Monday, October 12, 2015

Uncertain Health in an Insecure World – 60

“Precise Vectors”

The term precision medicine was first coined in a 1979 paper by Ling Wei of the University of Waterloo in Canada, in reference to acupuncture.

Since 2012, precision medicine (PM) has largely replaced the term personalized medicine, after an influential National Research Council report by University of California San Francisco’s Susan Desmond-Hellmann and Memorial Sloan-Kettering’s Charles Sawyers recommended using cancer science precision in oncology medical practice.

PM is a new vector in the innovation ecosystem. A vector moves things in a new direction, with some yet-to-be-defined certainty of future success. Vectors are influencers…

PM’s promise is the capacity to direct healthcare at a personal level, more precisely than the current population-based “shotgun” approach. PM combines a new enabling scientific innovation (better, more affordable gene sequencing) with leveraging of an existing system investment (in lower cost, more sustainable healthcare delivery).

Vertex Pharmaceuticals' "Most Important Drug of the Year", Kalydeco (ivacaftor), was one of 40 drugs approved by the U.S. Food and Drug Administration in 2012. Kalydeco improves the function of a chloride ion pump in a small percentage (4-5%) of the world's 70,000 cystic fibrosis (CF) patients (i.e., CF is a "rare disease"). Vertex has admitted that the drug would not have been developed without the investment of the Cystic Fibrosis Foundation, in return for a somewhat conflicting US$3 billion royalty deal from drug sales. The drug improves CF (see X-rays below).

The annual cost of Kalydeco therapy is US$294,000!

Who pays for these miracles of PM?

Over time, venture capital (VC) aims to reduce the risk of new ideas from infinity to zero in a vector’s domain. VC funds typically have 11-14 year liquidity pathway – the year 2026 is a deal cycle shorter than PM’s likely timeline for successful adoption.

Elon Musk (above) demonstrated a true entrepreneur's vision to found SpaceX in 2002. SpaceX showed the “better, faster, cheaper” business skills to outperform NASA, and Musk made a commitment of $6B in personal wealth from Tesla’s VC funding and exit success.

Using the Dragon lander (below), Musk promises a human Mars outpost by 2026.

Is there an Elon Musk-style visionary out there promising to land PM on Earth? 

Just as Martin Eberhard and Marc Tarpening fueled Tesla until its Series ‘A’ VC funding and Musk’s entry as CEO, wise objects must continuously energize private equity “deals”, attracting resources beyond their personal control (see post #59). This is hard, particularly when people, technology and money are all highly mobile. Beyond geographic mobility, key innovation factors move dynamically in and out of the deal.

The “magic” of this VC process is the pattern recognition capacity of key participants in the value creation channel. Such individuals and teams connect the new technology to the right market, or participate in the creation of a de novo market.

For a “wedge” innovation like PM to enter and disrupt the healthcare mass market, it must be very compelling indeed! In order to prove its worth against entrenched market forces, the innovation must be de-risked by early VC funding, ideally resulting in a long-term cash out event (M&A) or a company creating exit into the market (IPO).

Who, then, will de-risk PM?

In 2013, General Electric (GE) adopted the PM term in its corporate communications ( GE also hired three Silicon Valley VC firm partners from KPCB (est. 1972) and Mohr Davidow (est. 1983) to seek out business opportunities for molecular diagnostics, imaging and analytics.

But GE’s later stage corporate VC approach is not de-risking activity.

In his 2015 State of the Union speech, President Barack Obama announced a Precision Medicine Initiative (PMI) that was subsequently vouched for in the New England Journal of Medicine by NIH Director Francis Collins and NCI Director Harold Varmus. Ironically, perhaps, it was Francis Collins who originally described the rare chloride ion pump mutation in cystic fibrosis patients 25 years ago.

America's highly-politicized healthcare sector has no business motivation to de-risk PM.

According to Keval Desai, a partner at InterWest Partners on Sand Hill Road (est. 1979), the real test of a business-to-consumer (B2C) Newco’s relevance and market value is when its product or service becomes a “daily habit”. For PM to fundamentally change medical practice, its use must become part of clinical orthopraxy. Will PM become a "daily habit" for healthcare givers? Or is PM a technology that will actually dis-intermediate doctors from their usual patient care and referral pathways?

Many more doctors use Uber cars than practice PM. 

Silicon Valley lore states that Uber founder Travis Kalanick (above) conceived his creation in San Francisco in drunken frustration at being unable to get a “black car”. So-called Uber-fication of home health services is being actively tested by tele-medicine companies like New York City’s Pager dispatches doctors and nurse practitioners via Uber cars for $200 per house call. Similar disruptions are popping up in Los Angeles, San Francisco and Minneapolis. VC invested US$300 million in tele-medicine in 2014, including US$81 million in America Well that uses Uber-like capabilities to match a patient with a doctor in <1 minute.
But I’m not still precisely sure of the PM use-case.

In April 2015, The Economist (now in a strategic partnership with GE) called PM a "revolution". Is PM a suite of technologies that predicts a disease so that doctors can intervene before it becomes an illness? Now that would be a Mars landing!

A SpaceX view (above) of the San Francisco Bay area is dramatic, and infused with creative energy. What appears to be missing with PM is an idea-to-launch (I2L) process that can drive this big concept to market.

PM is modern medicine's Space... a precise vector to The Final Frontier.

The rocketry and satellite are ready, but the rapid and adaptive PM launch platform is missing.

We in the Square are counting on PM. The countdown to 2026 has already begun...   

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