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Medical Technology Innovation Techniques & Funding
 

Medical Technology Innovation Techniques & Funding

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Presentation at Harvard Medical School and CIMIT (Center for Integration of Medicine & Innovative Technology) on Techniques for Inventing, Funding, Developing & Commercializing High Impact Clinical ...

Presentation at Harvard Medical School and CIMIT (Center for Integration of Medicine & Innovative Technology) on Techniques for Inventing, Funding, Developing & Commercializing High Impact Clinical Innovations

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  • Important to decide where you want to innovate, how markets view that innovation Market size is addressable subsegment of larger market, FOCUS KEY Often, initial products or R&D morphs into larger opportunity, but tough to anticipate
  • Important to decide where you want to innovate, how markets view that innovation Market size is addressable subsegment of larger market, FOCUS KEY Often, initial products or R&D morphs into larger opportunity, but tough to anticipate
  • Incremental doesn’t mean low value, but often does - Cardiac surgery and interventional cardiology, plenty of examples of wonderfully valuable products improving on prior ideas One can apply these same metrics to PRODUCT TYPES: IMPLANTABLES, DISPOSABLES, CAPITAL EQUIPMENT
  • Another view of investor perspective includes cash burn and eventual cashflow
  • Great map of care value chains and cycles Michael porter Opportunities at each point, but as we all know often healthcare system is rewarded for interventions Fundamental misalignments in the system, but entrepreneurs and clinicians must work within this system, imperfect as it is
  • Intend where you want to work in the innovation landscape Ensures alignment toward common goal Gating factor for Boston Medical Innovation is training MD/Vcs to accelerate high impact innovation

Medical Technology Innovation Techniques & Funding Medical Technology Innovation Techniques & Funding Presentation Transcript

  • Inventing & Funding High-Impact Medical Innovations Zen Chu CIMIT Forum Harvard Medical School April, 2008 © zen@acmedx.com
  • 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
    • Venture capital panel discussion & examples
    © zen@acmedx.com
  • Innovation without Impact is Worthless
    • “ Unmet Clinical Needs”
      • Cliché, not useful metric
    • “ Translational Medicine” must
    • strive to become Standard of Care
    © zen@acmedx.com
  • High Impact Innovation
    • Starts & ends with clinical efficacy
    • High enough value to overcome:
      • Development through clinical trials & FDA
      • Cost, learning curves, doctor/patient behaviors
      • Economic justification critical
    • Forward-compatible with entire value chain
    • “ Don’t fight forces, use them” - R. Buckminster Fuller
    © zen@acmedx.com
  • Pattern of Successful Medical Products [email_address]
    • Prove Effective Therapies for Right Patient
      • Unmet Medical Need
      • Remove treatment ambiguity
      • Improve Standard of Care
      • Comparative Effectiveness
    • Prove it quickly & efficiently
    • Productivity = Save Physician Time
    • Reduce Patient Pain
    • Enable New (Cheaper) Provider & Venue
    • Intellectual Property (Patents, trademarks, brand)
    • Lower Cost
    Necessary But Insufficient
  • Clinician Innovators Critical to Medical Technology
    • 22% of surgeons innovate - von Hippel, 2003
    • Physician-invented = higher impact - Chatterji, 2008
    • 99/100 top Medtronic products originated by MDs
    © zen@acmedx.com Anticipate Path Standard of Care
  • Physician’s View of Value © zen@acmedx.com Time Market Introduction FDA Approval Patent grant First in Man Animal testing Patent disclosure Prototype/Reduction to Practice Idea Milestones Value Conflicts of Interest perceived & real Hand off to Licensing office
  • Investor’s View of Value © zen@acmedx.com Value Time 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 Management team hired Pilot manufacturing Patent grant First FDA meeting Regulatory opinions CEO hired Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market Analysis Idea Anticipate Potential Exits
  • Investor’s View of Risk © zen@acmedx.com Value Time Milestones Technology Risk Management Risk Regulatory Risk Market Risk Reimbursement Risk Address These First
  • Typical Early-Stage Medical Failure Non-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@acmedx.com
  • Myth of the Lone Inventor
    • Initial invention & patent is only 1 st 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
    © zen@acmedx.com
  • “ 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 companies Professor of Surgery, Stanford University [email_address]
  • 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
    [email_address]
  • Cultural Barriers to Med Innovation
    • Interdisciplinary collaboration takes extra effort
    • Culture of Academic & Clinical Research
      • Grant 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
    [email_address]
  • Development Best Practice © zen@acmedx.com Value Time Milestones 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 opinions CEO hired Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market Analysis Idea 2) Hire team & Execute 1) Plan in Reverse
  • 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
    [email_address]
  • Innovation Landscape
    • “ If you don’t know where you are going, you might end up someplace else.” - Yogi Berra -
    [email_address]
  • Innovation Landscape Match Resources to Opportunity Size
        • Market Size of Opportunity
    Low Capital Required High Big Opportunities Complex Solutions, Fragmented Services Philanthropy/NIH Basic Research Unknown Mechanisms $100MM $500MM © zen@acmedx.com Large Established Companies May Discover New Applications & Technologies Venture-Backed Companies Focused Teams to Prioritize, Execute Equity Discrete Product Product-Line Extensions License or Product Acq Royalties May Discover New Larger Opportunities
  • Innovation Landscape Match Resources to Opportunity Size Philanthropy/NIH Basic Research Unknown Mechanisms Gates Foundation Off-Label Uses Ortho Lumbar Disc
        • Market Size of Opportunity
    Low Capital Required High Big Opportunities Complex Solutions, Fragmented Services $100MM $500MM © zen@acmedx.com Stem Cells RNAi for AMD Cystic Fibrosis Ischemic Stroke Gastric Bypass Unfocused & Requires Segmentation Aortic Abdominal Aneurysm
  • Incremental vs Breakthrough © zen@acmedx.com METRIC INCREMENTAL BREAKTHROUGH Funding $$ $$$$$$ Market Size Varies depending on funding needed >$500MM No current therapies Time Needed Adoption & Exit Shorter Match opportunity to strategy Longer Regulatory path dependent Value @ Exit Less More Major Risks Window of opportunity Execution quality & critical path Competition Technical/Clinical unknowns Market adoption hurdles Reimbursement Success Factors Focused execution Management experience Manufacturing economics Patents, Franchise Value Market adoption, Std of Care Investor expectations Patent Protection Less More Competition More Less
  • 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
    © zen@acmedx.com
  • Time is Life © zen@acmedx.com ACCELERANT DECCELERANT REGULATORY Device 510(k) Predictive animal models New materials & claims Unclear endpoints CLINICAL Existing human data Reproducible published studies Non-superiority Entrenched behavior No practice benefit REIMBURSEMENT Existing Codes DRGs Private-pay, consumer Cost-Benefit Studies MARKET Reduce skills needed Physician buying power Unambiguous diagnostic Capital equipment purchase SALES Focused physician popul. Existing distribution Learning curves Entrenched behavior
  • Getting Paid
    • Reimbursement & Payments
      • Map at earliest stages of business planning
      • How will physician & hospitals be paid?
      • Analyze economics of overall procedure costs, venue & productivity
      • Basis of Value Proposition to Payers, Providers, Partners
    • Ideal Payment Situations To Reduce Risk
      • Existing DRG (Diagnosis Related Group) for hospital fees
      • Existing CPT codes (Current Procedural Terminology) for physician fees
      • Generating new codes can form competitive barrier, but at increased cost and time to market
    [email_address]
  • Accelerants Amplify Clinical Impact & Return on Investment © zen@acmedx.com Value Cashflow Time Milestones $0 COMPRESS TIME TO MARKET FASTER CURES
  • Techniques to Identify New Opportunities & Invent New Cures
    • “To have a great idea, have a lot of them.”
          • Thomas Edison
    © zen@acmedx.com
  • 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?
    © zen@acmedx.com
  • © zen@acmedx.com Michael Porter, tiesberg Economics drive innovation to interventions
  • Opportunities from Wider View Surgical 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
    © zen@acmedx.com
  • Productize the Procedure
    • Turn medical service/procedure
    • into a repeatable product
    • Efficacious, simpler, quicker, less skill
    • Stomach stapling to Lap-Band
    © zen@acmedx.com
  • 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
    © zen@acmedx.com
  • Driving Solutions & Costs Down Healthcare Value Chains
    • Point of Care
    • General Hospitals
    • Out-Patient Facilities
    • In-Office Care
    • In-Home Care
    • Provider
    • Specialists
    • General Physician
    • Nurse Practitioners
    • Self-Care
    © zen@acmedx.com Improves reimbursement economics Convenience, simpler use Complexity of diagnosis & Treatment Christensen Seeing What’s Next, 2004
  • Eliminate A Provider or Facility Heresy!
    • Reduces procedure costs
    • Accelerate payor approvals
    • Creates economic headroom
    • Examples
      • Office procedure no anesthesiologist
      • no operating room, quicker
      • Posterior lumbar no vascular access surgeon
    © zen@acmedx.com Facility Fee Device Cost
  • Compete at the Consumption Void
    • Unique venue Different
    • Unique provider Design
    • Requirements
    • Cleveland Clinic satellite cardio centers
    • Spa/Cosmetic centers
    • Condom catheter for home/self care
    • Diagnostic nutritionists as referral channel
    © zen@acmedx.com
  • Reframe the Need © zen@acmedx.com
    • A better method to
    • revascularize the heart
      • - Thomas Krummel, MD
      • Chief of Surgery, Stanford Medical Center
  • Import Solutions
    • Find publications & therapies
    • outside USA with rigorous human efficacy data
    • Ortho implants from Eastern Europe
    • Embolic protection studies in EU
    © zen@acmedx.com
  • 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
    © zen@acmedx.com
  • Identify Opportunity from Off-Label Usage © zen@acmedx.com
  • Disease has Process & Timeline Different Interventions in Lifecycle
    • Match the clinician intervention to disease state at that particular stage
      • Prevention
      • Early Presentation & definitive diagnosis
      • Full-blown disease & active intervention
    [email_address]
  • Feedback Loop Shortcuts
    • Shorten the time between
    • diagnosis and therapy
    • Intraoperative imaging
    • Rapid diagnostics
    • Customizable implants
    © zen@acmedx.com
  • Ride Down the Cost Curve
    • Cheaper, Faster, Single-Use
    • Minimum efficient manufacturing scale
      • Modify outside technologies to jump onto another cost curve
      • Leverage Moore’s Law for software/hardware performance
    © zen@acmedx.com
  • 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
    © zen@acmedx.com
  • Conclusion It’s not brain surgery… Success requires both MDs & MBAs working in concert to maximize clinical impact © zen@acmedx.com
  • Innovation is Spark… but Development 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
    © zen@acmedx.com
  • See One, Do One, Teach One
    • Entrepreneurship can be learned
    • Physician & biomedical inventors maximize their clinical impact by addressing business models along with clinical outcomes
    Zen @ acmedx.com
  • Helpful Reading & Resources
    • MEDICAL 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.
    © zen@acmedx.com
  • 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
    © zen@acmedx.com