Smaller, faster, lighter, cheaper medical devices

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image via singularityhub.com

Is it just me or does it seem that most interesting medical device innovations are coming from startups and not from established companies? Here are a few medical devices being developed that are smaller, faster, lighter, and cheaper than established technologies and products.

The point of care diagnostic system being developed by startup Theranos relies heavily on microfluidic and automation technologies. The technology, while impressive, is not revolutionary. Theranos is using readily accessible technology to develop a point-of-care diagnostic test device that can be operated by virtually anyone. The test uses a pinprick to collect a drop of blood to perform all of its tests. No need for a nurse or technician. The test is completely automated so there is no need for a diagnostic technician.

Time is saved because the sample is processed onsite instead of being transported to a central lab and there is negligible wait time compared with large diagnostic equipment. One of the biggest drawbacks to present diagnostic testing is the wait: patients are anxious and physicians often can’t administer medicine or therapy until and unless an initial diagnosis is confirmed.

Tribogenics is developing the next generation of x-ray imaging technology. From the company website:

Tribogenics technology enables portable, compact X-ray solutions for applications in industrial testing, medical diagnosis, security screening and other industries. By miniaturizing X-ray sources and eliminating the need for high voltage, we can create products and solutions unattainable using existing X-ray technology.

While I’m not sure how big the opportunity is for pocket-sized x-ray machines in medicine, there are plenty of industrial and commercial uses. Plus, the potential for portability, low cost, and simplicity may make the Tribogenics device well-suited for deployment in developing countries with little or no medical infrastructure.

The third technology I’m writing about isn’t a product but a concept. The Smartphone Physical is being termed “the physician’s bag of the 21st century.” In a recent TED Talk, Shiv Gaglani showed that a complete physical exam could be conducted with a smartphone and what are essentially smart attachments. For example, companies have developed or are developing ECG leads, a stethoscope, otoscope, ultrasound wand, and even a spiromoter. Gaglani and his colleagues are creating a database of connected devices and apps and hope to start a company to commercialize the Smartphone Physical.

One concern about the Smartphone Physical is a condition that is described by a new word, cyberchondria. Yes, it means hypochondria that is facilitated (or exacerbated) by the ready availability of digital and connected devices and apps. Don’t think it could happen? Ask any doctor about how many patients self-diagnose on the Internet before their office visit. Cyberchondria is real.

Takeaways: If you can take an existing medical device or technology and improve it by making it smaller, faster, lighter, and/or cheaper, you have the makings of a company. Your new device doesn’t have to be better than what it replaces but it would make it easier to sell if it had the same quality, accuracy, etc.

There are plenty of examples of medical devices that are big, bulky, slow and costly. Give customers two or more benefits based on eliminating or minimizing these undesirable features and you will create a market niche for your products.

Read more:

Small, Fast and Cheap, Theranos Is the Poster Child of Med Tech — and It’s in Walgreen’s | Singularity Hub.

http://www.theranos.com/

California Startup, Tribogenics, Develops Smart Phone Sized Portable X-ray Machines | Singularity Hub.

http://tribogenics.com/

Smartphone Physicals Are Taking Off With Explosion of Apps, Attachments | Singularity Hub.

http://www.smartphonephysical.com/

 

Prescription drug prices increasing wildly

Mainstream media stories about prescription drug pricing are common. A simple Google search for “prescription drug price increases” yields 37.7 million results. A recent story highlighted that Americans, despite representing only 5% of the world’s population, manage to consume 50% of the world’s prescription drug supply. What’s going on?

The New York Times recently published a story about asthma inhalers. Drug companies have sharply increased prices in the U.S. for inhalers and drugs that have been on the market for years. A key driver was an EPA requirement that manufacturers reformulate their inhalers to eliminate particularly dangerous chlorofluorocarbons, even though the amounts used are quite small. Reformulation required new FDA approvals and in some cases resulted in new patents. Because the U.S., in contrast with most other developed countries, relies on market competition for price regulation, the drug companies were able to achieve massive price increases for drugs that often have no direct competition or equivalents.

In other instances, drug companies with drugs coming off patent were able to keep their products as prescription medications and avoid moving to over the counter (OTC) status by paying off generic competitors. This practice has recently been the subject of much litigation but has not been settled by the U.S. Supreme Court.

Additionally, pricing for new drugs, particularly cancer treatments, are breathtakingly high. Here’s an excerpt from an article in the Washington Post:

The average monthly price of cancer drugs has doubled over the past 10 years, from about $5,000 to more than $10,000. Of the 12 new cancer drugs approved by the Food and Drug Administration last year, 11 were priced above $100,000 annually. Yet only three were found to improve patient survival rates and, of these, two increased survival by less than two months.

The drug prices and increases are out of reach to anyone without very good medical insurance. In fact, medical bankruptcy is the most common form of bankruptcy in the U.S. The prices for the same drugs are much lower in other countries, meaning that we in the U.S. are effectively subsidizing the rest of the world’s pharmaceutical prices.

So we have reformulation of existing products with a huge price increase, avoidance of transition to generic status and price reductions by paying off generics manufacturers, and cancer drugs that cost well into six figures for a year’s worth of treatment but haven’t been proven to extend life (or extend it insignificantly). Not to mention successfully lobbying the federal government to prevent Medicare from being able to negotiate volume-based price reductions. There’s innovation here, but not much on the clinical side. The innovation is in working every angle to keep prices high and raise them even higher.

And we wonder why our healthcare costs are the highest in the world.

Read more:

The Soaring Cost of a Simple Breath | The New York Times

Chart: Cost of cancer drugs | The Incidental Economist.

The Rising Costs of Cancer Drugs | New York Magazine.

Making cancer drugs less expensive | The Washington Post

High tech medical device maker focuses on…China?

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image via axialexchange.com

High blood pressure is a significant societal health problem all over the world. Kona Medical is trying to address the huge hypertension population with a noninvasive ultrasound device that might eliminate the need to take daily blood pressure medication. In a somewhat unorthodox move, the company is focusing initially on China.

 

Last year, Medtronic acquired Ardian, another startup that is focused on the same clinical condition. Ardian, based in the San Francisco Bay Area, was purchased for $800 million.

From axialexchange.com:

The statistics for hypertension are stunning. 30% of US adults have hypertension (high blood pressure). Another 30% of Americans are pre-hypertensive. Less than half of those people with hypertension have their condition under control.  A fifth don’t know they have it. The annual price tag for direct medical expenses related to high blood pressure is $131 billion. This is driven in part by the 55 million doctor visits that are prompted by high blood pressure. High blood pressure is present in most first heart attacks (69%), first strokes (77%), and in people with congestive heart failure (74%). High blood pressure was listed as a primary or contributing cause of death for about 348,000 Americans in 2008.

Recent medical research has shown that ablation (destruction) of the nerves around the renal arteries can reduce blood pressure in patients with hypertension. A number of medical device companies are racing to commercialize products based on their proprietary technologies in order to take a lead in this evolving market.

Ardian uses radio frequency ablation delivered via catheter to the area of the renal arteries. Kona is using focused external ultrasound to deliver the therapeutic energy – they are calling it “surround sound.” In a superficial assessment, it appears that Kona has the edge since their technology is completely noninvasive while the Ardian technology could at best be described as minimally invasive.

Of course, what should really matter is which technology works best with the fewest side effect, not how the therapy is delivered. The “best” technology doesn’t always prevail in the medical device industry, however. Sometimes first to market gets and keeps the largest share while in other situations the best marketing prevails.

Kona has previously raised $40 million in venture capital earlier this year and in 2012.

Kona’s latest announcement, to use a new investment of $10 million to launch their product in China, is somewhat confusing. Yes, there are vast numbers of people in China and untold numbers with hypertension. Most, however, probably do not have the type of health insurance that would pay for a high tech solution. In its press release, the company said that their therapy has the promise of being delivered in an outpatient setting. Outpatient hypertension therapy clinics – now that’s a disruptive concept!

China is not a traditional launch market for new medical devices. The company says that the latest investment, from a fund with deep ties to China, will be used exclusively to address the many clinical, regulatory, and intellectual property issues unique to China as a medical device market for Kona’s new therapy.

It will be interesting to see if Kona can successfully launch their product into the Chinese market while simultaneously commercializing for the traditional U.S. or E.U. markets without losing focus or depleting key resources.

Takeaways: Most companies commercializing novel medical devices pick a launch market and stick with it. There are any number of reasons to launch in the U.S. first. Other companies pick the European Union countries and some look to large, less regulated countries in South America.

While many development and commercialization tasks are the same no matter which initial market is selected, there are important differences. It’s usually best to choose the first, second, and perhaps third initial markets so that the launch components are not uniquely different and the company can use scarce resources for other commercialization tasks.

 Read more: Kona Medical raises $10M to reduce high blood pressure for people in China – GeekWire.

Kona Medical

Medical Device Startup Fundraising: 5 keys for your pitch

Woman presentingIf you are leading a medical device startup, fundraising is your top priority. Here are five key points that you must address in every pitch that you make, no matter if it’s for a grant, seed investment from friends and family, angel investment, venture capital funding, or strategic partnerships with multinational medical device companies.

From the article:

  • Be clear on what your product is, right up front
  • Articulate the important problem you are solving
  • Define your customers
  • Spell out how you will create value with the $$ you are raising
  • Instill confidence in you and your team

Another way to look at the pitch is to think of it in terms of risk reduction. Most experienced investors talk about three main areas of risk in startup investing:

  • Technical Risk
  • Market Risk
  • Execution Risk

Investors will not move forward with an opportunity unless they believe that these key risks have been addressed and are below their personal threshold. Of course, you will never know that threshold so you must work to convince the investor that you have mitigated the three risks to the maximum extent possible.

Technical risk is all about the product or solution. Does your product solve the customer’s problem? Have you built a working prototype? Do you have an animal model? Have you performed animal testing? Are there important technical issues yet to be resolved? Do you have any intellectual property protection? Have you conducted a freedom to operate analysis? Does your product or solution depend on products or IP owned by other companies? Have you conducted beta testing? What’s your regulatory classification and plan? Are there more products in the pipeline?

Market risk is about the customer(s). Have you identified the problem? Is the problem a large one? Is the market opportunity big enough to justify the investment? Who are the customers? Why will they buy from you? What’s the competition (and don’t make the rookie mistake of saying that there is no competition)? Do you have evidence of demand? Do you have testimonials or at least interest from Key Opinion Leader customers? How do you plan to distribute and sell your product? How does your product or solution fit in today’s environment of managed care, healthcare reform, and evidence-based medicine? What’s your reimbursement strategy and plan?

Execution risk is about you and your team’s ability to convince investors that you can use their money to execute your plan. Does your team have the talent and experience to successfully commercialize your product? Do you have experienced and knowledgeable advisors, both business and clinical? Do you have a credible business model? What are your key milestones? What’s your exit strategy? Do you have a detailed pro forma income statement, especially for the period up to launch and for the two years after launch? Will you execute it exactly as conceived? Of course not, but you should be confident in your plan and your ability to execute. You should also have detailed contingency plans for the inevitable crisis when things go awry. 

Takeaways: Like many things, being successful at medical device fundraising requires being a great salesperson. Whether it’s a surgeon or an investor you’re selling to, put yourself in the place of that person. Be sure to address the five key points with details, evidence, and background information: product, problem, customer, milestones, team. Also keep in mind the risk tolerance of the investor. Your ability to communicate mitigation of technical risk, market risk, and execution risk will determine your success in fundraising.

Read more: Medical Device Startups: 5 essentials for your pitch deck | MassDevice.

8 healthcare applications for Microsoft Kinect, 6 reasons not to pursue them

Microhttp://dri2.img.digitalrivercontent.net/Storefront/Company/msintl/images/English/en-INTL_Kinect_for_Windows_L6M-00001/en-INTL_L_Kinect_for_Windows_L6M-00001_mnco.jpgsoft’s Kinect is absolutely amazing technology. And Microsoft keeps improving it. Did you know that Kinect has multiple potential healthcare applications?

If you have an early teenage or “tween” kid, you probably have an Xbox gaming system. The Kinect sensor technology is perfect for all sorts of innovative interfaces for dance, exercise, and role-playing games.

The Kinect sensors and software have the ability to perform skeletal mapping on multiple people simultaneously, to detect 3D gestures and motions and facial and voice recognition. Kinect can even determine users’ heart rates! The device also has the ability to “see” in the dark with infrared camera technology.

The Microsoft Kinect is an amazing amalgam of sensor technology. I’m sure it has many useful and possibly disruptive applications in healthcare and other industries.

Here’s why you should not base your healthcare product or application on Microsoft’s Kinect:

  1. Single sourcing is risky for any startup business or new product development organization. You have no alternative way to duplicate  or replicate the Kinect functions if Kinect or its key functions are unavailable for any reason.
  2. Healthcare is not Microsoft’s core business – it could remove access at any time and/or de-emphasize it in any number of ways. In fact, Microsoft is in strategic transition right now and its long-time CEO, Steve Ballmer, announced recently that he will be retiring in 2014.
  3. You have no access to the device’s source code – access to that code might be necessary if you are developing an FDA Class II or Class III device.
  4. The Microsoft Kinect is based on a console or PC-centric world view. What about tablets and smartphones? Oh, and don’t expect to ever see an Android or iOS device with Kinect capability.
  5. Although Microsoft has made an SDK available for Kinect development on Windows operating systems, the installed base of 24 million Kinects is almost all in Xbox gaming systems. Microsoft is not interested in giving up valuable real estate on its premier gaming platform to comparatively low volume and low margin healthcare apps. If you develop a Kinect-dependent windows app, you will a). have to wait for an installed base to develop or b). take on the added risk of marketing Kinect hardware to create your own installed base.
  6. You will have little technical support from Microsoft simply because your business potential is small compared to their other ventures.

If those six reasons aren’t enough to give you pause, here are the healthcare market areas identified by MobiHealthNews that are particularly suited for Kinect-enabled applications.

  1. Fitness and Exergaming – games and exercises to get people off the couch and on their feet
  2. Physical Therapy  – conduct PT sessions, monitor recovery
  3. Surgery Support  – hands-free image manipulation
  4. Autism Screening and Therapy – not quite sure what the advantage is here. Perhaps some on the spectrum can’t relate as well to people?
  5. Virtual Visits and Virtual Nurses – automated nursing visits. I think this is a bad idea, as senior shut-ins crave human contact.
  6. Virtual Group Therapy – avatar-based online group talk sessions (I believe you can do this with Google Hangouts as well)
  7. Aging in Place and Fall Prevention – gait analysis and fall prediction
  8. Helping the Blind to Navigate and the Deaf to Communicate – using machine vision and text to speech

Takeaways: It’s incredibly risky to develop new technology that’s based on someone else’s proprietary technology. It’s even more risky if that proprietary technology is primarily focused on non-healthcare applications.

You should consider open source projects as an alternative. There are many open source projects all over the world. If it’s critically important to you, try organizing and starting an open source project to support your development work.

If you must use the proprietary technology, try to negotiate a development agreement that places key parts of the technology in escrow so it is still available to you in the event of a default to the agreement. This tactic doesn’t work with gigantic corporations like Microsoft but it may be effective with smaller partners.

Read more: Eight ways the Microsoft Kinect will change healthcare | mobihealthnews.

How are hospitals responding to startup queries to use de-identified patient data? Cautiously | MedCity News

Access to large amounts of de-identified patient data has to be like oxygen to healthcare IT startups. They need the data to show that their software and algorithms function correctly and (a recurring theme) that they can credibly save money for their customers. This is critically important in attracting investors and scaling up to more customers.

Unfortunately for startups, the CEOs, CFOs, and CIOs of large hospitals and healthcare systems know exactly how valuable this patient data is. While they may have granted easy access to it once upon a time, those days are largely in the past. You will have to earn their trust and pay in some form to get access today and in the future.

If I were the CEO of one of these companies, I would do everything possible to get access to this data. Here are a few things that one should try in order to get to the precious data:

Partner with the hospital/healthcare system that owns the data. Easier said than done for a startup. Yes, you will need to make some sort of gain-sharing agreement. You will also need to indemnify the partner against legal and financial penalties resulting from your improper use of the data, e.g., HIPAA violations and any willful or inadvertent patent infringement. Essentially, you will need to guarantee the hospital that your startup will assume all of the downside (risk) and cut them in on the upside.

Partner with one of the hospital’s primary IT providers. They have far more influence and access to key decision-makers in the hospital. There is a veritable alphabet soup of systems out there, from EMR to HIS to RIS to PACS and beyond. None work perfectly and who knows? You may find the perfect corporate partner along the way.

Partner with a prominent and/or influential physician on the staff and preferably on the management team of the hospital. This could take the form of a consulting agreement, part-time employment, or membership on your medical advisory board. All of those should include a generous helping of stock options if permitted by the physician’s primary employer.

Offer to conduct an onsite beta trial with the data and aggressively identify all patient and economic benefits. Also offer substantial discounts for sale, installation, and support of your software.

If you live in a state or congressional district with a Democratic representative or senator, contact their offices and ask to speak to the aide responsible for healthcare liaison.  They are motivated to help anyone who has the slightest promise of showing that Big Data can help patients and save money, all key components in the promise of the Affordable Care Act (aka “Obamacare”). Their help and influence will be mostly indirect, however, and the most you could hope for is a phone call from the elected official to an executive at the hospital.

Conduct a PR campaign highlighting your company’s efforts to save money and improve patients’ lives. This works best if there are competing hospitals or healthcare systems in your area so you can play one entity against the other.

If nothing else works, expand your geographic scope and consider other metropolitan areas.

Read more: How are hospitals responding to startup queries to use de-identified patient data? Cautiously | MedCity News.

Medtech inventor claims Ethicon lawyer tricked him into divulging trade secrets | MassDevice

This is an excellent cautionary tale for anyone with an idea or invention who is thinking of approaching a corporation: Talk to an attorney first!!!

“In court documents Nicolo spelled out his prior disputes with Ethicon, noting that, in light of his previous experiences,” Dr. Nicolo adopted a heightened level of discretion and caution in approaching Ethicon and sharing any business proposals and technical developments with Ethicon.”

Nicolo said that he and another inventor jointly developed a proprietary surgical stapling system for intestinal reconstruction and resection, which was the subject of U.S. Patent issued in September 2000. While the patent was still pending in 1998, Nicolo met with representatives of Ethicon, including Federico Bilotti, to discuss the stapling technology, according to the complaint.

Just 7 months later Ethicon filed its own patent, naming Bilotti as its inventor, describing a surgical stapling instrument that included “hemorrhoidectomy device technology” that Nicolo claims was derived directly from his conversation with Ethicon.”

Now, who knows what really happened in this particular case? People file lawsuits all the time; it doesn’t mean that they are right and the other party is wrong.

For start-up novices or entrepreneurial inventors, it may seem like a good idea (and it may actually be a good idea) to talk with larger medical device companies. They have resources (= cash) and they need new products. However…I’ve heard similar stories from entrepreneurs, physicians, and inventors claiming that some big corporation stole their idea.

Here are some tips and other issues to consider. These are from my experience and perspective as an entrepreneur and medical device professional. As the saying goes, I am not a lawyer:

  1. If you must approach a big company, try to get them to sign an NDA (non-disclosure agreement, also known as a CDA, confidential disclosure agreement). You need a one-way NDA to document what you are disclosing to the company. Many times, the company will ask for a two-way NDA to cover anything they might disclose in the course of the discussion. Of course, many times the corporation will tell you that they will not sign an NDA as a matter of policy. In that case, you need to decide if the benefit of the discussion is worth the risk of compromising your intellectual property (IP).
  2. Read the NDA form very closely before signing it. If it’s your NDA form that is being used, review it carefully with your attorney beforehand. Also review any changes requested by the corporation’s attorneys. The NDA spells out very specifically what you have to do to be covered by the NDA. Usually, that means putting all disclosures in writing within a certain time period. This is especially important for anything that is disclosed orally during a meeting.
  3. Know in advance what you are willing to disclose in the discussion and do not waver. You can always ask for another meeting! Also know what you want. If you wait for the corporation to make a proposal, you will be negotiating from a weakened position. 
  4. Keep in mind that the other company probably has done investigation or perhaps even R&D into the topic you are discussing. They will not tell you any of this information. Also keep in mind that the corporation’s representatives are only interested in itself and themselves, not you. Corporate employees may whisper sweet nothings in your ear, but keep your wits about you and maintain a high level of skepticism.
  5. If you have intellectual property, protect it. At the very least, file a provisional patent application. These are relatively inexpensive and you have one year to file a formal patent application.
  6. If you have trade secrets, do not reveal them. You can show the results or output from application of the trade secret but trade secrets are by definition unprotected intellectual property. Think of the trade secret as a handful of precious gems. Once they are out of your possession, how do you prove they belong to you?
  7. Document everything. Keep notebooks, in a secure place (or the online equivalent, with reliable backups), detailing the invention, all inventors, dates, times, circumstances. Document every interaction you have with the corporation. Note names, titles, dates and times of meetings, all attendees, take notes, and publish meeting minutes.
  8.  Do not assume anything about your interaction with the corporation. Nothing is certain unless it is in written form – and even then, can be the subject of much legal wrangling if the parties disagree about something.
  9. Sure, you always have the option to file a lawsuit if things go awry, BUT the corporation has more and better lawyers and much, much more money. Consider this option your very last resort.
  10. It is possible for a small business to license or sell technology, IP, or a product to a larger company. Most of the risk falls on the little guy, unfortunately. As Ronald Reagan once said of his dealings with the USSR, “trust but verify.” I would modify that aphorism for this subject to “engage but document.”

Read more: Medtech inventor claims Ethicon lawyer tricked him into divulging trade secrets | MassDevice.