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Coming to an App Store Near You: Drug-Like Interventions

By Steve Dickman, CEO, CBT Advisors

A note to my readers: As of this week, I have been made a contributor to Forbes and many of my pieces will appear there. Thanks for your continued readership and please keep the comments and questions coming on Forbes, Twitter and LinkedIn.

Although replacing pharmaceuticals with apps still sounds like science fiction, it will be just a few years before getting medical treatment by downloading an app from the Apple App Store or from Google Play will begin to seem routine. All the pieces are coming together: startups are working on real medical challenges, apps are showing clinical utility and a path is emerging to approval by the Food and Drug Administration (FDA). The only things missing at this point are definitive proof and, oh yes, venture money. At a panel that I put together at Biotech Showcase in San Francisco last month (panel video here), three startups showed how they are tackling both the lack of funds as well as some real health issues: smoking cessation, attention deficit disorders and migraine. It is instructive that each of these companies sees peer-reviewed, controlled clinical trials as a must. A consensus seems to be emerging that in order to occupy the more clinically useful – and more highly remunerated – realm of “apps-as-drugs,” the winners will have to do much more than just monitoring.

To read the rest of my post and see which companies are emerging as leaders in the apps-as-drugs field, click the link or copy-paste it:
http://www.forbes.com/sites/stevedickman/2015/02/11/coming-to-an-app-store-near-you-drug-like-interventions/

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BIO CEO 2015 Conference Preview

By Steve Dickman, CEO, CBT Advisors

Feb. 3, 2015

One conference that is a highlight for me every year is BIO CEO in New York. This year’s edition arrives next Monday Feb. 9, concluding on Tuesday Feb. 10. One of many reasons I like it so much is that so many fund managers attend. That makes for some excellent Q&A and chatter in the hallways of the Waldorf.

BIO CEO2013_205x100_Thumbnail

If you can get there, I highly encourage it. If not, read the tweets (hashtag is #BIOCEO15) and other media coverage.

The sessions I am most looking forward to include these:

  • “Emerging Trends in Deal Structures,” Mon. Feb. 9 at 9:30am. Panelists will discuss recent trends in both performance milestones and earnouts as well as swaps between pharmaceutical companies of therapeutic assets. Excellent panelists include:
    • Bruce Booth, Partner, Atlas Venture
    • David H. Donabedian, PhD, Vice President, Head of Ventures & Early Stage Collaborations, AbbVie
    • Randall Mills, PhD, President and CEO, California Institute of Regenerative Medicine (CIRM)
    • Adelene Perkins, CEO, Infinity Pharmaceuticals
    • Mark Schoenebaum, MD, Managing Director, Evercore ISI

It will be especially interesting to hear from Randall Mills, who is ushering CIRM into a hectic phase of clinical trial funding after that state agency’s first few years funding mostly early-stage research. And it is always fun to hear from Mark Schoenebaum. I half-expect him to steal the show…

  • “Getting Ahead of Ebola and Other Infectious Threats—Overturning Assumptions,” Mon. Feb. 9 at 11am. The panel will discuss how companies are trying to bring new vaccines and therapies to market faster, with implications likely for a wide array of diseases. Ebola was on the front page of the New York Times on Sunday with good news, finally: the recent outbreak seems to be ebbing. However, as much as the topic will predictably fade, there will certainly be new outbreaks of Ebola and other emerging diseases and actual strategies from government and industry have been in short supply. I am glad that there is a representative of the Gates Foundation on this panel alongside some biotech luminaries to bring the much-needed non-profit perspective. Panelists:
    • Ripley Ballou, MD, Head of Ebola Vaccine Research, GSK
    • Chris Garabedian, President & CEO, Sarepta Therapeutics
    • Peter Khoury, PhD, Senior Program Officer, Bill & Melinda Gates Foundation
    • Guillaume Leroy, PhD, Head of Dengue Vaccines, Sanofi Pasteur
    • Clifford J. Stocks, CEO, Theraclone Sciences
  • “Digital Health—Early Successes for Investors and Biotech R&D Productivity,” Mon. Feb. 9 at 3pm. This session will feature perspectives from both financial and corporate as well as from experts who have broad exposure to digital health investments. One focus will be how digital health companies are improving R&D productivity for biotechs. I had panelist Julie Papanek on my “apps as drugs” panel at Biotech Showcase (the link will take you to a video of the full panel), which took place in January. There, Julie helped me learn about what VCs are doing (and not doing) in the space. Panelists:
    • Angela Bakker Lee, PhD, Partner, VP Healthcare, Global Business Services, IBM
    • Donald Jones, Chairman, Wireless-Life Sciences Alliance
    • Julie Papanek, Principal, Canaan Partners
    • Ryan Pierce, Entrepreneur in Residence, Rock Health
  • VC Funding Report for biotech. Dave Thomas from BIO Industry Analysis will be unveiling his new biotech VC Funding Report. This first-of-its-kind study looks at where venture financing has been put to work in terms of disease area and novelty of research over the last decade (five years pre and post economic crisis). Results are broken down across fourteen disease areas, including oncology, cardiovascular, neurology, psychiatry and more.

There are also some high-profile hour-long “fireside chats.” For example, on Tuesday morning, Gilead’s John Milligan will be followed by Alnylam’s John Maraganore. I wonder if anyone else remembers that Gilead started out as an antisense therapeutics company! Then on Tuesday afternoon, a chat with Peter Greenleaf from Sucampo will be followed by Ron Cohen of Acorda and then by Ian Read of Pfizer. I will try to attend many of these. Reading the CEOs’ body language and hearing their jokes will help me interpret both company commentary as well as investor sentiment in the months to come.

In between these plenary sessions, there are over a hundred company presentations. I hope to see you there.

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Why have only a few European biotechs made it through the IPO window?

By Steve Dickman, CEO, CBT Advisors

Posted to Boston Biotech Watch and to the Partnering360 blog

If the recent falloff in biotech IPOs continues, then many European biotechs would seem to have missed the longest, widest IPO window in the history of the industry. Why did a few European biotechs manage to go public (on NASDAQ, Euronext and the London Stock Exchange) in this window when most others did not succeed or even try?

In recent advisory work for about a dozen companies at various stages of the IPO process, five of which went public, and at a panel discussion organized by your correspondent and the EBD Group on the topic of European biotechs having US IPOs at last month’s BioPharm America conference, I identified three major trends contributing to the paucity of European IPOs:

  • Lack of access to EU capital for EU companies;
  • Absence of interest from (US) crossover investors in EU companies (maybe because they were not asked to invest); and
  • The conservative attitude of European IPO investors.

Sorting out the reasons for this phenomenon is important because of the long-term implications for the biotech industry in Europe. I’ll circle back to that larger question after looking at the data on some representative European IPOs and examining the reasons more European biotechs have not made it to an IPO during this window.

In Table 1 below I put together a sampling of eight European biotech and life sciences companies that pulled off IPOs in 2013 and 2014, their locations, their IPO dates and the amount of capital they raised.

Performance of some IPOs by European biotechs.

Table 1: Performance of some IPOs by European biotechs. Bold: CBT Advisors clients

Some observations:

  • Companies came from several European countries.
  • They went public on several stock exchanges.
  • Some of them raised a considerable amount of money (though typically less if they went public in Europe).
  • Most of these are therapeutics companies (similar to the US IPO crop).
  • With one dramatic exception, the stocks have traded down.

By comparison, according to data from an industry insider we know, this group of European companies have raised about the same on average as US biotechs that have gone public on NASDAQ in 2013/14 – $68.5 million for these six vs. $64 million to $70 million in the comparable crop of US-based biotechs. The trading down tells me that, while investor interest was just as strong initially for the European biotechs as for their US counterparts, the European companies either did not have the news flow or (my hypothesis) they lacked the “true believers” in their stories that would have been required to keep prices up in the months after their IPO.

Venture investors like panelist Rafaèle Tordjman, a general partner with Paris-based VC fund Sofinnova Partners, recalled that there have always been such challenges for European companies. “Our portfolio company Movetis went public on Euronext at the same time [in 2009] and at the same stage as Ironwood Pharmaceuticals but the valuation was three times less!” To be fair, she continued in an email, Movetis, later acquired by Shire, owned only European rights to its gastroenterology product whereas Ironwood owned worldwide rights. But the valuation gap still seemed disproportionate.

What is striking is the number of US companies that have gone public on NASDAQ: About 70, by my count, versus just six European companies. According to OECD, in 2013 there were 2,954 “dedicated” biotechnology companies in the United States and 2,654 in Europe. “Dedicated” firms are those that devote at least 75% of their production of goods and services, or R&D, to biotechnology. Even if these numbers were off by a large amount based on different definitions or stages of biotechs, and even taking into account the superb performance of the US stock market across the board as compared with the market in recession-prone Europe, it would still seem that a number of envious European biotechs are looking across the pond and wondering why their star has not yet risen. Here are my three answers:

Lack of capital from local investors

Despite the huge increase in investment interest in biotech in the United States from both specialist biotech investors as well as generalists, the sector has not gained wide enough appeal yet among either category of European investors to provide sustained support for a European biotech industry on either US or European exchanges. On top of that, what has happened lately is a wave of specialist support for US biotechs, which have been able to go public without much generalist backing at all.

In part, the lack of support in Europe for European biotechs is in part a function of scarcity, said Philip Astley-Sparke, a Venture Partner at the top-tier Dutch VC fund Forbion. He also happens to be President, US, of UniQure, one of the successful US IPO candidates. “Historically, LSE biotech listings did not get done unless generalists were involved to a large degree. In the States, no generalists are required.  These UK generalists are unlikely to be diversifying into US biotech. Hence, a few UK biotech IPOs may get done and then a single disappointment sends the generalists running for cover. This makes the market less stable. By contrast, a few blow ups on NASDAQ is just noise.”

In any event, the total amounts raised by biotechs in both IPOs and follow-ons combined have turned up in Europe but they still lag US deals by a wide margin (Figure 1).

Biotech deal volumes (cumulative) 2004-2014: Europe lags

Figure 1: Europe lags in volume. Data courtesy Dealogic. Figure courtesy FT.

Some reasons vary country by country. Germany, in particular, has lain fallow for many years in the aftermath of the dot-com boom. German tech stocks have come roaring back but there has not been a single biotech IPO on the Frankfurt exchange. Only one Germany biotech company, Affimed Therapeutics, an antibody therapeutics company in Heidelberg, had a NASDAQ IPO in 2013-14. It raised $56 million.

In other European countries such as the Netherlands and Great Britain, there are quite a few high-quality biotech companies so windows might someday reopen. There are signs of a thaw in Switzerland, where both institutional and retail investors were burned by disappointing clinical results from companies like Addex and Cytos. On September 23, the day after the panel discussion took place, Zurich-area biotech Molecular Partners announced that it was filing for a blockbuster $134 million IPO by the end of the year on the Swiss exchange SIX.

But none of the European biotechs I know would be likely to choose an EU over a US IPO if current conditions prevail. If the wave of IPOs that hit NASDAQ were to later reach Europe’s shores after it hit NASDAQ, this would be about the time for it to happen, but, with the exception of that one big-ticket Swiss IPO attempt, there is little sign of a biotech boom on Euronext or other exchanges.

In fact, on October 21, just before this post went to press, Molecular Partners pulled its IPO due to “market conditions.” “Whenever Wall Street starts coughing, Europe gets pneumonia,” was how one European biotech industry insider characterized that reversal.

Missing crossover investors

For those who have not encountered them, crossover investors, mostly US-based, have been driving the surge in biotech investment for some time now. This is a big change from the 1990s and early 2000s, when many pre-IPO investors, including venture capitalists, were eager to “flip” their shares immediately post-IPO. That period ended abruptly in around 2003-2004. What has happened lately is really the opposite. Savvy crossover funds jam-packed with PhDs and MDs are getting in just before the IPO with the goal of getting a bite of the company at a better valuation than they would get at the IPO. The same investors then typically buy in the IPO, then hold for clinical data. That is, the US crossover investors are not investing in the biotech as a non-public entity in order to turn it into a public entity that is now liquid and “flippable” but rather to turn it into a public entity in which they can share in and reap the rewards for good data (once their lockups have come off and they are allowed to sell shares).

It’s not that Europe has none of these deep-pocketed, risk-loving investors. Some have played quite strongly in the recent boom – some funds in Switzerland, Polar Capital in London and Omega Funds in London come to mind. But the diversity of the crossover investing sector, including mutual funds and some VC-like funds as well as traditional long-only hedge funds, and the sheer number of funds in the United States dominate the industry. Indeed, Omega has begun to invest more frequently out of its Boston office and considers itself more of a global investor. At least twenty US funds, some of them able to deploy many hundreds of millions of dollars in capital, have been extraordinarily active over the past two to three years.

There is no law preventing European management teams from pitching the same crossover investors that their US counterparts are pitching. But the logistical challenges are apparent. Ultimately, said Astley-Sparke, “a European company coming to the US has to be here a year in advance, doing non-deal road show work, getting in front of the crossover investors and preferably doing a crossover round. That [crossover round], in my experience, is almost a pre-requisite for being taken public by one of the larger banks.” Tordjman concurred that for Sofinnova’s portfolio company ProQR, a Netherlands-based therapeutics company focused on cystic fibrosis, the crossover round was very helpful.

Panelist Dan Grau, the President of UK-based Heptares Therapeutics, a highly regarded, still-private drug discovery and development company with management located in both London and Boston, concurred. “The pathway of doing a crossover financing to lead you to an IPO is clearly the preferred pathway,” he said. The caveat for companies, said Tordjman, is that in order to access all that capital in the United States, sometime companies have to make sacrifices in their valuation. “It’s an equilibrium,” she said. Lining up the preferences of existing investor against the valuation wishes of new investors requires careful thought and planning.

It will be a while before such a fund group can emerge in Europe. Some of the US-based crossover investors are part of decades-old fund families (e.g. Fidelity). Others among the seven thousand hedge funds in the United States are the specialists focusing specifically on pre-IPO biotech. It will almost certainly require a pretty large crop of European biotech IPOs that turn into long-term success stories for an investor pool like this to be replicated in Europe, if it ever is.

“What are you selling, the promise or the actuality?”

The final factor that is holding Europe back is more of a cultural one. US and European investors think they are buying different things and value companies accordingly. European investors want to see more data; US investors are more interested in the “sex and violence,” as Astley-Sparke put it in an email, that accompany earlier-stage companies. Grau summed it up nicely on the panel: “For US investors, there is a greater appetite for something that has potential and promise but may not have shown its data, may not have become actual yet. One doesn’t see exactly the same kind of fever on the European side, which sometimes be a bit more conservative in looking for the evidence in hand, especially for therapeutics, that you have crossed a risk threshold. So that is a potential dividing line. The reception we have as a Phase 1 stage clinical company with a substantial preclinical pipeline on Wall Street, whether we are talking to the buy side or the bankers, is very intense. They see the prospect of a very interesting data flow coming soon.”

US investors do occasionally invest in EU companies such as Innate Pharma and GenFit, both in France, says Otello Stampacchia, a Partner with Omega Funds. “Typically,” he says, “these investors need to see a clear value proposition (e.g. when there is more attractive pricing of assets in European companies) as well as a presence in a very topical space – immuno-oncology for Innate, NASH for GenFit.”

What hangs in the balance for the European biotech industry is more than just the return rates for some biotech VCs or the valuations of a few biotech companies, as important as those aspects absolutely are for the readers of this blog. IPOs these days are financing events rather than exit opportunities. This is consistent with the “buy-and-hold” approach that most crossover investors are taking now with most therapeutics company shares they own. But then what is the endgame? For many companies developing exciting new therapeutics, that will be acquisition by existing biotech players. Biogen Idec found its high-flying dimethyl fumarate product Tecfidera in a European biotech. Amgen snapped up Micromet and BioVex, both of which moved part of their operations to the United States prior to acquisition. Amgen kept a research facility open in Munich but the companies otherwise were lost as sources for new ideas, entrepreneurs and capital in Europe. Other such examples are bound to follow.

As I see it, what is at stake is Europe’s ability to build IPOable companies and fund them beyond the first good dataset. What makes a place a good biotech hub is well-known to us in the biotech nexus of Boston: Durable, lasting sustainable companies generating products, revenues, returns, innovation, ecosystems and spinouts. If the companies are all getting acquired – nipped in the bud, so to speak – such an ecosystem does not arise. If Europe wants to have a sustainable biotech industry, it doesn’t want all the companies acquired, at least not before there is enough value in the company and its team that it can create spinoffs and get them funded. On the other hand, if I’m a VC shareholder, I want and need them to get acquired.

Panelist Sinclair Dunlop, the Founder and Managing Partner of Epidarex Capital, an Edinburgh-based VC fund, agreed that this is a challenge, but that the interests are actually aligned right now in favor of acquisition. “[As an investor], you have to make money. You’ve GOT to be able to deliver competitive financial returns to financial institutions that back the cluster in those locations. Only then have you got a shot at recycling capital and ultimately growing it. One thing we lack in certain parts of Europe is the generation of entrepreneurs who have made their mint and who are now back to recycle their cash. You don’t have that yet in enough parts of Europe.”

Meantime, Tordjman reported that DBV Technologies, a Paris-area Sofinnova portfolio company making protective immunotherapies against peanut allergies – largely a US market – had announced an hour before the panel began that it was taking the next logical step after it pulled off a successful 2012 Euronext IPO and, in September, 2014, obtained excellent Phase 2b data: it filed an F-1 with the SEC to go public (again) and have a dual listing on NASDAQ.

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This Therapy Could Treat Ebola – How to Get it to Those in Need?

A guest post to Boston Biotech Watch

By Paul Caron

What if there were a useful treatment for infection with Ebola, which can produce a life-threatening and frightening hemorrhagic fever, but no easy way to get the product to those in need?  A detailed search of the literature and consideration of the viral structure of the Ebola virus helped me uncover a potentially useful product that is far ahead of other proposed Ebola therapies in development that, based on animal data, is highly likely to have efficacy.

Yet there seems to be no simple way to provide this product on a compassionate basis to those in need. This post is an open request to anyone with knowledge of the situation to take action on this potential treatment before more lives are lost.

Ebola is associated with extremely high mortality, between 60% and 90%, and there is no effective treatment. Until recently, it has been possible to contain the spread of the virus and limit the total number of cases to a maximum of a few hundred per year. This year, containment has proven to be more difficult and the number of cases has swelled to over 1,200, including a number of health care workers.

Map of 2014 Ebola outbreak

Map courtesy of WHO

There is concern that the virus could easily be spread beyond the current region encompassing Sierra Leone, Liberia, and Guinea. Indeed there is already one case where an infected traveler flew to Nigeria and later succumbed to this virus. Travel restrictions are being put in place to try to keep the virus contained, but because infected individuals may be symptom-free for up to 21 days, this may not be enough to stop its spread.

The only treatment currently available is supportive replacement of fluids, electrolytes and blood. Broad spectrum antivirals such as ribavirin have proven to be ineffective. There are a number of therapies being specifically developed for Ebola including vaccines, monoclonal antibodies, antisense molecules, and small molecule inhibitors. However, these are all in early stages of development and can’t address the immediate need for an effective therapy.

Antiviral therapies that have proven highly effective for other viral infections often target viral proteins required for replication. Ebola contains an RNA-dependent RNA polymerase, a protein that is conserved among other related viruses including Marburg, parainfluenza, mumps, rabies, and RSV. This suggests that inhibitors that target the most conserved region of RNA-dependent RNA polymerase, the nucleotide binding domain, have high potential for activity against Ebola virus.

By reviewing relevant literature, I have uncovered recent experiments with one of these inhibitors, favipiravir (T-705), which have demonstrated that this product can inhibit the virus in cell culture as well as in mouse models of Ebola infection. Papers on this were published by two research groups (Antiviral Res. 2014 May;105:17-21; Antiviral Res. 2014 Apr;104:153-5). One example of favipiravir’s effectiveness is that a one week course of treatment of infected mice was able to prevent death in 100% of the mice. This treatment was 100% effective even when started six days after the initial infection, when the mice already had symptoms.

Favipiravir is currently in development for influenza (flu) infection by FujiFilm Pharmaceuticals/Medivector. It has completed Phase II clinical trials in hundreds of patients and has recently entered multinational pivotal Phase III trials funded by the US Department of Defense.  It was approved for pandemic stockpiling in Japan in May of this year.

Favipiravir has not been advanced by FujiFilm for use in Ebola patients, because it lacks the resources and expertise, according to a company executive quoted in a Bloomberg News article that ran on July 17, 2014. But it is far ahead of other specific Ebola therapies under development. Given the animal data, I believe it to be highly likely that favipiravir will have efficacy in Ebola patients, especially if it could be given relatively early in the infection cycle. Sufficient drug supply for up to 1,000 patients in the planned influenza trial is likely already available. That is in addition to any material already being stockpiled for potential influenza pandemic use in Japan. Processes to produce more should be in place.

Hazard gear

(Photo: European Commission DG ECHO/Flickr/Creative Commons)

There are other precedents for using unapproved therapies in times of clinical emergencies, especially when the situation is life-threatening and there are no other acceptable therapies. Often these situations arise in oncology, where clinicians advocate to use promising therapies that are in development in critically ill patients. A recent example in antiviral therapy involved a cancer patient with an otherwise untreatable viral infection who was able to receive investigational drug brincidofovir from Chimerix, Inc., in North Carolina. The patient soon recovered.

While treating Ebola patients in Western Africa may not be the largest commercial opportunity associated with this molecule, I find it ethically challenging to have a molecule in hand that could prevent many of these patients from dying as well dramatically limit the spread of this disease and then not even attempt to test its efficacy. Drug supply for at least some patients should already exist; it has proven to be relatively safe in humans; and animal experiments indicate that it has a large potential to work. Quickly bringing this potential therapy to patients will demonstrate to the world what medicine in the 21st century should look like.

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Paul Caron is a pharmaceutical industry consultant and founder of Integrated Profiling, LLC.  www.integratedprofiling.com. He can be reached at pcaron@cbtadvisors.com.

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Big Data in Drug Discovery and Healthcare: What is the Tipping Point?

By Steve Dickman, CEO, CBT Advisors

What good is big data for drug discovery? Not much, if you ask the pharmaceutical industry. The world’s drugmakers have other challenges right now and, with a few notable exceptions like PatientsLikeMe, neither consumer-driven nor patient-driven “big data” seems to be part of the solution.

Even in the apparently more data-driven field of healthcare services, big data keeps bumping up against regulatory and practical barriers. As I wrote earlier this month, a funny thing happened to 23andme on the way to its now-on-hold million-person database….

Mark Murcko, Feyi Olopade and Ajit Singh

Mark Murcko, Feyi Olopade and Ajit Singh (Image courtesy EBD Group)

A recent panel of experts argued that trends in big data will drive up its relevance and provide a navigable path toward greater utility both in pharma and in healthcare. The panelists at the workshop I put together for the 2014 Biotech Showcase in San Francisco last week hinted that the time will soon come when “big data” is as much a part of both drug discovery and healthcare as it is of financial forecasting  and choosing driving routes that minimize traffic.

Click here to watch the video of the panel or copy-paste the link:

http://www.partnering360.com/insight/showroom/id/445

The companies that presented are NuMedii, a venture-backed company that calls itself a “digital pharma company” tackling drug discovery itself; and CancerIQ, a data analytics company focusing on aggregating data on how cancer patients are treated and using it to upgrade the treatment that can be provided in different geographies and types of hospitals.

Joining the CEOs of NuMedii and CancerIQ were Ajit Singh, a venture capitalist with Artiman Ventures who taught electrical engineering and neuroscience at Princeton and then ran global businesses for Siemens in oncology and digital radiology; and Mark Murcko, the former chief technology officer of Vertex Pharmaceuticals who is now running a consulting firm and advising computer-powered drug discovery firms such as Schrodinger and Nimbus Discovery.

Due to these engaging and insightful speakers, this was a fascinating panel that delivered all sorts of hints about what looks like an upcoming turning point. Topics included (time stamps on video in parentheses):

  • What sort of venture investor would understand a big data company in healthcare, IT or life science? (10:10) and (12:45)
  • Where do big data startups go to even get their data given the high degree of regulation? (27:00) and (28:50)
  • How can innovative startups avoid being stopped cold by HIPAA? (21:30)
  • What will be the turning point at which the pharmaceutical industry sees big data as a driver of solutions rather than just noise? (32:40) and (38:00) and (52:20)
  • Is genomic data “big data”? (17:00)
  • How can “sparse data” be just as useful as “big data” in solving certain problems? (43:00)
  • How can newly industrialized countries like India and China contribute to models that might be useful in the United States and Europe? Will they “go first” in some sense in using big data? (44:30)
Gini Deshpande, Founder-CEO of NuMedii

Gini Deshpande, Founder-CEO of NuMedii (Image courtesy EBD Group)

Here is a more complete list of time stamps:

  • (2:00) Definition of Big Data “Things one can do at a large scale that cannot be done at a smaller one to extract new insights or create new forms of value in ways that change markets, organizations, the relationship between citizens and governments and more.” (From the 2013 book Big Data: A Revolution That Will Transform How We Live, Work and Think by Mayer-Schönberger and Cukier)
  • (3:00) Gini Deshpande self-introduction. “At NuMedii, we are a digital pharma company. We are focused on leveraging the vast amounts of life sciences big data that is out there and translating it into drugs with a higher probability of therapeutic and commercial success….We are a pharma company. We leverage the data and turn the data into drug candidates.”
  • (4:20) Mark Murcko self-introduction.
  • (5:10) Feyi Olopade self-introduction. “My co-founder is my mother. She is a nutty professor slash clinical oncologist slash MacArthur genius fellow. It was my mother’s vision to start using data and analytics to deliver more precision treatment and more precision risk assessment….We hope to democratize access to premium cancer care by helping providers deliver data-driven decisions.”
  • (6:35) Ajit Singh self-introduction
  • (7:45) In the world of healthcare, the analytics revolution has barely begun
  • (10:10) How NuMedii bridges the (large) gap between healthcare investors and IT investors
  • (12:45) How CancerIQ bridges the same gap
  • (14:35) Early days of analytics: Shared Medical Systems
  • (17:00) Why genomic data may not be big data
  • (20:35) How 23andme learned the hard way about regulation of medical data
  • (21:30) On overcoming HIPAA: a fascinating framework
  • (25:00) Why IT investing is easier: world of atoms vs. world of bits
  • (27:00) How CancerIQ gets its data
  • (28:50) How NuMedii gets its data
  • (32:40) Why pharma is still (mostly) focused on the drug candidates
  • (38:00) The importance of actionability
  • (41:00) Q&A: How to de-identify health data
  • (42:15) Cancer patients are very willing to share their (personal) information
  • (43:00) The best data may not be big data
  • (44:30) International big data in healthcare – will it take the lead? Case: India
  • (49:00) Case: China
  • (52:20) Why pharma does not yet trust “black box” models – they do not tell a story, says Murcko

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From a painful loss, a way to improve children’s care worldwide

Boston Biotech Watch guest post by Megan Krench*

A year ago, Boston-area medical device entrepreneur Sameer Sabir and his wife Nada Siddiqui received the most devastating news a parent could imagine: their infant daughter, Rehma, had passed away.

Rehma was at home with her nanny on January 14, 2013. In the late afternoon, emergency services responded to the home after a call that Rehma had suffered an apparent seizure. Rehma was rushed to Boston Children’s Hospital. Despite the staff’s enormous efforts to save her, Rehma passed away on January 16, 2013, two days after her first birthday.

Rehma  photo

Rehma passed away just days after her first birthday

As explained in the Boston Globe’s coverage, the nanny was charged with first-degree murder after the Office of the Chief Medical Examiner conducted an autopsy and ruled the death a homicide.

It is an understatement to say that this has been a difficult year for Sabir and Siddiqui. They are still very much in the midst of dealing with the profound consequences of the loss of their daughter. Yet, despite their grief, they have decided to take action in Rehma’s memory and help support a unique, new platform for medical education.

Not long after Rehma’s passing, Sabir and Siddiqui established The Rehma Fund for Children. Inspired by the care they experienced at Children’s Hospital, they describe the fund’s mission as supporting “charitable causes that help children and parents deal with the emotional trauma and stress of illness and hospitalization through easier access to more compassionate healthcare.”

The fund recently decided to support an innovative and powerful medical education resource that has the potential to make a positive difference for parents and physicians around the world. The program, OPENPediatrics or OPENPeds, is currently in beta testing. It was developed through a collaboration between Boston’s Children Hospital, the World Federation of Pediatric Intensive and Critical Care Societies, and Cambridge-based IBM labs.

OPENPeds was conceived by Dr. Jeff Burns of Boston Children’s Hospital, whose team was responsible for Rehma’s care. Rehma was treated by experts in the pediatric intensive care unit (PICU) during her time at BCH. In spite of a global need for this kind of expertise, only a select number of PICUs exist. OPENPeds was designed to close this gap by offering an open-access, peer-reviewed, not-for-profit platform to facilitate collective knowledge exchange among pediatric care providers, especially those operating outside of the expertise of PICUs.

To ensure OPENPeds equips practitioners with the tools they need most, the curriculum is based on the results of a survey, completed by over four hundred pediatric critical care providers from fifty-four countries as well as on World Health Organization data on the leading causes of mortality in children.

In addition to this survey-based core curriculum, the Rehma Fund has contributed resources for a Non-Accidental Trauma Module. This module aims to increase quality of care for children who have been the victims of non-accidental trauma. In addition to providing expertise for those patients, the Rehma Fund and OPENPeds also aim to increase awareness of non-accidental trauma in hopes of preventing future injuries. They explained their decision in this video, which they posted last week on what would have been Rehma’s second birthday.

OPENPeds prides itself on high-quality content. The program has been working with physicians all over the world to generate material for the site. The purpose of this is twofold. First, OPENPeds aims to find doctors who are practicing experts in the field for which OPENPeds is developing content. For example, a physician from Boston Children’s Hospital likely would not have extensive experience with pediatric HIV or malaria. The other reason OPENPeds recruits doctors from around the world is to ensure this platform is truly being created for a global community, by a global community. “We recognize that we don’t have all the information, and we don’t want it to be a ‘West to the Rest’ concept,” OPENPeds’ Program Manager, Bridget Koryak, explains.

OPENPeds image of "virtual ventilator"

Interactive medical education: OPENPediatrics allows users to train on a “virtual ventilator” in a patient simulation. (Image courtesy OPENPeds)

The quality of information on OPENPeds is comparable to that found in peer-reviewed journals, but the content is presented in a more dynamic format. OPENPeds has worked closely with experts in Internet-based education technology from both MIT’s OpenCourseWare and the Harvard Graduate School of Education to apply a growing body of knowledge regarding how adults learn. One result is that much of the learning on OPENPeds is interactive. For example, users are challenged to actively apply their knowledge through interactive training modules. Physicians training on an OPENPeds “virtual ventilator” can see how their actions change simulated patients’ responses.

OPENPeds is a unique program, described by partner IBM as the “world’s first cloud-based global education technology platform,” but it will be complementing some existing companies in the digital medical education space. For example, physicians can already subscribe to a service called UpToDate to find comprehensive summaries of cutting-edge medical knowledge in a wide range of specialties, including general pediatrics and adult and pediatric emergency medicine. Two key differences between UpToDate and OPENPeds are format and access: unlike the interactive learning platform used by OPENPeds, UpToDate is primarily literature-based. And unlike OPENPeds’ open access, UpToDate is based on the more traditional paid subscription model.

One physician at a large teaching hospital said that OPENPeds is likely to be widely used, especially by trainees.  Up to Date provides incredibly comprehensive information, this physician said, but it sometimes provides too much information to quickly digest.

Upon learning about OPENPeds, Dr. Rodney Altman, Clinical Assistant Professor of Emergency Medicine (Department of Surgery) at Stanford University School of Medicine said, “Some physicians, especially those in rural hospitals, might treat pediatric patients but might not have a lot of experience or comfort in treating the full range of pediatric conditions. Those MDs might well find such a resource useful and might also be interested to see it extended to true, interactive telemedicine.”

Since its launch in September 2012, OPENPeds Beta has already reached over 1,000 users in 70 countries. During early planning, OPENPeds creators imagined this tool as a way to deliver cloud-based medical education to doctors in remote regions. The OPENPeds team was surprised to find strong domestic uptake. It was even being used by physicians in Boston. OPENPeds has turned out to benefit professionals at institutions ranging from rural hospitals in underserved communities to major regional centers. In this way, even before its official launch, OPENPeds is already serving as an equalizer. Regardless of a hospital’s size, location or resources, OPENPeds levels the playing field by giving everyone access to the same high-quality information.

The OPENPeds team is optimistic about the future, but well aware of the obstacles they face. One issue is connectivity. In order for OPENPeds to reach the wide global audience they have in mind, doctors in remote areas must be able to access the information. To get around this issue, the beta release of OPENPeds was a program that doctors could download once, and then update whenever connectivity permitted. However, user feedback has shown that hospital firewalls often prevent doctors from downloading information directly to their computers. Therefore, OPENPeds is switching to a cloud-based platform to circumvent issues with downloads, but the program will still offer a downloadable version for physicians with limited connectivity. Another obstacle is the language barrier. Modules in other languages are on the way, starting with Spanish. OPENPeds’ videos also have rolling transcripts to help physicians who are non-native English speakers.

OPENPeds has ambitious plans for 2014. The spring will see the release of OPENPeds version 1, along with the release of the non-accidental trauma module. OPENPeds plans to expand its content beyond just critical care to include other pediatric specialties, and will soon be launching both pediatric urology and additional pediatric nursing materials. It is also investigating the possibility of adding a feature that will allow users to directly contact an experienced physician in emergency situations.

As a high-quality, Harvard-affiliated program, OPENPeds could potentially spin off into a for-profit startup, but for the moment there are no plans to depart from its original mission to provide free content to pediatric care providers across the world.

In the rapidly expanding landscape of online learning tools for physicians, OPENPeds has several unique attributes so far not duplicated elsewhere: its focus on pediatrics; its lineup of top physicians as speakers and demonstrators; its incorporation of online learning techniques based on up-to-the-minute research about how adults learn; and its non-profit organizational model. By using both interactive techniques as well as highest-quality medical experts, OPENPeds has set itself apart from more conventional approaches to medical education. Given the subsidies and contributions (including those from the Rehma Fund) that make the platform free to users, and its focus on the typically not very lucrative specialty of pediatrics, it currently seems to have no private sector competitors. However, competition may soon be on the way. According to an article that appeared on January 15 on TechCrunch, 2013 saw $1.9 billion in VC funding for early stage healthcare software and app technology, a 39% increase over 2012.

The Rehma Fund will continue to raise funds and consider investing them into expanding the non-accidental trauma module, translating their content into other languages, and possibly creating other modules. Much will depend on the uptake of the initial release and anecdotes showing that it has indeed been an equalizer.

When Koryak was asked about the contribution of the Rehma Fund to OPENPeds, she replied, “It’s been fantastic working with them. When you work at Boston Children’s Hospital, you’re constantly exposed to different stories and many things that kind of touch you. But this one, particularly so.”

*Megan Krench is a PhD candidate in the Department of Brain and Cognitive Sciences at MIT, where she studies the genetics and biology of neurodegenerative diseases. Follow her on Twitter: @mkrench.

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23andme: It’s all about the data

By Steve Dickman, CBT Advisors

There was a flood of news in late November about the stinging letter that Mountain View, California-based 23andme received from the U.S. Food and Drug Administration (FDA). Because it ignored FDA instead of continuing a years-long dialogue, 23andme was forced, over howls of protest, to stop selling its direct-to-consumer genetic testing panel.

Almost lost in the controversy was the company’s now derailed core strategy: to collect a million customers’ worth of genetic data, then mine the data for valuable insights that can give the company an insurmountable competitive advantage.

You could try to convince me that the strategy is moot now that 23andme has run into a brick wall at FDA. That aggregating data as a way both to derive medical benefit and to make money is now as dead as 23andme’s consumer genetics business.

23andme blimp

Grounded?

But I would push back. I think this regulatory battle, which 23andme has apparently lost in a rout, is just the first skirmish in what promises to be a game played over a much longer term and at much higher stakes. More about that below.

A year before the FDA’s letter, 23andme cut the price of its service to $99 and announced that it would attempt to reach one million customers by the end of 2013 after attracting only a reported 180,000 in its first six years on the market.

In my view, this change in business model explains much. The test used to cost $699, then $299 and, despite economies of scale, it is hard to imagine that 23andme was making much money selling it for $99.

What happened is this: when adoption was running way behind what it would likely have taken for 23andme to become a profitable testing company, there was a purposeful shift toward aggregating data. In the words of CEO Anne Wojcicki, “One million customers can be the tipping point that moves medicine into the molecular era.”

In my view, what stood behind this shift is the same widespread belief that informs much of the research being done on longer genome sequences: that the aggregation of enough “Big Data” will yield insights more valuable – and profitable – than anything that genomics has yielded until now.

This is why BGI in China, in its Million Human Genomes project, is attempting to sequence more genomes faster than has ever been done before.

It is also why Foundation Medicine has raised over $200 million in venture funding and IPO financing to be the first to market with a 200-gene test for cancer. Foundation does not simply want to be a first mover in massive sequencing of cancer genomes. As I have written before, I believe that it wants both the data that patients will provide as well as the high-margin revenue that will come from providing sequences of the relevant genetic segments at $5,000 or so per patient. It remains to be seen if it will get either the data or the revenue.

Journalist Ezra Klein, nailed it in his Dec. 5 column on Bloomberg View when he wrote “… the long-term play is [the] more interesting [one]: 23andMe wants to aggregate the genetic information of millions of individuals, then mine that data to make medical connections, find disease markers and discover treatments at a faster rate than would be possible using traditional techniques.”

In Klein’s view, the company “fumbled” its chance to work in concert with FDA to jointly develop regulatory guidelines under which it – and presumably its competitors – could live. This “fumbling” by 23andme, wrote Klein, has created “an opportunity for the political system to reassess an old law and determine whether it suits the newest technologies.”

I beg to differ. I do not think 23andme was that foolish. I think that by flagrantly waving its tests in the face of FDA, even going so far as to run national TV ads for them while spending six months not returning FDA’s calls, the company sought out the chance to challenge the very idea of its test being regulated as a medical device.

Indeed, Lauren Fifield, a senior health policy expert cited by MedCity News, predicted in late November that the company has purposely taken a stand. “My gut tells me,” Fifield is quoted as saying, “that the company isn’t challenging process but is instead challenging the very regulatory definition of what it is to be a device.” Fifield, the blog says, works closely with startups, the FDA, and other federal health agencies in her role at electronic medical records company Practice Fusion. “What remains to be seen,” she continues, “is whether the company and tech industry can convince the government that safety can be increased, or at least balanced, by innovation rather than set at odds.”

Look not just at the fact that 23andme lost. Look at how the company lost. The FDA letter stated that, after “more than 14 face-to-face and teleconference meetings, hundreds of email exchanges, and dozens of written communications, you have not worked with us toward de novo classification, did not provide the additional information we requested necessary to complete review of your 510(k)s, and FDA has not received any communication from 23andMe since May.”

You might try to persuade me that 23andme acted inattentively or naively when it gave FDA the cold shoulder. That is the argument made in The New Yorker blog on Nov. 27, 2013, by 23andme co-founder Linda Avey, who left the company in 2009. The FDA decision “…surprised me,” she told the New Yorker writer David Dobbs. “But she pointed out,” wrote Dobbs, “that 23andMe’s general counsel, whom she understands was leading the negotiations with F.D.A., left the company this summer; [so] perhaps it fell through the cracks. “The whole time I was there,” Avey told Dobbs, “we were in an outreach mode with the F.D.A. I can’t imagine there was that much of a cultural shift since then. It might be they weren’t paying close attention.” She admits this sounds strange, Dobbs wrote, but thinks that it is no stranger than any other explanation.

Look at what was at stake: the very future of the company, not to mention the option for consumers to have hundreds of thousands of their genes scanned for health-related variants. 23andme was the only remaining provider among the initial crop of consumer-focused companies to continue to offer these tests.[1]

With so much on the line, I have to believe that 23andme went into this battle with its eyes open. It initially conceded defeat – though even that took a week – in a press release put up on the company web site stating, “We have received the warning letter from the Food and Drug Administration. We recognize that we have not met the FDA’s expectations regarding timeline and communication regarding our submission. Our relationship with the FDA is extremely important to us and we are committed to fully engaging with them to address their concerns.”

Wojcicki was quoted in a New York Times blog saying that the company should have responded to FDA’s requests sooner rather than ignoring them for six months. “We completely recognize we’re behind schedule; we failed to communicate proactively,” she said. “They’re a very important partner, and everyone is focused on resolving it.”

But 23andme may also be borrowing a page from its investor Google in not necessarily attempting to resolve the tension with FDA but rather by trying to trump FDA’s factual and legal arguments with evidence of the utility of the data and widespread support of consumers who willingly share the data in order to see a bigger picture. How better to go into a regulatory or legal proceeding than to be armed with medical advances that were only made possible by data collection that, one could later argue, existed in a regulatory grey zone?

Now that the initial thrust by 23andme has been parried by FDA, the company will face a much tougher road to getting its tests back on the market, if it ever does.

But I would not underestimate the power behind the company, which might include the full force of Google, despite the public separation of Wojcicki and her husband, Google co-founder Sergei Brin. After all, Brin himself took an interest in the company when it revealed his increased risk for Parkinson’s disease, which he knew ran in his family. Furthermore, Anne Wojcicki’s sister, Susan Wojcicki, is Google’s senior vice president of ads and commerce. In addition to Facebook billionaire Yuri Milner and several venture capital firms, Google would appear to remain one of 23andme’s largest financial investors.

Aside from Google, enough consumers believe that they have been helped by 23andme’s tests that a court case or at least an impassioned appearance at Congressional hearings might start to turn things around.

The implications reach far beyond 23andme. In an interview published (paywall) in the Financial Times on Dec. 20, 2013, PayPal co-founder  and billionaire investor Peter Thiel lamented “how technological ambition has gone from the world, leaving what he calls an ‘age of diminished expectations that has slowly seeped into the culture.’ Predictably, given his libertarian bent, much of this is traced back to regulation.”

This is his explanation for why the computer industry (which inhabits “the world of bits”) has thrived while so many others (“the world of atoms”) have not: “The world of bits has not been regulated and that’s where we’ve seen a lot of progress in the past 40 years, and the world of atoms has been regulated, and that’s why it’s been hard to get progress in areas like biotechnology….”

The argument in favor of consumer genetics the way 23andme wants to practice it will be easier to make after there is overwhelming evidence in favor of its utility. I, for one, am not a customer. I have not been convinced that a 23andme test would do more for me than increase my anxiety about my genetic risks for a variety of ailments.

In that regard, FDA has a point beyond a merely procedural one. A clinical trial showing an advantage to a genetic test such as 23andme’s would go a long way toward that test achieving acceptance among both regulators and consumers.

23andme might go away as a provider of medical data. (The company still provides genealogical services.) But its skirmish has paved the way for a fight that could take the better part of the next decade and might result in either radical reform (no more FDA regulation of consumers’ own genes at all?) or in the offshoring of genetic analysis, with all its benefits and pitfalls, to more lenient regulatory environments, whether those turn out to be in China, in Iceland or somewhere in between.

END

Steve Dickman will be moderating a panel on Big Data in healthcare and drug discovery at Biotech Showcase in San Francisco on Jan. 14, 2014, at 8am Pacific time. He is CEO of consulting firm CBT Advisors, based in Cambridge, Massachusetts.


[1] Navigenics was acquired in 2012 by Life Technologies (now Thermo Fisher) and its consumer-facing business was shut down. DecodeME was discontinued before its parent, Iceland-based Decode, was acquired by Amgen in 2012. Pathway Genomics shied away from direct-to-consumer testing through Walgreens after a warning from FDA came in 2010.

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