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CIMIT Innovation Grand Rounds
 

CIMIT Innovation Grand Rounds

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Zen Chu's new presentation on the economic playbook for healthcare investment

Zen Chu's new presentation on the economic playbook for healthcare investment

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  • Thank great turnout Latest installment of IGR Great panel, Purpose See One, Do One, Teach One Apply mantra to medical innovation

CIMIT Innovation Grand Rounds CIMIT Innovation Grand Rounds Presentation Transcript

  • The New Playbook for Healthcare Innovation CIMIT Innovation Grand Rounds Massachusetts General Hospital ZEN 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
  • New Playbook for Current Climate
    • Innovation Landscape
    • Value Drivers & Milestones
    • De-Risking Early Stage Medical Ventures
    • Development Teams
    • Clinician Innovation Roles
    • Panel Discussion
    © zen@acmedx.com
  • 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 Grants Unknown Mechanisms $100MM $500MM Large Established Companies Integrate Whole Solutions Venture-Backed Companies Focused Teams to Prioritize & Execute Discrete Product Product-Line Extensions License or Product Acq Royalties © zen@acmedx.com
  • Innovation Landscape Adapt with New Information & Experiments
        • Market Size of Opportunity
    Low Capital Required High Big Opportunities Complex Solutions, Fragmented Services Philanthropy/NIH Basic Research Grants Unknown Mechanisms $100MM $500MM Large Established Companies Integrate Whole Solutions Venture-Backed Companies Focused Teams to Prioritize & Execute Discrete Product Product-Line Extensions License or Product Acq Royalties May Discover New Applications & Technologies May Discover New Larger Opportunities © zen@acmedx.com
  • Stem Cells Philanthropy/NIH Basic Research Grants 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 RNAi for AMD Cystic Fibrosis Ischemic Stroke Gastric Bypass Unfocused & Requires Segmentation Aortic Abdominal Aneurysm Segment To Focus Patients, Disease State, Providers © zen@acmedx.com
  • Incremental vs Breakthrough Plenty of Incremental Value, Different Strategy © zen@acmedx.com METRIC INCREMENTAL BREAKTHROUGH Funding $$ $$$$$$ Market Size Varies depending on funding needed >$100MM 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
  • Value Built Far Past Invention Value Time Critical 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 opinions Money raised & team hired Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market Analysis Idea © zen@acmedx.com
  • 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 Path Standard of Care © 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 © zen@acmedx.com
  • Physician Roles on Team Value 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 opinions Money raised & team hired Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market Analysis Idea Conflicts of Interest Critical Milestones © zen@acmedx.com
  • Accelerate Clinical Impact Time is Life Value 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 opinions Money raised & team hired Animal testing Clinician feedback Patent disclosure Prototype/Reduction to Practice Market Analysis Idea Critical Milestones COMPRESS TIME TO MARKET FASTER CURES © zen@acmedx.com
  • Which Risks to Prioritize? Value Time Market Risk Reimbursement Physician & Patient Adoption Packaged Solutions Regulatory Risk Safety & Efficacy Management Risk Technology IP Risk © zen@acmedx.com
  • Which Risks to Prioritize? Value Time Market Risk Reimbursement Physician & Patient Adoption Packaged Solutions Regulatory Risk Safety & Efficacy Management Risk Technology IP Risk Largest Risks Must Be Addressed & De-Risked Up Front Before Funding VCs & Investors Manage & Invest With These Risks © zen@acmedx.com
  • Prioritize & Translate Innovation Value Time Market Risk Reimbursement Physician & Patient Adoption Packaged Solutions Regulatory Risk Safety & Efficacy Management Risk Technology Risk 2) Team Execution 1) Plan in Reverse © zen@acmedx.com
  • Invention is Spark… but Development 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
    © zen@acmedx.com
  • See One, Do One, Teach One
    • ZEN 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
    © zen@acmedx.com
  • Backup Information © 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 Hospital Sales Cycle Disincentives to change SALES Focused physician popul. Existing distribution Learning curves Entrenched 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
    © zen@acmedx.com
  • 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
  • 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
    © 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
    • 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
    © zen@acmedx.com