cimit innovation grand rounds
DESCRIPTION
Zen Chu's new presentation on the economic playbook for healthcare investmentTRANSCRIPT
The New Playbook for Healthcare Innovation
CIMIT Innovation Grand RoundsMassachusetts General Hospital
ZEN CHU Accelerated Medical Ventures ELAZER EDELMAN, MD, PhD
MIT / HST / Harvard Medical School / Highland CapitalMICHAEL GREELEY
Flybridge Capital PartnersMARSHA MOSES, PhD
Children's Hospital Boston, Harvard Medical School JOE SMITH, MD, PhD
VP, Emerging Technologies, Johnson & Johnson COSAT
New Playbook for Current Climate
• Innovation Landscape
• Value Drivers & Milestones
• De-Risking Early Stage Medical Ventures
• Development Teams
• Clinician Innovation Roles
• Panel Discussion
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 GrantsUnknown Mechanisms
$100MM $500MM
Large EstablishedCompanies
Integrate Whole Solutions
Venture-BackedCompanies
Focused Teams to Prioritize & Execute
Discrete Product
Product-Line ExtensionsLicense or Product Acq
Royalties
Innovation LandscapeAdapt with New Information & Experiments
Market Size of Opportunity
Low
C
apita
l Req
uire
d H
igh
Big OpportunitiesComplex Solutions,
Fragmented Services
Philanthropy/NIHBasic Research GrantsUnknown Mechanisms
$100MM $500MM
Large EstablishedCompanies
Integrate Whole Solutions
Venture-BackedCompanies
Focused Teams to Prioritize & Execute
Discrete Product
Product-Line ExtensionsLicense or Product Acq
Royalties
May Discover
New Applications
& Technologies
May
Dis
cove
r
New L
arger
Opportuniti
es
Stem Cells
Philanthropy/NIHBasic Research GrantsUnknown Mechanisms
Gates Foundation
Off-Label Uses
Ortho LumbarDisc
Market Size of Opportunity
Low
C
apita
l Req
uire
d H
igh
Big OpportunitiesComplex Solutions,
Fragmented Services
$100MM $500MM
RNAi for AMD
Cystic Fibrosis
IschemicStroke
Gastric Bypass
Unfocused & Requires
Segmentation
AorticAbdominalAneurysm
Segment To FocusPatients, Disease State, Providers
Incremental vs BreakthroughPlenty of Incremental Value, Different Strategy
METRIC INCREMENTAL BREAKTHROUGHFunding $$ $$$$$$
Market Size Varies depending on funding needed
>$100MMNo 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
Value Built Far Past InventionV
alue
TimeCritical Milestones
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
CEO hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinionsMoney raised & team hired
Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market AnalysisIdea
Clinicians Essential for Innovation
• 22% of surgeons innovate - von Hippel, 2003
• Physician-invented = higher impact - Chatterji, 2008
• 99/100 top Medtronic products originated by MDs
Anticipate PathStandard of Care
“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
Physician Roles on TeamV
alue
Time
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 CEO hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinionsMoney raised & team hired
Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market AnalysisIdea
Co
nfl
icts
of
Inte
res
t
Critical Milestones© [email protected]
Accelerate Clinical ImpactTime is Life
Val
ue 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 CEO hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinionsMoney raised & team hired
Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market AnalysisIdea
Critical Milestones
COMPRESS TIME TO MARKETFASTER CURES
Which Risks to Prioritize?V
alue
Time
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Regulatory RiskSafety & Efficacy
Regulatory RiskSafety & Efficacy
Management RiskManagement Risk
Technology IP Risk
Technology IP Risk
Which Risks to Prioritize?V
alue
Time
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Regulatory RiskSafety & Efficacy
Regulatory RiskSafety & Efficacy
Management RiskManagement Risk
Technology IP Risk
Technology IP Risk
Largest Risks Must Be Addressed & De-Risked Up Front Before Funding
VCs & Investors Manage & Invest With These Risks
Prioritize & Translate InnovationV
alue
Time
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Market RiskReimbursement
Physician & Patient AdoptionPackaged Solutions
Regulatory RiskSafety & Efficacy
Regulatory RiskSafety & Efficacy
Management RiskManagement Risk
Technology RiskTechnology Risk2) T
eam
Exe
cutio
n
1) P
lan in
Rev
erse
Invention is Spark… butDevelopment Drives New Therapy
Prioritize efforts in the landscape– Approach clinical innovation empirically– Map entire value chain & risks– Match opportunity to funding & team required– Innovation at every level
Tough times require execution discipline– Experimental rigor, same best practices– Adaptation as new data learned
See One, Do One, Teach OneZEN CHU
Accelerated Medical Ventures
ELAZER EDELMAN, MD, PhD
MIT / HST / Harvard Medical School / Highland Capital
MICHAEL GREELEY
Flybridge Capital Partners
MARSHA MOSES, PhD
Children's Hospital Boston, Harvard Medical School
JOE SMITH, MD, PhD
VP, Emerging Technologies, Johnson & Johnson COSAT
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 Hospital Sales CycleDisincentives to change
SALES Focused physician popul.Existing distribution
Learning curvesEntrenched behavior
Clinical Opportunity Evaluation• Clinical Merit & Adoption
– Current therapies, Physician-adoption hurdles– 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, unambiguous diagnosis– 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
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
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• Richard Ferrari, DeNovo Ventures• Richard Foster, McKinsey & Co Healthcare• 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