cimit innovation grand rounds
DESCRIPTION
Zen Chu's new presentation on the economic playbook for healthcare investmentTRANSCRIPT
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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
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New Playbook for Current Climate
• Innovation Landscape
• Value Drivers & Milestones
• De-Risking Early Stage Medical Ventures
• Development Teams
• Clinician Innovation Roles
• Panel Discussion
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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
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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
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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
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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
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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
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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
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“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
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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]
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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