existing distribution
Learning curvesEntrenched behavior
Accelerants Amplify Clinical Impact & Return on Investment
Val
ue
Cas
hflo
w
TimeMilestones
$0
COMPRESS TIME TO MARKETFASTER CURES
Techniques to IdentifyNew Opportunities
“To have a great idea, have a lot of them.”
–Thomas Edison
Simply put “Interventional” in the name
Apply interventional techniques to a sleepy discipline
Empower an aggressive specialty to disrupt another specialty
• Interventional pulmonology• Interventional podiatry?
Opportunities from Wider ViewSurgical Procedure Example
Narrow View• Implant choice• Surgical prep• Access• Fixation• Closure
Broader Analysis• Diagnostic• Procedure venue• Surgical tool or implant• Easier customization• Intraoperative feedback
– Confirmation of efficacy
• Easier revision, tuning• Re-use service
Productize the Procedure
Turn medical service/procedure into a repeatable product
Efficacious, simpler, quicker, less skill
• Stomach stapling to Lap-Band
Remove Treatment Ambiguity
Anticipate or create the Standard of Care
• Definitive diagnostics• Procedure choice• Implant & tool choice• Quicker learning curves• Effectiveness of intervention• Recovery and maintenance• Surgical revision rates
Driving Solutions & CostsDown Healthcare Value Chains
Point of CareGeneral HospitalsOut-Patient FacilitiesIn-Office CareIn-Home Care
ProviderSpecialistsGeneral PhysicianNurse PractitionersSelf-Care
Improves reimbursement economicsConvenience, simpler use
Co
mp
lex
ity
of
dia
gn
os
is &
T
reat
me
nt
Christensen Seeing What’s Next, 2004
Eliminate A Provider or FacilityHeresy!
Reduces procedure costsAccelerate payor approvalsCreates economic headroom
• Examples– Office procedure no anesthesiologist
no operating room, quicker– Posterior lumbar no vascular access surgeon
Facility Fee
Device Cost
Compete at the Consumption Void
Unique venue DifferentUnique provider Design
Requirements
• Cleveland Clinic satellite cardio centers• Spa/Cosmetic centers• Condom catheter for home/self care• Diagnostic nutritionists as referral channel
Reframe the Need
A better method to revascularize the heart
- Thomas Krummel, MD Chief of Surgery, Stanford Medical Center
Disease has Process & TimelineDifferent Interventions in Lifecycle
Match the clinician intervention to disease state at that particular stage– Prevention– Early Presentation & definitive diagnosis– Full-blown disease & active intervention
Feedback Loop Shortcuts
Shorten the time between diagnosis and therapy
• Intraoperative imaging• Rapid diagnostics• Customizable implants
Ride Down the Cost Curve
Cheaper, Faster, Single-UseMinimum efficient manufacturing scale
– Modify outside technologies to jump onto another cost curve
– Leverage Moore’s Law for software/hardware performance
Simplify Unknowns & Process
Cell therapies & tissue engineering– Autologous vs allograft economics– Complex & unknown mechanisms– Host tissue integration– Genzyme Carticel economic failure
Reframe: View cells as biologic depots– JNJ Growth factor concentrator – Bedside autologous therapy via Device Model
Import Solutions
Find publications & therapies outside USA with rigorous human efficacy data
• Ortho implants from Eastern Europe• Embolic protection studies in EU
Value = Efficacy Invasiveness^2
Win with same efficacy, less invasive
• Natural orifice tranluminal endoscopic surgery (NOTES)
• Intuitive Surgical, robotic surgical tools• Lithotripsy obviate kidney stone surgery
Innovation is Spark… butDevelopment drives Value
Approach clinical innovation empirically
Prioritize efforts in the landscape– Map entire value chain & risks– Align opportunity to funding and teams– Analyze the economics to
optimize impact & value
See One, Do One, Teach One
Entrepreneurship can be learned
Innovation Grand Rounds needed– Identify & train MDs to think like VCs– MIT $100K Competition Medical Track
Zen @ acmedx.com
Panel DiscussionRichard Anders
– Cofounder - LaunchPad, Still River Fund
Zen Chu– Cofounder - 3DM Inc, AcMedX
Robert Creeden– Managing Director, Partners Healthcare Center for
Innovative Ventures
David Milne – General Partner, SV Life Science Advisors– Former VP, Corp Business Dev, Boston Scientific
Thomas Stossel, MD– Harvard Medical School Professor– Co-Director, Hematology, BWH
Backup Materials
Helpful Reading & ResourcesMEDICAL INNOVATION:• Ferrari, Richard. Keys to Creating Value for Early-Stage Medical Device Companies. In Vivo:
The Business & Medicine Report, 2005. 20(10)• Pisano, Gary. Science Business: The Promise, The Reality, and The Future of Biotech.
2006, Harvard Business Review Press.• Stossel, Thomas. Regulating Academic–Industrial Research Relationships — Solving
Problems or Stifling Progress? New England Journal of Medicine, 2005. 353: 1060-65.• Center for Accelerating Medical Solutions. Investing in Innovation: Accelerating Disease
Research Through Philanthropy and Business. www.fastercures.org, 2005.• Community Wealth Partners. Venture Philanthropy 2002: Advancing Nonprofit Performance
Through High-Engagement Grantmaking. www.vppartners.org, 2002. GENERAL HIGH TECH STRATEGY:• Chesbrough, Henry. Open Business Models. 2006, Harvard Business School Press.• Christensen, Clayton. The Innovator’s Dilemma. 1997, Harvard Business School Press.• Christensen, Clayton, et al. Seeing What’s Next. 2004, Harvard Business School Press. • Megantz, Robert. How to License Technology. 1996, John Wiley & Sons.• Moore, Geoffrey. Crossing the Chasm. 1991, HarperCollins.• Porter, M. and Teisberg, E. Redefining Healthcare: Creating Value-Based Competition on
Results. 2006, Harvard Business School Press.
Accelerated Medical Ventures Lean Team, Focused Process, Alignment of Purpose
Rational Device Design Process
• Market opportunities, driving trends• Clinical needs, gaps, undertreated• Favor Accelerated Regulatory Path
– Actively engage FDA feedback early– Clinical endpoints, clear & quick, for
downstream claims and sales support– Human clinical data ASAP if needed
• File & Source Intellectual Property– Sophisticated mapping & filing of IP
• Choose technology & engineers later– Only after clinical needs, approach,
predicates specified
• Prototypes for quick feedback & testing• Design for manufacturing & scale issues
Right Team, Properly Aligned, Working Quickly
• Rational Portfolio Approach– Products vs. Company analysis– Spin out companies with plan, early data, clinical
plans, rapid funding, ramp team
• Driven by entrepreneurs & VCs– Closely participating VC, early alignment– Large funds avoid EIR costs from mgmnt fees– Deep pockets to fund, build team quickly, but only
when & where appropriate
• Multidimensional MDVC Clinician Advisors– 10+ MDs specific to Project/Company/Domain – Recruit multiple clinical design perspectives – Meaningful early-stage feedback
• Virtual Organizations For Each Project– Anti-Incubator - Not a real estate play!– Co-locate with VCs for ideaflow, alignment– Outsource labs, testing, prototyping, regulatory– No obligation/mis-incentive to create companies
Accelerated Med Venture ProcessMarket & Clinical Drivers
• Market opportunities, driving trends– Existing solutions & problems– Physician and patient critical needs– Initial sub-segments to drive adoption– Map competitors & potential exits– Critical development & distribution partners
• Maximum clinical impact & use scenarios– Clinical frustrations with std of care– Faster/Better/Cheaper metrics– Segmentation of undertreated/Inability to treat– Source clinical advisors & indep. champions– Sales model and doctor/patient targets– Clinical trials endpoints to drive adoption– Patient recruitment issues
• Initial Regulatory Path– Existing safety & efficacy data– Clinical endpoints, clear & quick, for
downstream claims and sales support– Clear predicates– FDA feedback & path to human clinical data
Patents & Reduction to Practice
• Whole solution mapping– Tools, implants, techniques, materials– Critical 3rd parties & existing products– Blank sheet design inputs– Essential new IP, in-licensing– Platform & franchise value of this idea
• Prototypes for quick feedback & testing– Existing primary human & animal data– Predictive & accepted animal models– Existing papers identifying design
requirements
• File & Source Intellectual Property– Sophisticated mapping & filing of IP– Prior art and FTO search– Plug holes
• Design for manufacturing & scale issues
Clinical Opportunity Evaluation• Clinical Merit & Adoption
– Current therapies– Untreatable problems & populations, sub-segments– Prevalence vs. incidence & other objective metrics of clinical need– Independent clinical champions
• Stage of Development– Reduced to practice– Prototypes, animal data– Human data– Manufacturing feasibility and economics
• Commercial Potential– Defined product, market size, procedures– Time to market, regulatory pathway, reimbursement– Interim milestones and risks
• Protection & Competition– Patent & prior art search– Public disclosure, scope of protection, FTO– Natural product line extensions, product/procedure cannibalization
Typical Early-Stage Medical FailureNon-optimal Design Process, Clinical Focus
• Technology-focused origin => Solution looking for a clinical problem– Wedded to technology, scientific & engineering bias among founders
• Initial patents filed prematurely– Tech focused rather than clinical approach– Prior art poorly mapped & early IP overvalued
• Funding raised, paths & milestones committed, expectations set• Regulatory path not mapped
– Consultant opinion, but little FDA feedback – Clinical endpoints and patient recruitment either too slow or not clear– Lack of predictive & robust animal models
• Clinical feedback not complete– Clinical need, economics, practice implications, design prototypes– Solution not matched to expedited proof and approval paths
• Clinical Advisors not matched with staged milestones– Too late to give meaningful feedback on chosen roadmap– Feedback doesn’t impact design modifications – Respected names promoted, but feedback mismatched to stage– Advisors used in early development dropped later for clinical phases
Zen ChuFounder, Accelerated Medical Ventures
Early-stage medical investor & accelerator
CEO & Co-founder, 3DM Synthetic Regenerative BiomaterialsEqual co-founder with MIT Faculty Shuguang Zhang, Alex Rich, Bob Langer, Alan GrodzinskyBootstrapped business, licensed IP portfolio from MIT, drove pre-clin data, FDA feedbackRaised venture capital from Bain Capital Angels, Monitor VenturesCollaborations with Boston Scientific, Medtronic, J&J/DePuy, Genzyme, among othersWorldwide license & partnership with Becton Dickinson for cell culture reagentAcquired 11/2007 by NMJ Capital (Japan) to fund human clinical trials (2008), licensing
Partner, NetVenturesEarly-stage firm founded by Adam Kirsch, co-founder of Bain CapitalSeed funded 3DM and a number of early-stage technology companies
Founder & Director, HPGarage, Hewlett PackardHP’s new technology ventures group across business units and HP LabsVenture capital partnerships to quickly add value to portfolio companiesIncreased sensitivity to investment trends, new technologies, internal metricsParticipated in 1st ever spinout from HP, TimesTen Software
Biomedical Analyst, MD BuylineLargest subscription service for quality & service ratings of medical device manufacturers
EducationMBA, Yale University School of ManagementBS Biomedical/Electrical Engineering, Southern Methodist UniversityNVCA / Kauffman Venture Capital Institute
High Impact Clinical Innovations Course
• Landscape of Medical Innovation– How clinicians, grant research, philanthropy, start-ups, venture capital,
large med-tech & pharma companies prioritize innovation differently– Matching invention to appropriate funding source
• Patterns of the Highest Impact Clinical Innovations– Common attributes and best practices for proving efficacy & accelerating
adoption– Segmenting & Prioritizing Patients & Providers– Example inventions, retooling techniques
• Transitioning from Research to Development– Team-building & roles for inventors, clinicians, entrepreneurs– Identifying and Solving Conflicts of Interest– Milestones & common pitfalls on the roadmap to patient treatment
• Toolbox for Innovation & Accelerating Clinical Adoption– Techniques for analyzing current care, care gaps & business models– Tailoring venture models, Christensen, Porter, Moore’s Chasm and other
techniques to medical innovation and clinical adoption
• Team sessions & case studies
Strategies for clinicians and medical inventors to maximize adoption and clinical impact of new products & services
Efficiently Training MD/VCsKey to Identifying & Scaling Innovation
• Creating MD/VCs: 3 Apprentice-based Groups Must Intersect– MDs, VCs, med tech entrepreneurs skillsets tough to scale– Efficient cross-pollination will enable innovation of the correct solutions– Apprenticeship must address medical & business domains– Improving interaction & sophistication pays dividends to all involved
• MDs Must Innovate Economically Viable Solutions– Scalability: Best way to benefit society beyond physician’s own hands– Economics: Commercial realities must be addressed for wide impact– De-Risk Ideas Early: MD Adoption, Substitution, Regulatory, Economic, Design– Timeframe: Simple focused ideas often yield greater impact, both short & long term– Institutional Benefit: MD staff creates royalty stream for institution
• Focus on Jr. Faculty & Fellows– Fresh eyes on the problems, right level of experience– Aspiration as innovators, greatest segment of frustrated young doctors– Grant treadmill has not completely handicapped them– Mentorship by top thought leading VCs and MDs
Why Now, Why Boston?
Fantastic Boston Medical Resources• Huge denominators in most metrics
– Thought leaders, institutions, grant funding, doctors, OR’s, licensing, entrepreneurs, engineers, VCs
• Over 300K active Physicians have come through Boston institutions
• Over 50 hospital networks and 115K active physicians in New England
• New England highest per capita MD pop
Medical Devices & Services Ascendant• Devices as best ROI• Growing VC experience, investment• Robust non-reimbursed opportunities • Improved patient outcomes vs pharma• Mature companies as distribution partners
& exits• Broken Pharma Model driving capital into
med device & services investments
Boston Underproductive Relative to SV• Less commercialization than Silicon Valley • Few vehicles to institutionalize early stage device
commercialization• Vacuum mentoring entrepreneurial physicians• Complex institutional IP sourcing & licensing• More conservative VCs than Silicon Valley
Macro Trends Driving Innovation• Realization that “Translation” means
commercialization• Aspiring Surgeon Innovators
Top 99% of Medtronic Innovations from MDs• Consolidation of Device Companies• Faster Lifecycle & Moore’s Law Impacting Device
Performance & Cost• Aging Boomers & Consumer-Driven Health • Healthcare crisis & cost pressures
Sources of Critical Feedback
BOSTON INSTITUTIONS• Center for the Integration of Medicine &
Innovative Technology (CIMIT)• Robert Langer• Chiefs of Hospital Departments• Harvard Medical School • Harvard-MIT Health Science &
Technology Faculty & Advisors• Harvard Business School Faculty• Partners Healthcare Ventures• Tech Licensing Offices• MIT$100K leadership• MIT Deshpande Center
VCs & CORP DEVELOPMENT• Leading East & West coast med tech VCs• Med Tech Incubators/Acclerators• Corporate Venturing groups• Entrepreneurs on both coasts• Windhover Publications Editor• MA Governor’s Life Science Initiative
OTHER INSTITUTIONS• Gates Foundation• Milken Foundation & FasterCures• Stanford Biodesign• Stanford Medical School• Biomedical IDEA Competitions• Yale University Medical School Faculty