Friday, May 23, 2014

Nascent biotech entrepreneurs

In between days of the Stanford Big Data in Biomedicine conference, on Thursday night I attended the finals of the Oxbridge Biotech Roundtable Onestart Americas business plan competition. I posted my thoughts over on my Engineering Entrepreneurship blog.

Thursday, May 22, 2014

Stone age EHR

Today was my first #bigdatamed conference data at Stanford Medical School, which is hosting a three day conference on Big Data in Biomedicine. (I wasn't able to come Wednesday but watched two sessions on the live webcast).

I first learned of the conference last year from Atul Butte (@ajbutte), who I met when he presented at the 2012 Open Science Summit. My impression from Atul (and watching the webcast last year) is this is a bunch of computational biologists who’ve replaced their wet labs with databases (or nowadays, cloud computing accounts), in search of the next great lead to be found on their computer screen.

Certainly the first two panels yesterday fit that pattern (the first moderated by Butte). So did the after-lunch keynote by former UCSD professor Phil Bourne, creator of the PDB (protein database): a few months ago, Bourne joined NIH as its first-ever associate director for data science, reporting directly to NIH Director Francis Collins.

Translating from Science to Practice

But today the conversation broadened (as one slide put it) from the "science of medicine (biomedical research)" to the "practice of medicine (healthcare)". In other words, from faculty to the clinicians, and from universities (few industry scientists were present) to hospitals and clinics.

Some of the differences were as expected. Drug discovery researchers are at the bleeding edge of the science, and then after 5 or 10 or 15 years of drug development (animal models, clinical trials, regulatory filings, manufacturing, marketing etc.) the product finally shows up in the hands of doctors. Similarly, researchers are hoping to add to their journal publications while providers are trying to improve clinical outcomes — and increasingly under pressure to do so at higher efficiency (of both time their time and the amount spent on tests and treatments).

For clinicians, HIPAA privacy rules limit dramatically what and how data can be used and shared. Researchers have institutional review boards, but also face HIPAA restrictions. The NIH helpfully makes available a brief (16-page) note on researchers should interpret the interaction of IRB and HIPAA privacy constraints. (As it turns out, both clinicians and non-clinical researchers at the conference complained that HIPAA places unrealistic limits on combining data from differing sources to render an assessment of a given patient's health).

Proprietary vs. Open Platforms
At some point, it was inevitable that participants would discuss where the patient’s clinical data resides. Ten years ago, it was in paper charts, but now the ACA has strong incentives and penalties to store it in an electronic health record or EHR. (The administration’s healthcare IT czar says don’t call it an “electronic medical record”).

It was also inevitable that someone would ask: if we are compiling personal genomic data for patients, how will that data be made available for the clinical benefit of that patient? By one estimate, a patient’s EHR runs less than 100 megabytes while whole genome data (I’m told) runs into the gigabytes. As David Watson (ex Kaiser CTO, now at Oracle) said on today’s opening panel, medical images (such as MRI scans) are stored external to the EHR; will that happen with genomic data?

More seriously, how will such data be phased into operational systems? On the same panel, Jim Davies (CTO for England’s 100K genome project) suggested that existing EHRs would need an abstraction layer that would allow new data types to be added on, i.e. the way that apps, plug-in modules and extensions are added to other modern software systems.

However, today the EHR vendors (except for VistA) as proprietary as mainframe platform companies of the 1960s. Even Kaiser — which in 2010 had the largest private EHR implementation to date — is highly dependent on a proprietary vendor (Epic).

Proprietary control of the platform means high switching costs and other proprietary control of the customer, and so (I predict) this is something that none will relinquish unless forced to. We have a technical solution, but not a market solution. And the ACA penalties for EHR non-compliance mean that no provider can credibly defer or set aside EHR adoption until one provides the necessary openness.

So we know where we need to go, but it’s not clear how we get there. Two Harvard researchers — Zak Kohane and Ken Mandl — have proposed a way forward, and the following year won $15 million from HHS to implement their Smart Platforms project.

However, the plan seems to think that either vendors will see openness as being in their own interests or that customers will organize to demand openness. As someone who’s studied IT openness for 15 years, I can say that openness is almost always instituted by the weakest player (e.g. a late entrant), and right now I don’t see an obvious candidate in the EHR market.

WIthout such openness, health care providers are stuck with healthcare IT systems without third party add-ons. This is not just pre-app store, but pre-IBM PC, pre-Apple II, vertically integrated platforms with little if any choice to extend or change their systems. In other words, EHR systems are stuck in the stone age (1960s) of the digital computer era, with little prospect for improvement.

Sunday, May 4, 2014

The next wave of life science startups (and entrepreneurs)

On Wednesday, KGI held a major public event for the finals of our business plan competition. This year (as with last year), the competition was tied to our business plan class, which was first offered in Fall 2003, for our third graduating class of MBS students. Also like last year, the class was team taught by me (as the business guy and course coordinator) and Mark Brown, a KGI grad and senior scientist at a local KGI spinoff company.

This year we had 17 MBS students and 8 (PhD-educated) PPM students across seven teams. The students worked with four external sponsors (plus KGI) to develop detailed business plans — product, sales, marketing, operations and financing — for the patented invention provided by (in most cases) the university technology transfer office.

The teams included therapeutics, research tools/services and a medical device:
  1. Elegans Therapeutics: a novel treatment for asthma (California Institute of Technology)
  2. Insituomics: improved visualization of RNA transcripts (California Institute of Technology)
  3. Click-Brains: software that analysis neurological MRI scans (Children’s Hospital Los Angeles)
  4. Klondike Therapeutics: improved therapy for anthrax (Keck Graduate Institute)
  5. Cardiovascular Cell Source: improved quality supply for endothelial cells (UC Merced)
  6. Mucotherapeutics: therapy to clear mucus for COPD (UC Merced)
  7. Innovfusion: improved epidural infusion pump (BioFactory Pte. Ltd)
We had the most amazing panel of judges, who were all directly involved in launching, funding and/or running life science startups:
  • Robert Baltera, a director of the San Diego Venture Group, former CEO of Amira Pharmaceuticals until its acquisition by Bristol-Meyers Squib, a 17 year Amgen veteran (and a KGI trustee)
  • Craig Brooks, angel investor, head of two current life science startups (BCN Biosciences, Biostruxs) and a 19 year Amgen veteran who formerly worked for Procter & Gamble
  • Robert Curry, partner of Latterell Venture Partners, former general partner of Alliance Technology Ventures, former faculty member at the University of Delaware (and chair of the KGI trustees)
  • Stephen Eck, vice president of Astellas who previously worked for Eli Lilly and Pfizer, a board-certified hematologist/ oncologist (and a member of the Board of Advisors of the KGI School of Pharmacy)
  • James Widergren, a former senior VP, group vice president and treasurer of Beckman Coulter, angel investor (and a former KGI trustee)
From the discussion, the judges were most intrigued by one project, and so it was not surprising when Dr. Curry announced that Insituomics was selected as the winner of the competition. Several of the judges expect that the Caltech technology will enable the next generation of diagnostic instruments. Runner up was Mucotherapeutics, which spent three months translating an in vitro scientific discovery into a viable product.

Head judge Bob Curry with the winners of KGI’s 2014 business plan competition:
Jagan Choudhary, Jixi He, Ashi Jain and Melanie Ufkin 

Entrepreneurship is the lifeblood of any high-tech industry, including biotechnology and the related life science industries that have arisen over the past 30 years. Being entrepreneurial — and applied — are two of KGI’s core values, that we try to embody in our programs, courses, events, faculty and students.

Mark and I want to thank all the judges, the university sponsors and of course our student entrepreneurs for all the hard work that made this event possible.

Wednesday, January 29, 2014

Someday putting doctors out of business

In the KGI business class today, a student idly asked “when will computer replacing doctors in diagnosing patients?” Another student said “never”.

It's pretty clear that technology will reduce the labor-intensity of medical care, and also shift some tasks from expensive high-skill people to inexpensive low-skill people. Look at how cars were made by Gottlieb Daimler, Henry Ford, Toyota in the 1970s and then today.

Computers will over the next 20-40 years replace some or all of the role of doctors in diagnosing conditions. It’s too labor intensive and expensive not to become a target. The question is not if, but when, where first and how fast.

The claim will be that it's intended to improve consistency and accuracy, but the real reason will be cost. Claimed improvements in quality — such as for patients who lack access to a specialist for diagnosis — could be used to overcome the opposition of highly educated, compensated and organized physicians.

The initial push thus will come from an organization that both has scale economies and a record of innovating to save pennies. My prediction is that the first major use in North America will fall in one of three categories:
  • US government, probably the Veterans Health Administration
  • An HMO, almost certainly Kaiser Permanente; or
  • A provider serving rural areas, most likely the First Nations and Inuit Health Branch of Health Canada.

Sunday, November 10, 2013

Biotech not like other high tech

In teaching, research and talking to industry professionals, I am often tempted to refer to “high technology” industries, “technology startups” and the like. This would tend to emphasize the commonality between IT and biotech.

And then there are days like Friday, when I’m reminded that biotech — and human health more generally — is completely different.

The occasion was an event on pharmaceutical quality, organized by KGI’s student chapter of the Parenteral Drug Association, a professional organization concerned with drug quality and safety issues.

The students invited three industry speakers.

First up was Susan Weber of Baxter introduced us to the principles of Quality by Design, i.e. start from a quality goal and work back through the entire design, development an production process. The ideas are more than 20 years old, but apparently have recently have begun to influence pharmaceutical manufacturing in the US.

The second speaker was Marsha Hardiman, a consultant for Concordia Valsource. After showing a stunning video by the American Society for Quality on the consequences of quality failures, she summarized the regulatory and process failures of the New England Compounding Center that have led to 64 deaths so far. Nothing illustrates the difference between a bad drug and a bad iPhone app.

The final speaker was James Sesic of Amgen, talking about the challenges of maintaining regulatory compliance for drugs sold in more than 100 countries.

This was the real eye-opener. We all know about the need for drug companies to spend years and hundreds of millions of dollars to get the first NDA or BLA approval. Sometimes we talk about getting the second approval — e.g. in Europe or Japan after the US. But I’ve never heard anyone talk about the rest of the world.

How does a company like Amgen handle approval in dozens of countries? The richest countries have their own large-scale regulatory systems (US, Japan, Canada, Europe), the smallest grant approval after certified approval from one of the major regulators, while a range of countries attempt to form their own regulatory judgements without a lot of resources.

On top of that, regulatory approval is required for any major change in the production process. Normally this discourages companies from making major changes, but if there’s a major improvement in the process — or the company needs to comply with new regulations — it will go through the process.

One example is getting approval to shift manufacturing to a new factory. The company will have to apply for approval in dozens of countries and cannot sell drugs in country X from the new factory until regulatory agency X has approved such production.

If a drug has several deliver modalities — concentration, IV vs. injection, etc. — then when multiplied by the disparate languages, marking requirements and other national regulations, a single blockbuster drug could be sold in 100s of SKUs. Double that with separate SKUs from the old and the new factory.

When it takes 4-6 years for all the countries to approve the change, then an Amgen needs to keep track of all those 200? 500? SKUs (for one drug) to know which SKU is legal to sell in one country.

Contrast this to the rollout of the latest iPhone, a product that (unlike software or PCs) must satisfy strict government and operator requirements to be sold in a given country. Apple launched the iPhone 5c in 10 countries in September, added 60 countries between October 25-November 1, and expects to have more than 100 countries by the end of the year (i.e. in less than 4 months).

The process of global drug regulation seems pretty inefficient, and we pay for this inefficiency through higher costs (or lack of access by smaller countries to non-blockbuster drugs). It would be nice if we could develop a drug regulatory system where the first review is highly rigorous but the remaining process is streamlined so that drug companies spend their money on development (and safety), not SAP and paperwork.

Friday, November 1, 2013

Administration: 93 million will lose existing health insurance

From Forbes, October 31:
Obama Officials In 2010: 93 Million Americans Will Be Unable To Keep Their Health Plans Under Obamacare
[by] Avik Roy

It turns out that in an obscure report buried in a June 2010 edition of the Federal Register, administration officials predicted massive disruption of the private insurance market.

Section 1251 of the Affordable Care Act contains what’s called a “grandfather” provision that, in theory, allows people to keep their existing plans if they like them. But subsequent regulations from the Obama administration interpreted that provision so narrowly as to prevent most plans from gaining this protection.

“The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34,552 of the Register.

The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34,552 of the Register. …

Another 25 million people, according to the CBO, have “non group and other” forms of insurance; that is to say, they participate in the market for individually-purchased insurance. In this market, the administration projected that “40 to 67 percent” of individually-purchased plans would lose their Obamacare-sanctioned “grandfather status” and become illegal, solely due to the fact that there is a high turnover of participants and insurance arrangements in this market. (Plans purchased after March 23, 2010 do not benefit from the “grandfather” clause.) The real turnover rate would be higher, because plans can lose their grandfather status for a number of other reasons.

As to the number of people facing cancellations, 51 percent of the employer-based market plus 53.5 percent of the non-group market (the middle of the administration’s range) amounts to 93 million Americans.

Wednesday, June 19, 2013

The Myriad decision

The Supreme Court on June 13 issued its decision on Association for Molecular Pathology v. Myriad Genetics. The case was of great interest because we covered it in class this semester. To understand the case, I read more than a dozen articles or commentaries on the decision: in addition to the decision itself, the most useful were a same day report by Jason Rantanen of the PatentlyO blog and this week’s analysis by John Conley of the Genomics Law Report.

The case centered on Myriad’s discovery of two genes (BRCA1 and BRCA2) linked to a greater inherited risk of breast cancer. In an opinion written by Clarence Thomas, the Supreme Court held unanimously that Myriad was not allowed to patent isolated DNA but was allowed to patent composite DNA (cDNA).

As the slip opinion reported:
At issue are claims 1, 2, 5, 6, and 7 of U. S. Patent 5,747,282 (the ’282 patent), claim 1 of U. S. Patent 5,693,473 (the ’473 patent), and claims 1, 6, and 7 of U. S. Patent 5,837,492 (the ’492 patent).
and specifically whether these claims are patentable under 35 U. S. C. §101::
§ 101 - Inventions Patentable:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
The difficulty of the case (as with any patent case the Supreme Court is willing to accept) is trading off two conflict policy goals. As Thomas wrote:
patent protection strikes a delicate balance between creating “incentives that lead to creation, invention, and discovery” and “imped[ing] the flow of information that might permit, indeed spur, invention.”
From the opinion, it’s clear that this case sets a key precedent for DNA patenting, building upon the seminal Diamond v. Chakrabarty (1980) and last year’s Mayo v. Prometheus.

Diamond v. Chakrabarty was the first case to allow DNA patenting, in this case for a new organism created by GE microbiologist who created a new oil-degrading microbe. In retrospect, it doesn’t seem controversial at all, but the case was narrowly decided by a 5-4 margin, with the two conservative judges joined by three swing justices (vs. the four liberal justices).

Last year, in the Prometheus case, a unanimous SCOTUS held that “Laws of nature, natural phenomena, and abstract ideas are not patentable.”.

Despite efforts by Myriad to argue otherwise, in this case the court agreed with plaintiffs that isolating DNA corresponded to “laws of nature”. In this regard, they seemed heavily influenced by the opinion of William Bryson, the dissenting justice in a 2-1 decision favoring Myriad at the U.S. Court of Appeals for the Federal Circuit.

However, all three appeals justices (and all seven SCOTUS justices) agreed with Myriad’s argument that the cDNA is manmade and thus entitled to patent protection. As Thomas wrote:
the lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring eons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a “product of nature” and is patent eligible under §101…
What was particularly instructive was the final (III) section of Thomas’ opinion, which begins: “It is important to note what is not implicated by this decision.” If DNA patents are invalid, two related patent areas are not.

Myriad did not assert any method claims: if it had, it appears the court would have upheld them. Similarly, the case did not consider any applications (of the unique DNA knowledge Myriad developed). As appeals justice Bryson noted, Myriad both “was in an excellent position to claim applications of that knowledge. Many of its unchallenged claims are limited to such applications.”

What is unresolved is the business impact of this decision. On the one hand, Myriad’s lead attorney told Bloomberg “We have a very strong patent estate around the BRCA test,” protected by 24 patents. However, as Bloomberg (and others) noted, the plaintiffs and many other private and university entities will be offering BRCA-based tests. Presumably these competing approaches will test the validity (or effectiveness) of Myriad’s patent barriers.

A second key issue is how the decision will impact university research, Rantanen (writing at PatentlyO) suggests two possible outcomes:
In terms of the effects on my friends here at the University, I can see at least two consequences. First, it may allow researchers more freedom to engage in whole-genome sequencing because they won't need to deal with a multitude of isolated DNA patents for individual sequences. On the other hand, because early-stage research on newly discovered DNA sequences cannot be patented, it may encourage companies - and perhaps universities - to pursue greater secrecy over those early stage discoveries. Social research norms may cut against this - particularly in universities - but there may be some increased pressure, particularly at the margins, towards secrecy of potentially valuable inventions.
Finally, there is some question as to how long the cDNA distinction will last. Forbes quoted biochemist and IP attorney Brenda Jarrell as disputing the court’s finding that “cDNA is not a product of nature.” When this argument is made in a future case, it’s possible that the justices will reconsider where they have drawn the line between nature and invention.

That points to the final (and best) part of the entire Slip opinion, the concurrence by Antonin Scalia:
I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief.
Although Scalia relied on the same distinction between natural and manmade used by the other eight justices, he did not feel qualified (nor necessary) to deliver a two page tutorial on molecular biology. Some would count this as an all-too-rare example of humility by any member of the high court.