How To Kill A Unicorn: The cautionary tale of Theranos

A unicorn in startup jargon is an early stage tech company with a $1 billion+ valuation. Theranos is (was?) a Silicon Valley startup and a unicorn, focused on disrupting the enormous market of diagnostic blood testing.

Valuations are funny things. They are critically important to startup CEOs and investors but ultimately, they are subjective shared opinions based on complex models of present and future events. Startup CEOs and venture capital investors try very hard to keep their company’s’ valuations ever-increasing. Negative news or events can start a cascading cycle resulting in the dreaded “down round” of investment and even ejection from the unicorn club.

Theranos was a unicon, but no longer
Killing the unicorn, British Library

Background

CEO Elizabeth Holmes founded Theranos in 2004. As a 19-year old college student, Holmes pitched an idea to her Stanford professor and was advised to start a company. Through family and personal connections, venture capital money poured in, Holmes dropped out of Stanford and Theranos began its mission to change health care.

Theranos CEO Elizabeth Holmes
Theranos CEO Elizabeth Holmes – Inc. cover photo Oct. 2015

“…it doesn’t work…”

Alas, “mistakes were made” and the company and its executive team found itself in hot water with the FDA and the subject of a number of unflattering stories in The Wall Street Journal and elsewhere. The Theranos head of R&D committed suicide and left a note saying “it [the technology] doesn’t work.” Also, the company president recently resigned and CEO Holmes is banned from owning or operating a lab for two years. In addition, Theranos’s commercial partners, Safeway and Walgreen’s, terminated their agreements with the company.

That’s about as bleak a series of events as you can imagine, right? Well as the infomercial goes, wait, there’s more…

Negative reactions continued over the year since the WSJ story broke. In May 2016, Theranos announced that it had voided two years of results from its Edison device. Patients filed a class action lawsuit alleging they were adversely affected by Theranos’s business practices (specifically, faulty blood tests). Recently, the company announced layoffs of 40% of its labor force and closure of testing labs around the country. In October, 2016 Holmes announced that Theranos would shift its strategy toward development and manufacture of small, robotic diagnostic test equipment – a very crowded market.

In June, 2016, Forbes assessed the valuation of Theranos as $800 million and revised the estimated net worth of CEO Holmes from $4.5 billion at the company’s peak valuation (she has a 50% stake in Theranos but it’s all common stock) to zero.

Theranos valuation history
Theranos valuation history (based on public estimates)

What killed the unicorn? There are a number of bad decisions made by Theranos management and its Board of Directors. Here are 10 of the worst that I identified.

Bad Decisions

  1. Stack the Board of Directors with old, politically connected white guys (Henry Kissinger, George Shultz, Bill Frist, Sam Nunn) with little or no startup, technology, or diagnostics savvy.
  2. Create a cult of personality around the CEO. Make sure she appears on popular magazine covers and is interviewed frequently on TV shows.
  3. Create a not-so-subtle emphasis on the similarities between your attractive, young CEO and Steve Jobs: both are college dropouts, both wear a uniform of black turtlenecks, both are “visionary” leaders, both are/were young billionaires (only on paper in the case of Elizabeth Holmes)..
  4. Keep the founder as CEO, no matter if she has zero prior business or medical industry experience. Do not bring in a strong executive team with relevant industry experience to complement the CEO’s energy, vision, and talent.
  5. Hype your technology but shroud its technical details in secrecy. Worse, secretly use competitor’s technology for the vast majority of the tests performed.
  6. Do not conduct randomized clinical studies to demonstrate efficacy vs. industry “gold standard” technologies. Definitely  do not publish in peer-reviewed journals.
  7. Sign agreements with major commercial partners (Walgreens, Safeway) and conduct major PR campaigns announcing the deals before the technology is mature and proven.
  8. Pay no attention to FDA, CLIA, and GLP requirements. Refuse to learn from what happened to other startups that defied or ignored the FDA (see 23andme).
  9. Aggressively promote your muddled, multi-pronged, “disruptive” business model.
  10. Deny and deflect all bad news. Accuse The Wall Street Journal of conducting a witch hunt.

Takeaways

  1. The medical device/diagnostics industry is not the technology industry. Patients’ health and lives are affected by poor management, decisions, and/or business practices. Consequently, medical technology companies are heavily regulated and conservative regarding innovation. 
  2. If you must have an inexperienced person at the helm of the startup, compensate with a seasoned, accomplished Board of Directors with relevant experience and networks.
  3. Aim to solve one problem at a time. Prioritize. Theranos touted its “Nanotainer” finger stick technology, Edison diagnostic technology, and plans to disrupt healthcare by bringing diagnostic testing directly to patients through grocery and drug stores. That’s a lot of moving parts.
  4. Expect swift and deadly reactions from entrenched competitors (including complaints to the FDA and leaks to the media). Your disruptive business model is their existential threat.
  5. As the saying goes, sunlight is a powerful disinfectant. The first step to success in the medical technology industry is a strong intellectual property portfolio and properly maintained trade secrets that create solutions to real healthcare problems. But that strategy must coexist with a culture of regulatory compliance, stringent adherence to quality standards, and sponsorship/disclosure of peer reviewed randomized clinical studies. It’s a business model that has worked for many successful companies in the industry.

Will Theranos pull out of its nose dive, emerge as a disruptive company in the ultra-competitive medical diagnostics market, and regain its unicorn status? Maybe, but given its track record and penchant for acting more like a Silicon Valley tech startup than a medical technology company, I would not bet on it.

Postscript 12.15.16 The shareholder lawsuits have begun.

References

  1. From $4.5 Billion To Nothing: Forbes Revises Estimated Net Worth Of Theranos Founder Elizabeth Holmes [Forbes]
  2. The wildly hyped $9 billion blood test company that no one really understands [The Washington Post]
  3. An Open Letter From Elizabeth Holmes [Theranos company website]
  4. Theranos Attacks Wall Street Journal (Again) in a Rebuttal You’ll Need a Medical Degree to Understand [recode]
  5. Expecting Data From Theranos, Lab Experts Get New Product [Bloomberg]
  6. At Theranos, Many Strategies and Snags [The Wall Street Journal]
  7. Why the Next Steve Jobs Will Be a Woman [Inc.]
  8. Theranos throws in the towel on clinical labs, officially pivots to devices [Ars Technica]
  9. How Playing the Long Game Made Elizabeth Holmes a Billionaire [Inc.]
  10. Theranos’ Scandal Exposes the Problem With Tech’s Hype Cycle [Wired]
  11. Will Shareholder Lawsuit Trigger Theranos To Return Capital To Shareholders? [Forbes]

  12. Theranos Just Got Slammed With Another Lawsuit [Fortune]

Eko Core, A Digital Upgrade For The Centuries-Old Stethoscope | TechCrunch

Eko Core Digital Stethoscope - product picture
Eko Core Digital Stethoscope

The Eko Core digital stethoscope is a “why didn’t I think of that?” invention.

In a few months, the stethoscope will celebrate its 200th birthday. A medical breakthrough in 1816, it’s still a part of nearly every doctor’s visit today and a symbol of medicine itself.…

Digital Stethoscope

Stripped to its essentials, the Eko Core digital stethoscope is a highly engineered Bluetooth microphone designed to fit medical stethoscopes. The device wirelessly transmits patients’ heart sounds (not EKG) to a smart phone or tablet app.

The Eko Core was invented and commercialized by a team of UC Berkeley engineering graduates (claimed to be the youngest team to secure FDA clearance for a Class II medical device).

What Eko Core did well

In developing and executing its strategy, the Eko Core team did a number of things right:

  • Targeted a huge existing market. Most doctors and many nurses carry and use stethoscopes every day.
  • Recognized and addressed a  nagging clinical problem: It can take years (even decades) to become adept at using a stethoscope to recognize heart sounds.
  • Improved the functionality of the stethoscope by enabling visualization and amplification. Benefit to the user is improved confidence in identification of heart sounds.
  • Made their device a simple, affordable ($199) add-on to the user’s existing stethoscope.
  • Employed a Bluetooth wireless connection to the user’s smart phone or tablet . Data  from the stethoscope is displayed in a custom app.
  • Enabled data sharing via “the cloud” so that users can share typical and atypical heart sounds and learn from each other.
  • Partnered with major EHR suppliers to enable the digital stethoscope data to be entered into the patient’s electronic medical record.
  • Identified the potential for use of the Eko Core to lower healthcare costs by reducing costly referrals to cardiologists for unusual heart sounds.

What Eko Core hasn’t done yet

  • Showed they can be financially successful over time. Medical device sales and marketing is expensive. Manufacturing under FDA, GMP, ISO, etc. regulations can increase costs. Maintaining healthy profit margins on low-priced medical devices can be a challenge.
  • Exhibited a competitive advantage over similar products, Thinklabs for example.
  • Fully protected their intellectual property, although the company did recently file a patent application.
  • Leveraged their technology beyond one-hit wonder status.

Takeaways

The number of medical stethoscope users in the developed world is on the order of several million. Growth rates are slow, with new graduates replacing retirees, etc.  That puts the potential market at around $500-600 million.

Not bad, but once you “pick the low-hanging fruit” and sell to the early adopters and early majority customers, selling more units gets progressively tougher and more costly. And given competition, it’s a race for market share to capture and keep customers.

I think this will be a fun and profitable business for a while. Longer term, I hope Eko Core has a big medical device company lined up as a distribution partner and has an encore product that leverages the same technology and customer base.

Source: The Eko Core Is A Digital Upgrade For The Centuries-Old Stethoscope | TechCrunch

Eko Devices website

3D Printing Parts from McMaster-Carr| Make:

McMaster-Carr Catalog 3D print
McMaster-Carr Catalog

McMaster-Carr, the industrial supply giant (http://www.mcmaster.com/), has been in business since 1901 but the company is fully embracing the digital age. McMaster previously released an iPad app of its massive paper catalog containing over 555,000 items. The company has gone one step further and is now offering 3D printing files of many of its parts.

Engineers and designers unsure about dimensions and compatibility of a particular part now have the option to download and print a 3D printing file of many parts in the McMaster -Carr catalog. The user can then try the printed part for fit before ordering “real” parts. This capability can save makers considerable time and expense.

It’s probably just a matter of time until 3D printing has the capability to duplicate manufactured parts in terms of materials and physical performance. Great to see a company that’s over 100 years old innovating and keeping up technologically with its customers.

Takeaways: If you are developing a new widget or prototyping a novel medical device, check the McMaster-Carr catalog, website, or iPad app if you are looking for readily available parts and you don’t want to wait or pay for custom prototypes. You can even check out a new part without the wait by downloading and 3D printing some parts.

If your company-startup or otherwise-is in a rut, look at McMaster-Carr for inspiration. If a 114 year-old company is still innovating and  differentiating itself via new technologies, your company can, too.

Pro Tip: You Can 3D Print Parts from McMaster-Carr | Make:
Link to Instructables set-by-step instructions

Free Medical Device Launch Checklist – Protect Your Investment

free Medical Device Launch Checklist

So you (or your company) has developed a new medical device. You have invested millions of dollars and substantial time in engineering, obtained regulatory clearances, and set up manufacturing. It’s time to go to market, right? Turn it over to Marketing and Sales and wait for the orders to pour in. Are you sure that all relevant launch activities are being planned and accounted for? Perhaps you should protect your investment in your medical device product with this simple, easy to use, free Medical Device Launch Checklist.

Easy to use, downloadable PDF file: free Medical Device Launch Checklist

The Medical Device Launch Checklist from sanko::strategic consulting is free and easy to use. It contains 64 checkable launch items. Launch items include traditional marketing activities like pricing as well as easy to overlook issues such as expiration dating and localization. The Checklist gives you a brief description of the purpose of each item. It also shows you the department/corporate function with primary responsibility for the item. The file can be saved to monitor launch progress.

Anyone can use the Medical Device Launch Checklist. It is primarily intended for small and medium-size companies that may not have institutional systems and processes to control launch activities. It can also be used by anyone (Product Manager, Marketing Manager, Project Manager, startup CEO, et al) who wants to assure that nothing has been omitted from their launch plan.

You can use the Checklist to guide the development of a launch or marketing plan. The Checklist can also be used as a gateway document to assure that all activities are accounted for and either completed or in progress before authorizing product launch.

To obtain your personal copy of the free Medical Device Launch Checklist, click here and select the link for the free Medical Device Launch Checklist.

Think of it as cheap insurance to protect your multi-million dollar baby.

Image courtesy of arztsamui / FreeDigitalPhotos.net

Crowdfunding ROI: $813 per hour invested

https://www.kickstarter.com/download/kickstarter-badge-funded.png
image via kickstarter.com

We’ve all seen and heard about people and companies with novel ideas getting funded on sites like Kickstarter and Indiegogo. There are many anecdotes of ideas going viral and raising lots of cash. There are also plenty of ideas that either don’t get funded at all or fail to reach their target. A new study reports that in terms of crowdfunding ROI, you can expect to receive about $813 for every hour you invest in a successful crowdfunding project.

It would be helpful to look at crowdfunding at a high level and get some questions answered about this relatively new fundraising alternative. Forbes magazine recently reported on a new report about crowdfunding published by Capital Crowdfund Advisors (CCA). In August 2013, CCA interviewed several hundred organizations in North America, Europe and Africa that had completed successful crowdfunding campaigns.

Here are some of the most relevant questions asked by CCA and reported by Forbes:

  1. Does crowdfunding increase sales?
  2. Does crowdfunding create jobs?
  3. Does crowdfunding help attract follow-on investment?

First of all, yes, crowdfunding does have a positive effect on sales. The effect was modest when considering all three crowdfunding modes: rewards, debt, and equity. (Yes, you can now raise equity with crowdfunding. Be sure to speak to a savvy attorney first!) The sales increase for the equity crowdfunding mode was dramatic: an average of 341% increase in quarterly sales after the successful campaign.

Crowdfunding was shown to have only a small positive effect on job creation with 39% of those surveyed hiring an average of 2.2 new employees and an additional 48% planning to increase hiring by an unspecified amount.

As for helping to attract new investors, it appears that successful crowdfunding has positive effects: 28% of those surveyed completed rounds of traditional investment with angels or venture capitalists within three months of the conclusion of their campaigns and 43% more were in talks with institutional investors.

How much was raised in a typical crowdfunding project? From the Forbes article:

In this report’s sampling, the average raised across all methods was $107,810 (with a mean of $40,300, as some results were exceptionally large). For an equity raise, the average was even higher, producing the U.S. equivalent of $178,790. In the process, firms sold between 5% and 50% of their companies, with an average of 15%.

Kickstarter even publishes its latest stats on projects and funding. Projects on Kickstarter have raised $985 million to date for 133,565 projects from 5,648,063 individual backers. This is microfunding on a major scale.

Read more: New Report: The ROI Of Crowdfunding – Forbes.

Takeaways: Fundraising for early stage medical device companies continues to be challenging. Federal government grant money has been shrinking and more companies than ever are competing for the same pot of cash. Angel investors and venture capital firms have become more risk-averse as have the strategic investment activities of the large medical device companies. Crowdfunding, while no panacea, may be an another funding option for early stage medical device companies.

Keep in mind that you will probably not be able to launch your medical device using just the proceeds from a crowdfunding campaign. Medical device commercialization is costly. Crowdfunding proceeds should be earmarked for a specific purpose such as building an early prototype or conducting an important test In other words, reduce risk so you can attract follow-on investment from more conservative investors.

While Kickstarter specifically prohibits medical products, other crowdfunding websites are more open. Here is a very cool (and useful) road map from Inc. Magazine that identifies the ideal crowdfunding site for your Big Idea. Not mentioned by Inc. but nonetheless specific to medical devices and medical technology, Medstartr is another crowdfunding site to investigate and consider.

10 Principles of 3D Printing

3D printed bionic ear
image via American Chemical Society publications

Last week I attended an event, “From Trinkets to Body Parts: 3D Printing – Transforming Sci-Fi Fantasy Into Reality” sponsored by the Seattle MIT Enterprise Forum. The keynote speaker was Hod Lipson, PhD, Professor of Engineering at Cornell University. Prof. Lipson gave an informative and entertaining talk centered around his 10 principles of 3D printing.

There was also a panel of 3D printing industry experts and lots of Q&A with the large audience. It seems that there is much interest in 3D printing – a not-so-new technology whose time has come?

Prof. Lipson identified 10 key principles of 3D printing in his talk:

  1. Complexity is free
  2. Variety is free
  3. No assembly required
  4. Zero lead time
  5. Zero constraints
  6. Zero skill manufacturing
  7. Compact, portable manufacturing
  8. Less waste by-product
  9. Infinite shades of materials
  10. Precise repeatability

Here is my take on the 10 principles:

1. It’s as easy to 3D print a complicated piece as it is to 3D print a simple piece.
2. Every piece that you print can be different without increasing cost or cycle time.
3. The assembly process can be part of the printing process, e.g., a bicycle chain has been 3D printed.
4. Because there is no tooling and no setup, the only lead time is the time required to start the printer and send the digital file.
5. You can fabricate things using 3D printing that could not be made any other way.
6. Since there are no precision assembly tasks, printer operators do not require specialized skills.
7. 3D printers are relatively small, portable, and inexpensive compared to injection molding machines, milling machines, punch presses, and foundries.
8. The 3D printing process does not generate waste material. Neither does modern injection molding, but processes that remove material such as milling do generate considerable waste.
9. Not only can you combine colors in infinite shades, but you can combine materials to create unique mechanical properties.
10. Within the tolerance limits of the printer (0.1 mm for commercial grade printers), every piece printed is exactly like every other piece printed.

Prof. Lipson is also the author of a new book, Fabricated: the New World of 3D Printing.

There are drawbacks and limitations to 3D printing, of course. High volume production is better suited economically for injection molding. Surface finish can be rough, requiring secondary processing, although efforts are ongoing to improve surface finish and textures. Pieces may not have isotropic physical and mechanical properties.

Prof. Lipson identified an incredible range of materials that have been used as the raw material in 3D printing: plastic, of course, sand, concrete, various types of food, paper, steel and other metals, and even living cells.

Some products that have been 3D printed: a working gun, clothing, shoes, furniture, aircraft parts, artwork, food (might be what astronauts eat on their way to Mars and beyond), a working loudspeaker, batteries and electrical circuits, and body parts.

And here are some examples of 3D printing in healthcare and medical devices. Some are in research, some in active development, and others are commercially available:

  • Invisalign braces – custom made for each patient
  • Knee meniscus
  • Heart valve
  • Ear prosthetic
  • Organs – liver, kidney, heart

3D printing of human body parts and organs is also called “bioprinting” in this 2013 New York Times article, “At the Printer, Living Tissue”. The article is pessimistic about near term prospects for 3D printed organs, although it notes that there is much research and development being conducted. Others in technology think that breakthroughs are imminent: Functional 3D Printed Organs by 2014 > ENGINEERING.com. There is a startup bioprinting company, Organovo, developing an artificial liver. The liver in its first incarnation will be suitable for drug development and testing, not for human implantation. A research team at Princeton created a functional 3D printed ear, again, not suitable for implantation: Researchers create world’s first 3D-printed bionic organ | ExtremeTech.

Takeaways: 3D printing is becoming widely known and commercially acceptable. In the medical field, it can be used for rapid prototyping and even for fabrication of low volume production parts. As the “10 principles” indicate, you can save time and money in your medical device development projects by using 3D printing.

Renal Denervation – the next big bust?

Oops! Road SignOn November 1, I wrote a blog post about what seemed like an exciting new therapeutic market for medical devices, renal denervation to treat hypertension and lower high blood pressure:

Renal Denervation – the next big thing?

Fast forward to the present. Just 11 weeks later, it appears that this hot new market is in trouble.

First, this negative news from Medtronic:

Medtronic’s Hypertension Study Fails Taking Analysts By Surprise | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

The failure occurred in a large, randomized study being conducted at 87 medical centers in the U.S.

And then the company statement:

Medtronic CEO: Failure of Hypertension Clinical Trial Not An Execution Issue | MDDI Medical Device and Diagnostic Industry News Products and Suppliers

followed by competitive reaction from St. Jude Medical:

St. Jude’s CEO is still betting on renal denervation, despite Medtronic’s setback – FierceMedicalDevices.

Most recently, Covidien has decided to exit the market. Covidien spent $60 million to acquire Maya Medical and additional millions on clinical studies. They stated that the market in the European Union was developing too slowly and that they would be taking a $20 million writedown on their assets:

Covidien Pulls Out of OneShot Renal Denervation Program Citing Slow Market Development | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Medtronic famously spent $800 million to purchase Silicon Valley startup Ardian. Early clinical results were promising but when Medtronic tried to scale up the clinical studies for FDA approval, the results were disappointing. The company is in full “reboot” mode and is planning to convene a blue ribbon panel of experts to determine what went wrong and what to do now. I think I would have my resume updated and on the street if I were involved in this unpleasant set of circumstances.

Yet to be heard from are two other renal denervation market competitors: Boston Scientific, which spent $425 million to acquire Vessix in late 2012, and VC-funded startup Kona Medical which is developing a noninvasive ultrasound-based technology.

Takeaways: There is enormous pressure on medical device companies these days to identify, enter, and dominate new markets. Unproven therapies and technologies will always engender risk. Since most innovation is done at startups now, it will be interesting to see how risk mitigation occurs in future acquisitions or if there were any mitigations included in the Medtronic or Covidien deals.

If you are a startup executive or founder, you can look forward to more stringent diligence and a longer wait before investment or acquisition by strategic partners. There may also be more contingencies requiring technical and clinical milestones to be achieved before milestone payments are made. Make sure you have a good general counsel attorney and CFO. You are going to need them.

Smaller, faster, lighter, cheaper medical devices

http://3278as3udzze1hdk0f2th5nf18c1.wpengine.netdna-cdn.com/wp-content/uploads/2013/11/drop-theranos.jpg
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/

 

Too good to be true…or just hype?

http://www.getairo.com/img/airoband.png
image via getairo.com

In a development many were expecting, Canadian mobile health startup Airo Health backed off on its launch of the world’s first wearable device that could track caloric intake. The bold initial product announcement and aggressive commercialization timing led many to think it was too good to be true. Others dismissed the story as just hype.

 

In a story on techvibes.com, the company announced today that it was cancelling pre-orders and issuing refunds to prospective customers.

“Our early testing of AIRO shows tremendous promise, but through conversations with others in the industry, we have come to realize that it requires further testing and calibration through more extensive trials before it will be ready for general market availability,” wrote founder Abhilash Jayakumar in an email to backers this week. “The additional validation required will take us some time and, unfortunately, we no longer expect to be able to ship the first AIRO wristbands by Fall 2014 as initially indicated.”

From the Airo Health website:

NUTRITION

We all know the importance of eating right, but keeping track of what we eat takes too much effort. AIRO is able to automatically track both the calories you consume and the quality of your meals. With a built in spectrometer, AIRO uses different wavelengths of light to detect nutrients released into the bloodstream as they are broken down during and after your meals.

STRESS

AIRO helps you become proactive about stress. It measures heart rate variability, the aggregate response of your autonomic nervous system, derived from heart rate, to measure the smallest fluctuations in your stress levels. AIRO can not only warn you as your stress levels rise but can also provide recommendations as to how best to deal with it. Over time, AIRO gets smarter by learning what calms you and what doesn’t.

SLEEP

We spend a third of our lives sleeping but we know very little about it. AIRO tracks your circadian rhythm and can see distinct sleep cycles. It’ll wake you up at the optimum time and will let you know how much of your night’s sleep was restorative.

EXERCISE

It’s no secret that living an active lifestyle can lead to a long and healthy life. The best way to keep track of your daily activity is to monitor your heart rate; everything else is just a proxy. By tracking your heart rate, AIRO calculates the number of calories your body burns throughout the day.

I wrote about Airo Health and my healthy skepticism of its commercialization timing here. So did MedCityNews and mobilehealthnews.

Takeaways: Developing new medical technology is difficult, much more so than envisioning it. What works in the lab seldom works as well in humans. Unfortunately, it’s easy to get free PR for new and interesting technology without much proof. You can even generate orders without having a functional prototype.

It’s too soon to know if Airo Health actually has unique and innovative mobile health technology. It’s also too soon to know if the company has forever tarnished its reputation. I’m guessing they have “one more chance to make it right”. If they go away and perfect their technology and then try to promote it, the media will grab the story because of the company’s previous sins. If they fail again, I believe it will be virtually impossible to get press or investor attention.

Good luck, Airo.

Read more:

http://www.techvibes.com/blog/airo-health-cancels-preorders-2013-11-21

Startup unveils a wearable device it says can count calories — but it doesn’t actually exist yet – MedCity News.

Question marks, incredulity meet the announcement of Airo | mobihealthnews.

The Clever Bottle vs. the Smart Pill

http://www.clevercap.org/images/about_image.png
image via clevercaprx.com

Patients are terrible at taking prescription medications. A couple of startups have developed devices that aim to solve the problem, but with wildly different solutions: The Clever Bottle vs. the Smart Pill.

A recent study by WHO estimated that 50% of patients with chronic illnesses don’t take their drugs as prescribed. This behavior increases deaths and complications. Further, it costs about $100 billion per year in avoidable healthcare costs.

 

 

Medication compliance is a problem that has been around for thousands of years. In fact, a paper in The Mayo Clinic Proceedings included a quote from Hippocrates who lived and practiced medicine more than two thousand years ago:

Keep a watch…on the faults of the patients, which often make them lie about the taking of things prescribed. For through not taking disagreeable drinks, purgative or other, they sometimes die.

Hippocrates, Decorum

Ensuring that patients take their medications seems to be an unglamorous approach to a big and costly healthcare problem. It’s also a potentially lucrative market. While neither of the solutions would be considered simple or low tech by most people, they are direct in how they address the issue.

The Clever Cap pill bottle is something most of us might say, “hey, I thought of that!” The people at Compliance Meds Technologies in south Florida took the next step and developed their idea. The Clever Cap fits on standard pill bottles, dispenses only the prescribed amount of medication, keeps track of medications dispensed, and communicates wirelessly with mobile devices or with a special hub. The hub is a device made by Qualcomm in their attempt to cash in on the vast potential in mobile and digital health data.

CleverCap can also be reprogrammed and reused. The device is reported to work even without a wireless connection. It’s not clear what happens if the batteries die. What the CleverCap can’t do is know if the patient really swallowed the pills.

The Smart Pill, branded as the Ingestion Event Marker or IEM by its developer, Proteus Digital Health of Redwood City, California, aims to embed a microchip in each pill. The chip is activated and powered by stomach acid and apparently passes harmlessly through the digestive system and is eliminated. The chip communicates time and date ingested as well as physiological and behavioral patient data to a wrist patch worn by the patient.

Very high tech. Indeed, the company has partnerships with Novartis, Medtronic, St. Jude Medical, and Oracle among others. The company has raised a lot of money including $62.5 million in “the second closing of its F round.” Proteus has received FDA marketing clearance, a de novo 510(k) for its technology. It remains to be seen if drug manufacturers will need additional FDA clearance to use the technology with their pharmaceuticals.

The Smart Pill definitely knows if the patient swallowed the pills. The big question is whether patients want this much technology in their bodies vs. the less intrusive CleverCap. My guess is that there is probably room for both solutions in this potentially large emerging market.

Takeaways: There are unsolved problems and unmet needs everywhere in healthcare. We’ve all daydreamed about things like smart pills and clever caps. Keep an open mind and perhaps you will recognize a new opportunity.

Both of these technologies are potentially disruptive and they both make use of the latest information technology including cloud analytics and reporting. The CleverCap seems to have the quickest path to market but the Smart Pill has all sorts of other potential capabilities and that’s probably why the company is well-funded and flush with partners. Both strategies seem viable and there’s plenty of room in the market for their innovations and more.

Read more:

CleverCap Pill Bottle Connects to Wifi, Dispenses Only as Directed, Uploads To The Cloud | Singularity Hub.

The Pills Have Eyes: Microchipped Medicine Is Coming | Singularity Hub.

Medication Adherence: WHO Cares?.

Ranking the best places for healthcare startups

http://www.cbinsights.com/blog/wp-content/uploads/2013/12/1Top50ExitsNew.png
image via CBinsights.com

Silicon Valley is Mecca for technology companies. When it comes to ranking the best places for healthcare startups, however, the global technology hub seems to be not as dominant.

A common method for ranking the best places for startups is to quantify the number of exits and aggregate valuation in a given time period. A recent report by CB Insights, an investor service focused on early stage companies and emerging industries, says that Massachusetts and not the Bay Area has been more successful in exits for VC-backed healthcare startups.

Healthcare startup categories included medical device, biotech, and pharmaceutical companies.

The analysis also shows that other regions are competitive as well. Southern California had the next highest number of exits in the same time period, 2012-present.

http://www.cbinsights.com/blog/wp-content/uploads/2013/12/5ValueCreationTableNewFinal.png

The CBinsights report looked at the startup exit data in another way that highlights differences between the regions more clearly. They defined another metric, “Value Creation”. Value Creation is the ratio of the average exit value of a company in the region to the average VC investment in a company in that region. So bigger is better.

As seen in the table, New York comes out on top in this ranking while Silicon Valley lags at little more than half of the New York number. My home state of Washington is even lower on the list. This ranking may reveal why certain regions seem to have an easier time attracting venture capital investment than others. One last and very interesting note: the Value Creation metrics for technology companies are much higher than for healthcare companies. It starts to become clear why there is a dearth of capital investment in the healthcare space. If you are a VC, would you put your money in healthcare or technology?

Takeaways: Although no single city or region in the U.S. dominates when it comes to a great location for healthcare startups, there are a few conclusions that can be drawn from the report.

The East Coast  – Massachusetts in particular but also the New York/New Jersey/Pennsylvania tri-state areas are very strong in healthcare startups. Obvious reasons include major population centers for access to a talented and experienced employee pool, large numbers of world-class research universities and medical centers, and close proximity to financial hubs.

Of course, other locations such as Minneapolis, the San Francisco Bay Area (including Silicon Valley), Southern California, and the Seattle Metro area have their drawing power as well. Some of the additional factors include lifestyle, proximity to the FDA and other government officials, and being part of an industry “cluster” (medical device in Minneapolis, biotech in the Bay Area for example).

Read more:

Silicon Valley doesn’t dominate when it comes to VC-backed healthcare exits.

Silicon Valley is Second to Massachusetts for Venture Capital-backed Healthcare Exits.

Price Increases, Not Demand, Have Caused the Massive Hike in U.S. Health Spending

image via wikipedia.org
Life expectancy compared to healthcare spending from 1970 to 2008, in the US and the next 19 most wealthy countries by total GDP (wikipedia.org)

In the USA, we continue to pay more and get less for our healthcare expenditures than any developed country on Earth. What hasn’t been clear is why that is the case in the complex American healthcare system. A paper in the latest edition of the Journal of the American Medical Association by researchers at Johns Hopkins University and elsewhere asserts that price increases and not demand have caused the massive hike in U.S. health spending over the past few decades.

The researchers used publicly available data to identify trends in health care from 1980 to 2011. They examined and analyzed the source and use of funds, patients and providers, and finally the value created by the expenditures and health outcomes.

image via blogs.wsj.com

The researchers found that US health care expenditures have doubled since 1980 as a percentage of US gross domestic product (GDP), to well over 1/6 of the total economy. Growth in healthcare spending has far outpaced that of other OECD countries. Most of the OECD countries have either some form of single payer healthcare or public option health insurance along with government-imposed price controls on healthcare components. The U.S., of course, has none of these.

The article notes that annual growth in the rate of healthcare spending has decreased since 1970, and especially since 2002. That’s typical of large entities – Google and Microsoft experienced the same effect as they grew and aged. The average healthcare spending growth rate, however, stands at 3% per year. The 3% average annual growth in spending is more than overall GDP growth and is more than the average growth in any other industry. Moreover, the share of the healthcare system funded by government increased significantly, from 31.1% in 1980 to 42.3% in 2011.

Of course, as has been noted in this blog and elsewhere, all of this spending has resulted in lower life expectancies at birth as well as lower survival rates for many chronic diseases compared to other developed countries. The conventional wisdom has been that soaring demand for healthcare and the needs of the increasing elderly population have been responsible for the increases in spending, along with “inefficiencies” and the ever popular “defensive medicine”. Not so, according to this analysis:

The findings from this analysis contradict several common assumptions. Since 2000, price (especially of hospital charges [+4.2%/y], professional services [3.6%/y], drugs and devices [+4.0%/y], and administrative costs [+5.6%/y]), not demand for services or aging of the population, produced 91% of cost increases; (2) personal out-of-pocket spending on insurance premiums and co-payments have declined from 23% to 11%; and (3) chronic illnesses account for 84% of costs overall among the entire population, not only of the elderly.

So hospital charges, physicians’ fees, drugs, medical devices, and administrative costs (medical insurance) have all risen faster over the past ten or so years than the overall rate of increase in spending for healthcare. Also note that chronic diseases among the general population, not just the elderly, account for a whopping 84% of all healthcare costs. In fact, the study found that chronic conditions in people younger than 65 account for 2/3 of all health care costs. It’s clear to me what’s driving the increases, and it’s not in keeping with conventional wisdom.

Additionally, despite what most people perceive to be ever-increasing co-pays, premiums, and deductibles, out-of-pocket spending decreased more than 50% (as a portion of total spending) over the same period. That means most people are disconnected from the economic realities of healthcare spending. No wonder we can’t decide how to fix things – we can’t even figure out exactly what’s broken!

The article also points out that three broad trends are responsible for much of the changes over the time period in the study: consolidation of providers reducing competition, an emphasis on information technology that has yet to produce tangible benefits, and empowerment of the patient that has not always produced positive outcomes (think of direct-to-consumer advertising of pharmaceuticals).

Takeaways: the authors summarized it very well: “a national conversation, guided by the best data and information, aimed at explicit understanding of choices, trade-offs, and expectations, using broader definitions of health and value, is needed.

The current controversies surrounding the Affordable Care Act are a good example. Something had to be done about health insurance reform. Obamacare is a place to start and more evolutionary than revolutionary.

Anything as massive as our healthcare system will always be highly politicized and change will be controversial. Whether we can hope to have a conversation informed by data and information remains to be seen.

Read more:

Soaring Prices, Not Demand, Behind Massive Hike in U.S. Health Spending – US News and World Report.

JAMA Network | JAMA | The Anatomy of Health Care in the United States.

The artificial hip fiasco

http://en.wikipedia.org/wiki/Hip_replacement
image via wikipedia.org

Designing medical devices is hard work. Designing artificial joints is even harder. The ongoing artificial hip fiasco in the medical device industry is proof.

Artificial joints such as hips and knees are incredible technologies. They can take people out of wheelchairs and turn them into active adults. The crippling pain and infirmity of arthritis and other degenerative diseases are banished, at least for a while.

The requirements for these high tech medical devices are challenging. They are implants, subjected to full immersion in bodily fluids and subject to all of the stresses and biochemical processes of the human body. Ideally, the implant should last the rest of the patient’s life although that seems to be one of the most challenging requirements.

Implants such as artificial joints that must move may be the most difficult of all to design and to last in the body. Materials selection is particularly challenging. Metal implants must be sufficiently hard and tough to take the loading and repetitive motion of a patient’s joint for years and years. Ceramic implants must be fracture-resistant to impact loads and shocks, say from a jump or a fall. Polymer implants must be low friction but must not break up under mechanical stress or chemical attack. And coatings must not migrate to other parts of the body. Of course, none of the materials in the implants can be toxic.

Unfortunately, there does not appear to be an ideal combination of materials for hip implants. Interestingly as well (and I’m sure of substantial frustration to device engineers), there does not appear to be a reliable in vitro or in vivo model with which to perform wear and life testing. If there were a robust model, none of these implants would have made it to market without major revisions in materials and/or design.

Implant designs have failed mechanically through fracture and friction and more insidiously, have raised the potential for cancer and autoimmune disorders through migration of metals, coatings, and polymers to other areas of the body. In many cases, patients have undergone additional implant surgeries as a result of the failures. And these are not trivial operations.

A report today in Fierce Medical Devices indicated that Johnson & Johnson has settled 7,500 lawsuits for its metal-on-metal hip implants for a whopping $4 billion. That’s an average of $300,000 per implant and is in addition to other lawsuits settled in October. Other lawsuits against J&J are still pending as well as legal exposure outside the U.S. J&J announced recently that it will exit the metal-on-metal and ceramic-on-metal implant markets in 2014. I’m guessing that the legal settlements wiped out any profits made over the years and is probably going to cost untold numbers of jobs.

J&J’s competitors have problems too. According the the Fierce Medical article, Biomet, Stryker, and others are facing similar liability situations with respect to metal-on-metal implants.

The market for these devices is large and increasing. Hip implants are one of the most frequent orthopedic surgeries. As the population of seniors in the U.S. and other developed countries continues to grow while the baby boom generation ages, demand for procedures that maintain active lifestyles will continue to increase.

Takeaways: The onus is on medical device engineers to create valid in vitro and in vivo preclinical models and to test exhaustively before releasing to manufacturing. Engineers and researchers must also identify biomaterials and designs that are truly biocompatible and able to meet the demanding requirements that these implants must satisfy.

Give the track record of implants, engineers and medical device executives can expect increased scrutiny and skepticism from regulatory agencies, investors, physicians, and patients and their families.

Of course, it also means that there is an incredible opportunity awaiting the company or engineer that can solve this intractable issue.

Read more:

Report: J&J settles most metal hip lawsuits in $4B-plus accord – FierceMedicalDevices.

More Artificial Hip Concerns – NYTimes.com.

Jumper Cables for Your Brain

http://graphics8.nytimes.com/images/2013/11/03/magazine/03brain1/mag-03brain-t_CA0-articleLarge.jpgA novel therapy that improves mental performance in healthy people is being called “jumper cables for your brain.” The scientific name for the therapy is transcranial direct-current stimulation, tDCS for short.

A similar yet very different treatment, electroconvulsive therapy (ECT), formerly called electroshock therapy, doesn’t have a positive image in most peoples’ minds. Popular culture including movies and TV has convinced most of us that it’s used to treat crazy people, usually with extremely undesirable outcomes, and that the people giving the treatment are either mad scientists or evil government agents.

ECT does have a place in modern neuroscience, however. It is often the last resort therapy for patients with intractable depression and other conditions that do not respond to drug treatments.

tDCS uses very low voltage and very little current to achieve its effect, less than 1% of the enegy used in ECT. The tDCS devices being studied today use a 9 volt battery for power. tDCS researchers have been using currents in the range of 300 to 500 microamps. In contrast, ECT uses much more current, about 2000 times as much. According to an article in Wikipedia, “Typically, the electrical stimulus used in ECT is about 800 milliamps…”

 Researchers have identified a myriad of benefits for the novel therapy. From the article in The New York Times:

Scientific papers published in leading peer-reviewed journals since 2005 have shown that tDCS can improve the speed or accuracy with which people perform [a computerized] attention-switching task. Other studies have found it can improve everything from working memory to long-term memory, math calculations, reading ability, solving difficult problems, piano playing, complex verbal thought, planning, visual memory, the ability to categorize, the capacity for insight, post-stroke paralysis and aphasia, chronic pain and even depression. Effects have been shown to last for weeks or months.

“tDCS will not make you superhuman, but it may allow you to work at your maximum capacity,” said Felipe Fregni, the Brazilian physician and neurophysiologist who runs Harvard’s Laboratory of Neuromodulation at the Spaulding Rehabilitation Hospital. “It helps you achieve your personal best level of functioning. Let’s say you didn’t sleep well the night before. Or perhaps you’re depressed, or you suffered a stroke. It helps your brain reach its peak performance.”

No one is really sure why the therapy works although there are theories. The brain is essentially a very complex electrochemical computer. Applying a weak electrical field to neurons while performing a task seems to make the neurons fire easier and to remember the task for some time. Unfortunately, researchers have not yet identified the specific mechanism that is responsible for the improvements. As a result, research funding has been sparse because peer reviewers for funding agencies in the U.S. government remain skeptical.

A number of companies are pursuing commercialization of tDCS technology and are engaged with the U.S. FDA on the regulatory approval process. ECT devices are categorized as Class III or pre-market approval (PMA). It remains to be seen if the new, lower power devices also fall into the PMA category. A less restrictive FDA classification would mean a greater market potential and benefits to ordinary healthy people who are looking for a little mental advantage. I would definitely consider trying one of these devices in exchange for a few of those mental benefits!

Takeaways: There are many processes and body functions that are not fully understood or characterized. When researchers continue to investigate these promising areas despite a lack of funding, it might mean that there is an opportunity for collaboration and eventual commercialization.

Of course, something like tDCS, “brain enhancement technology” comes with risks. What might be the long term effect of the therapy on the brain? What about effects on children and adolescents?

Finally, it will be imperative to separate the new technology from the stigma of electroconvulsive therapy in order to appeal to healthy consumers.

Read more:

Jumper Cables for the Mind | New York Times Magazine

GLNT gets another patent to treat Parkinson’s for transcranial direct current stimulation during sleep.

Renal Denervation – the next big thing?

blood pressure checkIt seems like every big medical device company is working on a technology for renal denervation to treat high blood pressure.

Development and market availability of a therapy for hypertension (high blood pressure) is a big deal. Here are some facts about hypertension from the World Heart Federation:

  • Globally, nearly one billion people have high blood pressure (hypertension); of these, two-thirds are in developing countries.
  • Hypertension is one of the most important causes of premature death worldwide and the problem is growing; in 2025, an estimated 1.56 billion adults will be living with hypertension.
  • Hypertension is the leading cause of cardiovascular disease worldwide.
  • People with hypertension are more likely to develop complications of diabetes.

Some additional facts about hypertension in the USA from the Centers for Disease Control:

  • 67 million American adults (31%) have high blood pressure—that’s 1 in every 3 American adults.
  • 69% of people who have a first heart attack, 77% of people who have a first stroke, and 74% of people with chronic heart failure have high blood pressure. High blood pressure is also a major risk factor for kidney disease.
  • More than 348,000 American deaths in 2009 included high blood pressure as a primary or contributing cause.
  • High blood pressure costs the nation $47.5 billion annually in direct medical expenses and$3.5 billion each year in lost productivity.
  • About half (47%) of people with high blood pressure have their condition under control.

Hypertension is treated currently with drugs of course. According to a report from ADS Reports, the global market for antihypertensive drugs was $29.9 billion in 2010 and is projected to reach $33 billion in 2017. That’s a huge target for interventional therapy.

I wrote about Bellevue, WA-based Kona Medical a couple of weeks ago receiving a $10 million investment specifically earmarked for their market entry into China, obviously one of the biggest potential markets.

Kona recently announced interim results from two ongoing clinical trials. It reported an average systolic blood pressure reduction of 29 mmHg at 6 months in their first study and a three-month drop of 19.4 mmHg in the second study using a dosing pattern that reduced therapy time from 13 to three minutes.

Kona’s results are significant because its therapy is completely noninvasive. It uses high intensity focused ultrasound on the surface of the skin to deliver energy to ablate the renal nerves.

Other companies developing renal denervation technologies include St. Jude Medical, Boston Scientific, and Medtronic. Each has chosen a different energy modality to deliver the therapy.

MedCityNews reports that St. Jude is using a multi-electrode catheter to deliver electrical energy to the renal nerve sites. The company reported results from a clinical study: at 18 months, 77 percent of the 46 patients treated with St. Jude’s technology, the EnligHTN system, had responded to therapy. St. Jude’s system total ablation time is about four minutes, according to a company statement.

The Boston Scientific therapy uses bipolar (electrical) energy to deliver therapy. After 12 months, the company reported a “clinically-meaningful decrease in office systolic blood pressure” in 85 percent of the 139 patients treated. The Boston Scientific therapy requires a brief 30-second treatment time.

Medtronic seems to have a head start in the market. In early 2011, it finalized its purchase of Ardian, a Silicon Valley startup that was working on a novel therapy for hypertension since 2003. The Medtronic RDN system therapy uses radio frequency energy delivered via a catheter to the renal arteries/nerves. Medtronic’s Symplicity renal denervation system has a CE mark and is commercially available outside the U.S. Medtronic has a number of completed and ongoing clinical studies, all of which have resulted in conclusions that the therapy is safe and effective.

Takeaways: New markets are one area where startups can compete on a level playing field with huge, multinational companies. They can be more nimble, take more risks, and can pivot when things don’t go according to plan. In the case of renal denervation, Kona seems to have a decided advantage with its noninvasive technology and treatment. Of course, Medtronic has a years-long head start and we all know the “best” technology doesn’t always prevail, right?

Read more:

Two top medical device companies announce promising renal denervation tech results – MedCity News.

Kona notches solid results for novel renal denervation tech – FierceMedicalDevices.

 

 

How many calories were in that cheeseburger?

CheeseburgerA Canadian startup has developed technology that may disrupt the mobile health tracking market. Airo Health is commercializing a nutrition tracker that can passively detect and inform the wearer exactly how many calories were consumed in the user’s last meal.

The nutrition tracker uses a light emitter and detector in a wristband and fairly sophisticated software in a smartphone app to measure metabolites in the bloodstream. The metabolites are released during and after the user’s meal.

The Airo device also detects the user’s heartbeat and uses that information to assess activity and fitness levels. All of this analysis starts with sensors in a small, unobtrusive wristband.

According to the company co-founder, Abhilash Jayakumar, Airo received US$81,400 in seed funding from the Canadian federal government and the University of Waterloo. The company says it is planning a commercial launch in the fall of 2014 – that’s just a year or so away. Airo has not yet built production prototypes, so their launch date is most likely optimistic.

In an interview with MobiHealthNews, Jayakumar said the sensor bracelet is detecting accurate calorie intakes about 80% of the time. That’s an exciting development, but the lead times for consumer electronics make a full commercial launch in a year improbable at best.

The fledgling startup has done impressive work with very little funding. They are taking digital health and the “quantified self” movement to a new level. Competitors are no doubt already starting development of their own passive calorie tracking technology. What would really be disruptive is an app to make you not eat that cheeseburger in the first place!

Takeaways: Mobile health sensors and applications are getting progressively more sophisticated. It remains to be seen if there is a sizeable market for these devices and apps but they are capable of measuring things in real time that were previously available only in a doctor’s office by appointment. The commercial availability of a Star Trek-like Tricorder device may be only a few years away.

Most of the personal fitness devices are targeted at healthy people. There is a large opportunity as well in monitoring people with chronic diseases or those recovering from surgery.

Read more:

AIRO ups the ante with passive nutrition tracking

 

Cheney’s Defibrillator: Life Imitates Art, or Vice Versa?

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image via nytimes.com

Former U.S. Vice President Dick Cheney revealed in an interview with the CBS news magazine program 60 Minutes that he had his implantable cardioverter defibrillator (ICD) modified after implantation to turn off the wireless remote programming feature.

 

The skeptic in me wants to believe that Mr. Cheney was just drumming up publicity on his nationwide press tour to promote his latest book. Recent events in cyberspace, however, including the news that the U.S. National Security Agency has the ability to eavesdrop on the mobile phone conversations of the leaders of other countries has caused my to revise my beliefs. There are untold numbers of hackers around the world, all looking for a way to disrupt the status quo. So there is no shortage of motives for someone to try to hack the VP’s defibrillator.

[SPOILER ALERT] In the second season of the hit Showtime cable TV series Homeland (I’m a big fan, by the way), Nicholas Brody, the ex-prisoner-of-war/Marine Sergeant/Congressman/semi-terrorist cooperates with a Bin Laden-like figure to assassinate the Cheney-like Vice President by remotely manipulating his implanted defibrillator.

After Cheney made his revelation, there was much discussion about whether such an action was technically possible. The jury seems to be divided. It’s at least plausible enough to be the major plot point of Season 2 of Homeland. And apparently the possibility of hacker bad guys doing harm was the motivation for Cheney to deactivate the function in his device.

In the Homeland episode, Brody had to find a device code unique to the Vice President, then relay that to a remote hacker. The hacker executed some code that disrupted the device. The audience was not informed as to exactly how the bad code made its way to the implanted device. In real life, experts say that a programmer device must be in close proximity to the patient in order to wirelessly access the defibrillator. Apparently, Vice President Cheney wasn’t taking any chances!

Mr. Cheney had his defibrillator modified in 2007 while he was still in office. He has since undergone a heart transplant and presumably had the defibrillator removed.

Takeaways: As medical devices become increasingly complicated, the opportunities for negative outcomes – accidental and malicious – increase proportionally. Notwithstanding the dangers to the patient, this sort of negative publicity can have devastating consequences for a company, particularly an early stage company.

An ICD with wireless remote access obviously has the power to kill but other devices can be just as deadly. Be sure to conduct a thorough Failure Mode and Effects Analysis (FMEA) during the development process. Seriously consider involving computer experts, including security consultants, as additional resources. You should also consult key opinion leader physicians and patient groups to get objective third party viewpoints about risks and mitigations.

Lastly, have a disaster plan in effect for unthinkable scenarios like the one in Homeland. And make sure the CEO reviews and approves the plan.

Read more: 

Of Fact, Fiction and Cheney’s Defibrillator | The New York Times

Homeland | Showtime

“Dick Cheney’s Heart” |60 Minutes 

 

MedTech Startup Red Flags to Watch Out For and to Guard Against

Red flagIn an amusing series of articles and blog posts last week, biotech veterans and observers traded their favorite red flags that investors must watch for when considering biotech investment.

Most of these caveats also apply to medical device companies. On the flip side, startup CEOs should be forewarned and forearmed to not make the same mistakes when pitching and/or structuring their companies. They are on to you…

Here are a few of my favorite caveats:

[from Luke Timmerman at Xconomy]
  • Watch out for weak science or results that can’t be reproduced by third party researchers.
  • The company story is too complicated and can’t be reduced to an elevator pitch.
  • “There is no competition.”
  • No plan to demonstrate outcomes or show clinical and financial benefits to the healthcare system.
  • “Rent-a-luminaries” make up the Medical/Clinical/Scientific Advisory Boards.
[from David Sable, physician and venture capitalist]
  • CEO is clueless around investors
  • CEO is inflexible and won’t deviate from the rehearsed pitch
[from Christopher Henney, co-founder of Immunex, Icos, and Dendreon]
  • Too many VCs on the board
  • Family members in key management or board positions

I’m sure these three veterans have seen and/or interviewed dozens, if not hundreds of startup CEOs and their pitches.

Takeaways: Simple is best. Use a template to develop your pitch – they are easily found. Don’t deviate (at least not too much) from standard practices for startups in your industry segment and in your geographic area. It’s easier than ever to get a negative reputation. You may be able to get past one round with a sketchy pitch or objectionable governance. The stakes keep going up, however, and you risk everything by not being able to secure financing all the way to market launch. Do yourself and all of your stakeholders a huge favor and address the red flags before the investors see them.

Read more:

21 Red Flags to Watch for in a Biotech Company | Xconomy.

Six Red Flags to Watch Out For in a Biotech, From Dendreon Co-Founder Chris Henney | Xconomy.

A few more biotech red flags (h/t @ldtimmerman) – David Sable .

Riboflavin: not just for breakfast anymore

image via wikipedia

Riboflavin, also known as vitamin B2, is a micronutrient and food additive commonly found in breakfast cereals and other processed foods. It’s yellow or yellowish orange in color and is sometimes used as a food coloring. Now it’s being researched for use as a biocompatible “ink” ingredient for 3D printed implants and other structures to be placed in the human body.

3D printing has enormous potential to enable mass customization of medical products. Think of having an implant crafted to fit you and only you. How about 3D printing structures on demand rather than ordering from a manufacturer?

Conformis, an othopedic medical device company, makes individualized metal joint implants from imaging studies using a milling machine. The milling machine creates a custom-made prosthesis for knee replacement surgery. Patients have to wait about 7 weeks for their prosthesis to be made, however. 3D printing promises to be much faster since the machines are small and relatively inexpensive.

One issue has been the biological incompatibility of most of the polymers used in 3D printing. In typical use, a spool of polymer “ink” in the form of a long thread is fed through a 3D printer nozzle. Tiny dots of polymer are melted and laid down on a two dimensional surface and built up vertically until the piece being manufactured is complete.

Now according to Fierce Medical Devices, researchers at North Carolina State University, the University of North Carolina at Chapel Hill, and Laser Zentrum Hannover have used riboflavin as a nontoxic polymerization agent to 3D print structures that could one day become implantable medical devices.

While there is much more research and development to be done before this becomes a practical commercial technique, the technology is possible today. Next step is for a hungry startup or tech-savvy medical device company to commercialize this work. Perhaps when you have a surgery performed in 5-10 years, there will be a 3D printer in the next room churning out an implant “just for you.”

Takeaways: trends like mass customization and technologies like 3D printing are converging. Even in the relatively slow-moving healthcare industry with FDA regulation, there is a need for new, different, better ways of treating patients. 3D printed devices are yet another disruptive technology. At first, they will be crude and not very useful. As time goes on and the technologies evolve, however, they will have a significant effect.

Read more:

Study Finds Natural Compound Can Be Used for 3-D Printing of Medical Implants – FierceMedicalDevices.

Vitamin B2 may help build a safer 3-D medical implant – FierceMedicalDevices 

Knee Replacement, Knee Pain, Customized Knee | ConforMIS.

 Riboflavin – Wikipedia, the free encyclopedia.

 

In search of a better mousetrap…EHR system, that is

http://www.mddionline.com/sites/www.mddionline.com/files/image/01310/ehrdoc.jpg
image via mddionline.com

There has been enormous emphasis in the past few years on getting physicians to adopt electronic health records (EHRs). The HITECH Act (Health Information Technology for Economic and Clinical Health Act) part of the American Recovery and Reinvestment Act of 2008, established financial incentives for medical practices and hospitals to adopt EHRs that met specific “meaningful use” criteria. According to a recent survey, physicians are dissatisfied with their EHRs and are looking to switch.

The HITECH Act was an early effort of the Obama administration to use information technology to begin to rein in out of control healthcare costs by using data to make more informed decisions.

The Department of Health and Human Services (HHS) announced recently it has exceeded its goal of 50% of doctor offices and 80% of eligible hospitals having electronic health records (EHRs) by the end of 2013.

There are thousands of EHR products from hundreds of vendors: 3721 EHR products for ambulatory care and 1282 EHR products for inpatient care listed on the HealthIT.gov website as certified EHR solutions. Many entered the field opportunistically when it became apparent that large numbers of physicians, medical practices, and hospitals would be purchasing EHRs in response to the HITECH Act incentives.

According to research conducted by EHR software reviewer Software Advice, it appears that many physicians are unhappy with their new EHR systems: 31.2%  of medical providers are replacing their EHRs today, compared to 21.0% in 2012. That’s a 48.6 percent increase. The main reason for replacement? More than 60% of physicians reported dissatisfaction with their current system. There are multiple reasons for their unhappiness: 26% said their EHR lacks key product features while 14% said it was too cumbersome to use and 12% said their current EHR was too costly.

Adopting a new EHR is a big investment in capital and resources. The switching costs are quite high because transitioning to a new system is complicated and time-consuming.

Takeaways: There remains a significant opportunity for an EHR developer to capture revenue and market share given the high levels of dissatisfaction with current solutions. Companies already in the market should reassess their offerings and work with customers to improve usability and user interfaces, to improve connectivity with other systems, and to provide the features that users need. Startups should try to differentiate their products in the same ways.

It all starts with understanding customer requirements.

Read more:

Why Physicians are Ditching Your EHR System | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

The Impact of the HITECH Act on EHR Implementations IndustryView | 2013.

HITECH Act – the Health Information Technology Act | Policy Researchers & Implementers | HealthIT.gov.

Hyping a digital health startup

http://graphics8.nytimes.com/images/2013/10/03/technology/bits03-healthtap/bits03-healthtap-tmagArticle.jpg
image via NY Times digital blog

HealthTap is a digital health app and website. It’s a useful way to get health and fitness information that is tailored to your interests. You can even get your specific questions answered by medical experts. I use it myself. In an effort to attract attention and even more users, however, HealthTap appears to have hyped or at least exaggerated its success.

HealthTap works by recruiting physicians (more than 50,000 participate) to answer questions posed by subscribers for free. The subscribers do not pay for the service. I’m not quite sure what their business model is, actually. The rationale for doctors to participate is that the physicians will be recognized (“thanked” in HealthTap parlance), their online reputation will be enhanced, and real life patients will come to them as a result.

After an interaction where a user asks a question and receives a response from a doctor, HealthTap asks the user to thank the doctor or HealthTap and prompts the user for more information. The extra information apparently includes responding with a click to a question like, “This answer saved my life.”

HealthTap keeps a record of all of the positive responses to the “saved my life” prompt and issued a press release when the tally got to 10,000. Nothing wrong with any of that, except there is no way to prove if the app/website/reply really did save a particular life.

As one physician commenter in the New York times article said, “after my third “This saved my life,” I investigated. It was for recommending antifungals for jock itch. Nice pat on the back, but lifesaving? Not!”

Although some of the the lifesaving claims may be legitimate, the touting of “10,000 lives saved so far” on HealthTap’s website seems vaguely desperate and hyped – not what I expect from a serious medical app.

HealthTap also provides a disclaimer on its website and app: “HealthTap does not provide medical advice, diagnosis or treatment.” The disclaimer is obviously there to avoid being treated as an FDA-regulated medical application. Of course, the FDA (and malpractice attorneys) will have the final say on that status. I don’t know how asking a specific medical question and having an answer provided by a physician avoids becoming medical advice.

HealthTap is competing with big players in the health information field. WebMD is the 800 pound gorilla and granddaddy of health information sites. I suppose the executives at HealthTap feel they have to be aggressive in order to create awareness and get users and doctors to take notice. Unfortunately, their real utility and service has been tainted by excessive marketing, in my opinion.

HealthTap appears to be a well-funded Silicon Valley startup. Its investors include luminaries like Eric Schmidt, Chairman of Google, Vinod Khosla, Esther Dyson, and more.

Postscript:  I removed the HealthTap app from my mobile phone because I thought the notifications it provided were too frequent and intrusive. I still receive an email every few days on the subjects I told HealthTap were important to me.

Takeaways: Yes, you need to be aggressive in marketing your startup. There is a lot of competition for mind share among similar startups all over the world, no matter how unique you believe your company/product/service to be.

No, you should not make up or exaggerate claims about your product. Perhaps it can be excused as puffery or marketing hype but healthcare companies are held to a higher standard than consumer products like beer or body wash.

Read more:

An App That Saved 10,000 Lives – NYTimes.com.

HealthTap.com

High tech medical device maker focuses on…China?

http://axialexchange.com/images/articles/Hypertension-Nutrition-Counseling.jpg
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

Prosthetic Hands May Soon Gain the Sense of Touch

Someday in the not too distant future, amputees with prosthetic hands may gain the sense of touch.
image via discovery.com

This research being conducted at the University of Chicago could be a major advance in robotics and prosthetic technology. Amputees today have no way to “feel” their prosthesis except to watch it as it moves. Someday in the not too distant future, amputees with prosthetic hands may gain the sense of touch.

Using monkeys, the researchers first identified specific areas of the brain that corresponded with their fingers. Then the scientists connected electronic strain gages in the prosthetic hand to those specific areas in the brain. Using software, the scientists were able to successfully identify a “contact event” at the prosthetic hand from the monkey’s brain and to create a sense of pressure.

An important next step would be to control the prosthetic hand with the brain and to be able to apply force with feedback so the brain can sense what and with how much force the hand is touching.

The research work was partially funded by the U.S. government’s Defense Advanced Research Projects Agency (DARPA). DARPA is well-known for sponsoring high risk, long term research activity. The wars in Iraq and Afghanistan have resulted in large numbers of U.S. military amputees, creating an ongoing and increasing need for improved prosthetic technologies.

Takeaways: There are non-obvious sources of funding early technology development work. DARPA is a great example but there are plenty of others. In the government, NIH, CDC, and NSF have ongoing research grant programs. There are other military programs as well, for example, TATRC. Yes, there is competition for these grant dollars so you need to make a strong case for the technology and the problems it solves. There is also the possibility that the researchers have no intention of commercializing their technology. In that case, it is possible for a company to license and commercialize the technology on its own.

        Read more: How to Give Prosthetic Hands Touch Sense : Discovery News.

Teeny Tiny Pacemaker Fits Inside the Heart | IEEE Spectrum

http://spectrum.ieee.org/img/rsz_image_nanostim-euro_size_comparison-2-1381851816207.jpg
image via IEEE Spectrum

This leadless pacemaker is incredible technology. Not only did the company, Nanostim, reduce the size of the pacemaker by about 90% but it eliminated the often troublesome leads that are required in traditional pacemakers.

 

 

The stealthy company, based in the San Francisco Bay Area, was recently acquired by St. Jude Medical for $123-200 million (depending on milestones).

The new pacemaker has received European regulatory clearance but not FDA approval yet although it has received an FDA Investigational Device Exemption (IDE). A pivotal clinical trial is expected to begin soon in the U.S. while sales will begin in selected European countries very soon.

The device, about as big as a AAA battery, is implanted directly into the interior of the right ventricle of the heart. Electrodes on the exterior of the pacemaker provide electrical stimulation to the heart muscle. The device is implanted via a catheter inserted in the femoral artery. Removal occurs via the same route, only in reverse. Battery life is 9-13 years. The device has wireless communication capability so it can be programmed remotely.

Given the negative publicity and adverse events involving pacemaker lead fractures over the past years, leadless pacemakers appear to be an idea whose time has arrived. Of course, the idea has occurred to more than one inventor.

Here’s Medtronic’s take on the concept:

http://www.qmed.com/files/ck_images/large_Medtronic_leadless%20pacemaker.jpgMedtronic’s product concept is much smaller than a penny. Medtronic announced the device three years ago and said it would take 3-5 years before beginning human implants. They also said that the product concept included the ability to be programmed via a smartphone application.

 

image via qmed.com

 

 

Critics have pointed out that the Nanostim product and Medtronic device concept provide only single chamber pacing and are not rate-responsive – the most basic form of pacemaker.

It seems to me that the Nanostim device is classic disruptive technology. It provides a single function compared to the elaborate features of traditional pacemakers. It’s probably priced at a fraction of the price of complex pacemakers. As with other disruptive technologies, competitors ignore new entrants with low cost/performance at their peril. Given sufficient demand, I’m sure clinicians and engineers will figure out ways to make these “simple” devices perform all the functions of their bigger, older “brothers”.

On the positive side, no surgery is needed for implantation – a big plus with patients. And there are no potentially problematic leads to route. Other benefits from the patient’s standpoint are no activity restrictions, no surgical “pocket” for potential infections and no telltale bulge of the device under the collarbone. This could be one of those disruptive technologies where patient demand changes market dynamics.

The implantable pacemaker/defibrillator market is large, with 4 million active implants and 700,000 new implants occurring each year worldwide.

Takeaways: A leadless pacemaker is an obvious innovation to anyone who has worked in the cardiac stimulation field. Nanostim took the concept and ran with it while Medtronic took its time with what might be a technically superior solution.

While achieving lasting market share is more important than being first to market, Nanostim may be able to achieve both. Because they negotiated a strategic partnership with St. Jude Medical while the device was still in development, the company gained access to substantial resources, enhanced its credibility, and was able to reduce risk for investors by showing a clear path to exit. Nanostim also pursued the faster CE marking before FDA approval so that it could start selling the device sooner.

Read more:

Teeny Tiny Pacemaker Fits Inside the Heart – IEEE Spectrum.

News Release | Investor Relations | St. Jude Medical.

Weighing the Benefits of Medtronic’s Leadless Pacemaker | Qmed.

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.

Mobile Health: Red Hot Market Opportunity

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Image from Business Week

Call it mobile health, digital health, eHealth, or”Consumer Health Technology” as Forbes does. By any name the emerging market sector is expanding rapidly and attracting lots of attention, entrepreneurs, and investors.

As I’ve previously written, the time for mobile health has arrived. We carry in our pockets mobile devices with more computing power than the Apollo 11 astronauts had when they landed on the moon. The devices themselves are bristling with sensors and wireless radios. Typical smartphones have temperature sensors, accelerometers, gyros, GPS sensors, ambient light sensors, microphones, touch sensors, and high resolution still and video cameras. They can communicate via Bluetooth, NFC, WiFi, and a number of cellular communications protocols. On-board storage can hold thousands of books and dozens of movies. Connected cloud storage provides effectively infinite storage capacity.

Innovative engineers are responsible for an ongoing explosion of single and multi-purpose external, wearable sensors that communicate wirelessly with smartphones. Smartphone manufacturers are increasingly integrating fitness tracking capabilities into their devices. For example, Apple’s latest iPhone included the M7 chip that can track user activities while minimally affecting battery life.

Application developers are creating sophisticated fitness and health tracking software using the aforementioned technologies. Applications are increasingly passive rather than active, meaning the user does not need to enter data. The apps and sensors detect activities and are able to collect activity data in the background. Others are working to connect the consumer devices and sensors with electronic medical and health records “in the cloud” for a variety of purposes.

There are two main segments in mobile health, regulated and unregulated applications. In the near term, there is tremendous growth and potential in the unregulated space because it’s a quick way to get to market. The consumer markets are very large but price-sensitive.

Of course, your mobile health startup will not be alone when you get there. Big players are either already in the market or they are entering rapidly. Nike, Weight Watchers, Aetna, Garmin, Apple, Samsung, and others are already battling to be the mobile health brand of choice. There are new entrants as well. Jawbone, BodyMedia, FitLinxx, and Fitbit are relatively new companies with trendy, stylish wearable devices.

Huffington Post reported that Berg Insight said 8.3 million wearables were sold last year, up from only 3.1 million in 2011. By 2017, that number is set to reach 64 million. mobihealthnews projects 13 million fitness-related wearables will be purchased just for corporate wellness plans by 2018.

For FDA-regulated devices and applications, the initial market is smaller but the potential is just as great. Regulatory clearances and approvals provide some barriers to entry but will ultimately serve to give early market entrants a head start and not much more. These devices promise to do much more than fitness tracking. They have the potential to monitor chronic diseases and overall health, to provide alerts for significant health-related events, to collect data for clinician use, and to provide specific health-related guidance using user-specific data.

In addition to FDA scrutiny, another significant issue is compliance with HIPAA laws regarding patient privacy. With what amounts to 24×7 data collection and connectivity, there will be enormous amounts of user-specific data in devices and in cloud databases. Companies will have to address data security preemptively or risk losing user trust.

I believe the benefits to the user and to the healthcare system far outweigh the risks and costs associated with these devices and applications.

For healthy individuals, mobile health can provide real time feedback into activities, fitness levels, sleep patterns, even diet information like nutrient balance and calorie consumption.

For aging individuals or those with chronic diseases, mobile health can monitor vital signs, check disease-specific conditions, provide reminders to take medications or perform physical therapy exercises, and send updates and alerts to family members and physicians.

For physicians, mobile health can provide another way to communicate with patients and can also check compliance with recommendations and prescriptions.

For the healthcare system, mobile health can contribute to healthcare Big Data, making it easier for researchers, drug and device companies, and policy makers to track, measure, and assess the health and activities of large populations.

Takeaways: Mobile health is a once-in-a-lifetime opportunity for entrepreneurs. If you have an idea, now is the time to commercialize it. If you are a software developer, find hardware partners. Likewise, if you have developed a sensor, team up with app developers to make a complete package. If you have an unformed idea, try to shape it around mobile health. Investors have taken notice. Rock Health is soliciting applications for funding at a variety of levels.

Read more:

Thinking of Starting a Business? Check Out Consumer Health Technology | Inc.com.

13M wearables to be used in corporate wellness plans by 2018 | mobihealthnews.

How highly sensitive, wearable thermometers could change digital health | mobihealthnews.

What health startups think of Apple’s new motion tracking chip | mobihealthnews.

Moves comes to Android, not afraid of Apple’s M7 | mobihealthnews.

Healthcare Startups Can Save Lives — And Rake in Big Money | Wired Business | Wired.com.

Digital health: what’s the business model?

image via svtechtalk.com

Connecting patients with each other, with clinicians and other providers, with insurers, and with healthcare companies via mobile apps on tablets and smartphones and on the web seems like a great idea. The unanswered question is can you make money doing it?

Articles have been written about how the Internet has enabled patients with chronic diseases and their families to connect with others with the same condition. The patients share stories about symptoms, treatment successes and failures, and try to support each other in what can be emotionally draining circumstances. That ability to connect with a vast community all over the country, perhaps even the world, was virtually impossible before the advent of the World Wide Web.

Other companies are trying to connect healthcare providers with their patients. Some are offering to connect patients with providers for online visits for a fee, effectively commoditizing the doctor-patient relationship.

Google famously shut its attempt at a personal health record site, Google Health, last year. Google Health required a lot of effort to use as it didn’t automatically connect with consumers’ Electronic Medical Records. That shortcoming left a small market of people who were OK with manually entering all of their health data. And that wasn’t a big enough user base for Google.

Healthcare companies, especially those with a B2C business model, are desperate to maintain relationships with consumers.

Providing apps and cloud storage can be costly. It’s not clear who will pay for the digital services.

Doctors and other providers have been incentivized into adopting EMR technology. It’s unlikely that they will invest in additional information technology for their patients.

It seems that consumers and patients love the free stuff. A few may be willing to pay for some services but many have grown to expect that someone else will foot the bill. And most non-healthcare smartphone and tablet apps are either free or at most a few dollars. That sets a low ceiling for any new health-related apps. It’s a tough way to grow a sizable healthcare or medical device company.

People have grown accustomed to paying almost nothing for their healthcare. Sure, there are co-pays and deductibles that have increased significantly in recent years but those are a small fraction of the cost of care. It will be a challenge to change this expectation for health-related apps and services.

In-app ads are probably not the way to go. If the ads are for healthcare-related items like prescription drugs, the patients will lose trust in the service. If the ads are specifically targeted to the patient’s medical condition, the service will be accused of spying on the patient.

Perhaps healthcare companies will regard the cost of developing and providing apps as a marketing expense.

It’s an interesting dilemma. Free apps and services will draw large numbers of users. But monetizing the app via ads turns off many people. Charging for the services drastically reduces the potential market. Absorbing the expense internally places the app/service on the list of things to be cut when the company’s overall business stagnates or declines.

Takeaways: There is enormous interest in apps and services for mobile health. If you are developing products or services in this space, be sure you know how you are going to make money. It’s not a market if you can’t monetize it.

The traditional medical device business model doesn’t seem to apply here. If you procure funding, develop a product, then show economic or health benefits, who do you sell to?

Perhaps partnering with noncompeting companies interested in the same population is a creative way around the problem. If you can deliver large numbers of consumers/patients via a sponsored app to a partner like a big pharmaceutical company, you may be able to avoid some of the pitfalls and objections.

It’s prudent to put a lot of effort now into developing a viable business model. After all, when you start pitching to investors, one of the first questions asked will be, “how do you plan to make money?”

Read more:

Will Any Health App Ever Really Succeed? | MIT Technology Review

Patients share tips online for managing diseases | SFGate.

Improving Patient Engagement Equal Parts Technology, Empathy | Computerworld

Patients Eager To Access Data Including Medical Imaging Through Online Portals (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

A Cautionary Tale: Biotech firm Atossa recalls its only product | The Seattle Times

Atossa Genetics is an early stage biotechnology company in Seattle developing breast cancer diagnostic tests and medical devices using molecular diagnostic technology. The publicly traded company ran afoul of FDA regulations earlier this year and last week announced a voluntary recall of its products, causing its stock to tank.

The company bills itself as “the breast health company (TM).” Atossa is small, with only ten full-time employees (at least five of whom are senior management executives) according to Yahoo Finance.

Here’s a timeline of company events:

  • November 8, 2012 Atossa Genetics, Inc. Announces Initial Public Offering (NASDAQ exchange, IPO value $4 million). That’s not a typo. It really was $4 million, 800,000 shares at $5 per share.
  • February 21, 2013 Atossa Genetics, Inc. received a Warning Letter from the FDA regarding its Mammary Aspirate Specimen Cytology Test (MASCT) System and MASCT System Collection Test. From the company’s press release:

“The FDA alleges in the Letter that following 510(k) clearance the Company changed the System in a manner that requires submission of an additional 510(k) notification to the FDA.”

  • March – September 2013 Atossa Genetics Inc. continues marketing its products, announcing numerous distribution and partnering agreements as well as supporting women’s health events.
  • September 18, 2013 The company’s stock closes up almost 21% in one day at $6.00 on volume of more than 8.4 million shares traded when it announces a distribution agreement with medical distributor McKesson.
  • October 4, 2013 Atossa Genetics Inc. initiated a voluntary recall to remove the ForeCYTE Breast Health Test and the Mammary Aspiration Specimen Cytology Test (MASCT) device from the market. This voluntary recall includes the MASCT System Kit and Patient Sample Kit.
  • October 7, 2013 Atossa Genetics Inc. stock opens at $5.32 and quickly drops to $2.66 (down 50%) on the news of the voluntary recall. The stock closed today at $2.45, an all-time low.
  • October 7-8, 2013 At least six law firms have announced initiation of shareholder lawsuits in the aftermath of the recall.

Apparently, the company and the FDA disagreed on whether a new 510(k) was required after the company changed the Instructions for Use (IFU) on its product. The company seems to have decided to continue marketing without submitting a new 510(k). What happened next is unclear but the “voluntary” recall ensued.

The company told The Seattle Times that it currently has “sufficient cash for the next 8-12 months of operations without raising additional capital,” though it cautioned that the cost of the recall and other associated expenses is not yet known. Sales revenues were about half a million dollars for the first half of 2013. Atossa reported a $2.2 million loss for the same period.

According to The Seattle Times, Atossa is continuing to develop other diagnostic tests but “will be reassessing the regulatory status of these products … in light of our recent experience,” said CEO Quay. Seems like a prudent action given their recent history…

Takeaways: Do not disregard the FDA. They have the power to shut down your company. If you have a fundamental disagreement with FDA, hire a regulatory consultant and attorney and take their advice.

Make sure you have people with experience in commercializing medical devices, especially regulatory affairs, on your executive team and board of directors.

Think carefully before deciding that an IPO is your best financing option. There are very large fees to be paid and the reporting requirements (Sarbanes-Oxley, etc.) are much more revealing – and onerous – than anything required if you remain private and use VCs or angel investors as your sources of capital.

As the article points out, there are plenty of attorneys waiting to represent disgruntled shareholders. Perhaps you can prevail against all of this adversity but think of the opportunity costs in lost time and cash spent on lawyers and regulatory revisions instead of product development or marketing.

Read more: Biotech firm Atossa recalls its only product | Business & Technology | The Seattle Times.

Robotic surgery and Intuitive Surgical – justifiable targets or targets of envy?

http://mobile.bloomberg.com/image/index/pKISbwVuPwu-CpydsHPB-_ZzUeF8YNn3pSP_hdYcB-jmbFsMemtmA2YRxe7mpv9Ysm4SPHQUfdFCOkPclMKfZ9CUybeuQ86QqPvbWMC5B-eh3lqkPqkgukhgoIa-eGsGCD4Qr_KDqIxEgIvT52jCFi-wMjcy7J1OELQFhliwvoYa7eu81HQi3QHgaQ**Media attention on Intuitive Surgical is increasing. The Sunnyvale, California company is attracting much attention for its aggressive marketing and sales tactics. It’s also being scrutinized for what some critics say is an increased incidence of patient injuries during surgical use of the da Vinci System.

I’ve written about Intuitive Surgical in a previous blog post. Their products are very good and their marketing is stellar, perhaps too good if that’s possible. The ongoing controversies are whether the healthcare market needs as much robotic surgery as it is getting right now and whether inexperienced users and inappropriate use of the technology are responsible for increasing patient injuries or even death.

Intuitive has played the market situation perfectly as noted in the Bloomberg article. Their sales reps use da Vinci Systems to instill greed in hospital administrators by asserting that the hospital can increase market share by offering robotic surgery. Worse, they create fear by saying that other hospitals will increase their market share at the expense of the robot-deficient medical center.

Intuitive even heightens competition among surgeons in an effort to justify demand for additional installations. The surgeons are powerless to stop the marketing machine. One surgeon admitted that if he does not offer robotic surgery, his colleagues will, and he will lose patients to them.

One interesting, even frightening, item from the Bloomberg article is that many consumers, i.e. prospective patients, believe that the system is controlled by robots. In their minds, that’s what gives da Vinci a competitive advantage. So…low information consumers are heavily influencing  a market situation that affects everyone.

The MassDevice article highlights an ongoing dispute between Intuitive Surgical and analysts at hedge fund Citron Research. Citron alleges that adverse surgical events associated with the da Vinci System and reported through the FDA adverse event reporting system indicate a growing problem with injuries caused by the da Vinci System. Intuitive counters with its own analysis, saying that FDA reporting is unreliable and not suitable for time-based analysis. It further states that surgeons should rely on peer-based reviews before making decisions about the technology. From the article:

“”In the 1st 8 months of 2013, 2332 Adverse Event records were posted – compare to 4603 records posted in the entire 12 year period since the 1st Adverse Event tracking for da Vinci  appeared in MAUDE in 2000,” Citron wrote. “It is the opinion of Citron that the only reason there is not a national outcry is because the da Vinci robot has yet to kill or injure ‘the right person’ – like the next of kin of a congress member or a celebrity.”

Intuitive stock closed at $389.16 today, off 33.5% from its 52 week high.

Takeaways: If you plan to be a disruptive or hyper-aggressive medical device company, you need to have thick skin. There will always be plenty of critics and competitors taking potshots at you.

The extra risk with healthcare companies, of course, is that patients can get hurt and die as a result of action or inaction by the company.

You need to decide just how aggressive to be, and whether to define an ethical line over which the company and its employees will not cross. Of course shareholders and Board members may react negatively at any effort to put a damper on the money-making machine. Being responsible for installing that damper could cost a CEO, marketing, or sales executive his/her job.

As we move further into the era of outcomes-based decision-making, opportunities like robotic surgery for anything other than clinically justified reasons will diminish. Robotic surgery could be one of the few remaining “land grab” chances to make a lot of money with little competition. Let’s hope that patients and the rest of the healthcare system aren’t stuck with the bill.

Read more:

http://mobile.bloomberg.com/news/2013-10-08/robot-surgery-damaging-patients-rises-with-marketing.html

Citron puts Intuitive Surgical on blast over adverse events | 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.

For Med Students, Love From the Drug Rep | NYTimes.com

No drug reps signDrug companies and medical device companies focus sales efforts on residents for one reason: because it works. The career-long profit from an eventual loyal physician could be tens or even hundreds of thousands of dollars for a medical device company. It’s also a “bottom-up” way to capture and defend market share.

Often done under the guide of education, healthcare companies’ marketing efforts are creative and relentless.  As the article indicates, many successful sales reps position themselves more as friends than as company representatives.

Inevitably, there have been abuses to the practice. In reaction, many hospitals have severely restricted or even banned contacts with medical students and residents. Some hospitals and medical practices no longer allow sales reps free access to facilities and staff. Some prohibit employees from accepting anything free from industry representatives.

A number of influential and outspoken physicians have written and spoken publicly about the issue, stating that they do not accept any freebies from industry, not even a pen. Their position is that any relationship with industry creates an uncomfortable conflict of interest, actual or perceived.

Of course, attempts to influence physicians and others under the guise of educational programs have been ongoing for many years. There are seminars, dinner meetings and conferences where doctors can earn continuing education credits. I know several physicians who significantly supplemented their professional practice income by speaking about specific drugs at dinner meetings.

Takeaways: Billions of dollars are spent annually on efforts to influence medical professionals. That’s a reasonable (but not necessarily ethical) business decision because many billions more are at stake in drug and medical device revenues and profits. If you are a pharma or medical device sales rep or marketing executive, your job and career are always on the line. Banning these practices just seems to drive them underground.

Perhaps a more rational approach would be to require full disclosure of any transactions (including lunchtime pizzas and the like) with a draconian penalty for concealment.

Read more: For Med Students, Love From the Drug Rep – NYTimes.com.

New Medical Devices May Be Extremely Effective at Preventing HIV Infections

One new medical device is an intravaginal polymer ring impregnated with an antiretroviral drug, tenofovir. If successfully commercialized, this new technology that combines a medical device with a drug could have a major positive effect in preventing HIV infections and reducing HIV transmission rates in developing countries.

As the article poignantly states,

It’s often said that the HIV/AIDS epidemic has a woman’s face. The proportion of women infected with HIV has been on the rise for a decade; in sub-Saharan Africa, women constitute 60 percent of people living with disease. While preventative drugs exist, they have often proven ineffective, especially in light of financial and cultural barriers in developing nations.

The device, called a TDF-IVR (tenofovir disoproxil fumarate intravaginal ring) can be worn for up to 30 days. It delivers a constant dose of tenofovir, lower than the typical dose of the same drug taken orally. Delivery methods such as oral dosage and vaginal gels have not proven to be effective for a variety of reasons including inconvenience and cost.

The ring also has the capability to be impregnated with other drugs such as contraceptives and other antivirals to prevent non-HIV sexually transmitted infections.

Recently completed primate studies showed that the TDF-IVR was 100% effective in preventing HIV transmission in female macaque monkeys. A Phase I human clinical study is being planned for November in New York to assess safety and side effects.

The device was developed at Northwestern University with support from the National Institute of Allergy and Infectious Diseases.

I’ve been working with a group of physicians and engineers at the University of Washington to develop a new medical device for adult male circumcision. Clinical studies sponsored by the World Health Organization demonstrated that circumcision can reduce a male’s risk of contracting HIV by as much as 75% – that’s about the same as a highly effective vaccine (which of course does not yet exist for HIV). Our device, called SimpleCirc, is designed to be used in low-resource settings by non-surgeon healthcare workers.

Perhaps the commercialization of these two technologies will begin to eradicate the scourge and epidemic of HIV/AIDS that is devastating sub-Saharan Africa.

Takeaways: When tackling an intractable problem, try different packaging or delivery concepts to address the issue. In the case of the drug-eluting ring, the drug was highly effective in other using other delivery techniques but cultural and logistical challenges limited overall effectiveness when delivered orally or as a single application gel.

In the case of the circumcision device, the design includes a kit with all materials and accessories to perform the procedure and the device itself is extremely simple, almost intuitive to use. In this way, the ability to perform circumcisions can be scaled up quickly and at low cost.

Read more: Study: New Medical Device Extremely Effective at Preventing Immunodeficiency Virus | News | McCormick School of Engineering | Northwestern University.

The world’s craziest toothbrush cleans your teeth in six seconds and is 3D printed | qz.com

Blizzident photo - world's craziest toothbrush
Blizzident photo – world’s craziest toothbrush

The Blizzident toothbrush may be the most innovative toothbrush ever developed. It is custom manufactured for each user and provides a complete teeth cleaning in 6 seconds. It even has the ability to floss between teeth and clean your tongue at the same time.

Blizzident took advantage of several technology trends in developing the Blizzident toothbrush. Mass customization, 3D scanning, and 3D printing enable the commercialization of a potentially disruptive product that would have been impossible or impractical to make only a few years ago.

Developed by an international team of dental experts, engineers, and computer scientists, the Blizzident toothbrush is commercially available today. Sold on the Blizzident website,   the device initial cost is $300. There is also a one-time expense of $75-200 for impressions and/or digitization of your teeth. According to Blizzident, the toothbrush will last twelve months. Replacements will cost $89 for refurbishment or $159 for an all-new device.

The Blizzident toothbrush can be fitted for kids, although a new scan is required each year because of the ongoing growth and changes in childrens’ teeth.

The toothbrush works by deploying hundreds of ultra-fine bristles that are angled to reach every nook and cranny of your teeth, including the all-important areas under the gumline. The user bites, chews, and grinds his/her teeth for six seconds, brushing all teeth and surfaces simultaneously. According to the company, that’s the equivalent of a three minute manual toothbrushing session. Clinical study results are promised but not yet available.

I have a dental checkup next week and I plan to ask my dentist what he thinks of this revolutionary technology. The somewhat steep price tag may discourage many people but it will probably decline over time. I’m sure there are sufficient numbers of people who are either gadget freaks or just really care about their teeth to make an initial market. It will be interesting to see how Blizzident’s awareness spreads. The story is compelling for both traditional media and for social media.

Takeaways: Who would have thought that the humble toothbrush could be improved upon “again”? A Seattle area company, Optiva, successfully innovated Sonicare, a “next generation” electric toothbrush back in the 1990s. Optiva was acquired by Philips Healthcare in 2000. In 2001, Sonicare was the best-selling electric toothbrush brand in the USA.

For startups, no idea should be considered too small to commercialize. Likewise, no existing product or technology should be thought of as too established to be improved upon. Mass customization is a compelling trend – people want things that uniquely fit them. 3D scanning and printing are powerful tools that make disruptive innovations and novel business models possible.

Read more: http://qz.com/129919/the-worlds-craziest-toothbrush-cleans-your-teeth-in-six-seconds-and-is-3d-printed/

http://www.blizzident.com/

Frazier Healthcare raises $377M venture fund, surpassing target | GeekWire

Wow, looks like a repeat of the 1990s! A new venture fund from Frazier Healthcare is seriously good news for the healthcare startup community. I hope it’s the beginning of a trend and that we’ll see a few more VCs make fund announcements.

For the past few years, VCs have been pretty much absent from the market. Angel investors were left as one of the few financing options for early stage medical device and biotech companies.

Perhaps we will see a return of past practices where angel investors concentrated on very early financing rounds and then VCs stepped in. Who knows? But I believe it’s on balance a positive development for the industry.

Takeaways: There is a lot of money out there “on the sidelines.” Frazier may be taking a leading role in revitalizing healthcare startup financing. At least it shows that a lot of wealthy individuals and fund managers believe in the future of healthcare as an investment opportunity. Startup CEOs, keep pitching!

Read more: Frazier Healthcare raises $377M venture fund, surpassing target – GeekWire.

Wireless sensors are the missing link in mobile health applications

Scanadu Scout sensorWireless sensors are an evolving missing link and a gigantic opportunity in mobile health application development and commercialization.

Markets for mobile health are developing rapidly. Personal fitness, quantified self, chronic disease monitoring, elder health monitoring, infant monitoring, acute symptom diagnosis, physical therapy, and telemedicine are a few of the segments in mobile health.

We have fast networks that cover almost all of our population in the U. S. and most developed countries. Smartphones are powerful mobile computers with vast amounts of onboard computing power and storage. If the smartphone’s capabilities are insufficient, developers can access cloud-based storage, databases, and distributed computing that can scale to address any size problem.

Because all of this technology has been developed for mass consumer markets (and because of Moore’s law), it is inexpensive – orders of magnitude less costly than a few years ago.

So we have cheap, powerful, ubiquitous computing and connectivity mostly being used for social connectivity and YouTube video watching. This powerful computer network is also increasingly being used to improve healthcare diagnosis and delivery.

Still being developed are wireless sensors to take advantage of all of that computing power. There are a number of companies pursuing commercialization of sensors and apps to enable all sorts of mobile health capabilities and functions.

Some of the sensor technologies are wearable in clothing or on the skin, some are implantable, and others are ingestible. All use low power wireless communications technology such as Bluetooth Low Energy for continuous or periodic monitoring. The first generation of sensors, like Holter monitors, recorded data for a time period and were sent to a lab for processing so a report could be generated for a physician. The new generation of sensors records continuously and sends the data in real time where a physician or even the patient can access data that has been processed by a smart application.

Physicians are beginning to be able to monitor their patients with chronic diseases in real time. Individuals active in the “quantified self” movement have more personal data than ever with which to monitor and analyze themselves. Physicians can prescribe personal diagnostics to collect data in order to make a more accurate diagnosis.

For example, Given Imaging of Israel has developed a capsule that has video recording and radio transmission capabilities. The capsule is swallowed by the patient. It then records and transmits its journey through the patient’s digestive tract. The video is reviewed by the physician to determine a preliminary diagnosis and the need for more invasive interventions like surgery.

For the Star Trek fan, Scanadu is developing a crude “tricorder”  – a disk of sensors that is placed on the forehead to measure temperature, heart and respiration rate, blood pressure, and more. The Scanadu Scout is intended for consumers, not physicians.

According to Medical Device and Diagnostics Industry, Pathfinder Software, a mobile and wireless application developer, has created a clever infographic showing various sensors and the body functions they are intended to monitor.

The sensors shown on the infographic are a mere subset of what’s currently available and in development. For example, a startup in my home city of Redmond, Washington, Heapsylon has developed sensors for “smart socks” that can measure a variety of parameters related to running gait to improve athletic performance and prevent injury.

Takeaways: There are opportunities for novel sensors to monitor and measure all sorts of body functions and parameters. There are opportunities to develop applications that gather, process and interpret sensor data for consumers and for healthcare professionals. There are opportunities to analyze aggregated sensor data to assess population health and trends. Finally, there are opportunities to develop and deploy solutions that bring low cost healthcare to underserved populations.

Read more: How Innovations Using Sensors Can Disrupt Healthcare (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Mobile Health Innovations – Home Monitoring of the Elderly

What might have been science fiction a few years ago is science fact today – and one on the verge of market introduction. The Fraunhofer Institute in Germany has developed miniature sensors that continuously monitor the user’s health, communicate over a secure Bluetooth protocol to a mobile device such as a smartphone, and seamlessly transmit data to a cloud-based server.

Mobile health innovations such as this have the potential to save doctor visits, money, and lives.

The sensors can measure and monitor variables such as blood glucose, lactate, and cholesterol levels, biomarkers that may indicate presence of disease processes, and can also measure heart rate and blood oxygen level. The utility of transmitting all of the data to a cloud server is that a remote physician or family member can monitor the patient from a great distance in virtually real-time and also see trends as they develop.

Additionally, smart software could integrate the sensor data and provide diagnostic alarms for conditions like heart attack or insulin insufficiency. For people living alone and with loved ones thousands of miles away, sensors like these could literally be lifesavers.

These developments have the potential to keep elderly people independent longer and to improve the health of people working in remote locations for extended periods of time. Eventually, I expect scaled-down versions of these sensors to make their way into consumer electronics. Samsung is already marketing its S-Health suite as part of the unique software on its flagship Galaxy S4 smartphone.

I’m sure these mobile sensors will get more sophisticated over time. I also expect that clinical researchers will develop new and interesting ways to use the data for monitoring and diagnosis. From the article:

Fraunhofer FIT demonstrates the first system that integrates three different sensors in one platform. A nano potentiostat measures biochemical information in a patient’s assay, e.g. glucose, lactate or cholesterol levels. A fluorescence sensor is used to detect color-marked biomarkers. A SpO2 sensor monitors heart rate and arterial oxygen saturation. A smartphone app processes the data from the three sensors and transfers them to a server. For secure data communication, a Bluetooth connection with a specifically developed protocol is used.

Takeaways: This is a glimpse into the future of telemedicine. Fraunhofer does not commercialize or market products. They license their technologies to medical device companies and related entities. I would expect Fraunhofer to already be in licensing discussions for these technologies but you should contact Fraunhofer if you and your company are in the mobile health segment.

Read more: FIT press release, 12.9.2013 – Fraunhofer FIT.

Fundraising advice for medical device startups – 7 tips for angel funding, 3 more for VC funding

Not that this advice is any guarantee of success in fundraising but it’s fun to read what an angel investor and a VC fund manager have to say about how startups approach them, position themselves, and make their pitches.

Both articles are from MedCity News and were written at AdvaMed 2013. The angel investor article is a brief interview with Allan May, the founder and chairman of Life Science Angels who spoke at the Angel Investment Forum. The VC advice comes from Paul Grand, managing director at Research Corporation Technologies Ventures, a life sciences firm focused primarily on medical devices.

For startups fundraising from angel investors,

  • Your intellectual property (IP) may be the most important indicator of valuation and whether you will be successful in your funding quest. Investors need to plan an exit before they invest. Because the most likely exit is via acquisition by a larger medical device company, and medical device companies hoard patents like misers, it’s in everyone’s interest to have the strongest possible IP portfolio.
  • Unless you have a successful startup track record, a stellar team, and potential for a very large exit in 3-5 years, avoid VCs and focus on angel investors. They are willing to invest in smaller, less perfect deals than VCs.
  • Whether you want it or not and whether you like it or not, expect your investors to take a personal interest in your startup and the way you run it. That means lots of phone and face time giving updates and answering questions…and listening to advice.
  • Because angel investor consolidation has become the norm in raising Series A and beyond, investors will know each other. They won’t invest with others they don’t like, trust, or respect. Same holds for your board members – choose them carefully as they are a direct reflection on you.
  • Mr. May also said “This isn’t about picking technologies, it’s about picking people.” My experience suggests that for most early stage entrepreneurs, your technology qualifies you for consideration while your reputation, track record, and interpersonal skills can usually disqualify you.
  • As for how much money you should raise, “The amount of money you should raise is the smallest amount of money that can have the biggest impact on your valuation in the shortest period of time.” That’s a cute way of saying it’s easier to raise the next round at an increased valuation…because you executed your plan and achieved your goals.
  • This last bit of advice is my favorite and probably the most practical in the interview:  Get someone who knows the angel investor to take the business plan to them. . . “Getting into the pile [of business plans] is not a success.”

From the VC fundraising perspective,

  • Be sure to research the VC firm and the partner before the pitch and adjust appropriately. Every VC is different. Do your homework online and through your network. If you are at the level of pitching to VCs, there should be no surprises.
  • Make sure your startup team has the right experience and is correctly sized. These days, you can run a virtual or lean company a long way toward commercialization without expensive full-time executives. There are plenty of freelancers, contractors, and consultants ready and eager to help…”at the beginning, you just need the founder and the engineers…”
  • If all you have is an idea and technical/clinical skill you should wait a bit before approaching VCs. You are unlikely to get a signed nondisclosure agreement, much less early stage financing from VCs if you make your pitch too early. There are incubators and seed investors who can help you become ready for VC investment. As discussed above, consider angel investment as an alternative to VC funding.

Takeaways: Medical device fundraising is hard but there are steps you can take to improve your chances of success. Make sure you know the expectations and criteria of the people and firms to whom you are pitching. Make sure your startup is a good fit with your prospective investors. Just like Goldilocks and the three bears, you must position the opportunity you’re presenting as not too small, not too big…not too early, not too late. 

Read more:

Need angel funding for your early-stage healthcare startup? 7 smart tips from investor Allan May – MedCity News.

Three big mistakes medical device companies make when pitching VCs – MedCity News.

How to Get Payors to Pay For Your Medical Device | MDDI Medical Device and Diagnostic Industry News

You and your medical device development team have created an exciting new widget. You’re gearing up for a costly product launch. How do you make sure health insurers will reimburse hospitals for purchasing your device?

It’s a very important question because hospitals will not purchase your device unless they are confident that they will receive reimbursement from the payor (insurance company).

If your widget is the same as existing products except it’s cheaper, congratulations. You’ve developed what could be considered a commodity product. You can take advantage of existing reimbursement codes (CPT and DRG) and explain the codes to the physicians and decision-makers at the hospital. You can sell your device on the basis that it saves money.

If you have created a really new widget that is unlike other devices, congratulations again. You’ve developed a differentiated product. Your reimbursement effort is just beginning.

If you haven’t done so yet, now would be a good time to engage with a reimbursement consultant. Perhaps your new widget can fit within existing reimbursement codes. If not, the path will be long and involved to get a new code – a topic worthy of its own post, perhaps even a chapter in a book.

In a discussion at AdvaMed 2013, Alan Muney, chief medical officer at Cigna, said Cigna asks three questions when considering coverage for a new device:

1. Has the new technology been proven by studies in peer-reviewed journals?
2. Has the new technology produced better outcomes than current technologies?
3. Does the new technology produce the same outcomes as current technologies but at a lower cost?

These seem like reasonable questions. Although Dr. Muney did not explicitly say so, I’m assuming that you need only answer “yes” to one of these questions in order to be considered for coverage for your device. The questions all have implications, however.

First, to have a study published in a peer-reviewed journal generally means you must conduct a randomized clinical study with enough statistical “power” to make a definitive conclusion. In this context, “proven” means that the new technology has equivalent or superior clinical efficacy to the existing “gold standard” technology. And you already know that clinical studies are expensive and take a long time to conduct.

Second, “outcomes” are more focused on patient health than on a comparison with other technologies. You will need to conduct a clinical study, but with different endpoints measuring different things. The study may last longer and involve more patients, all of which will cost more money and involve more risk to you, your company, and your investors.

The third question adds costs to the equation, not just the procurement costs of your device but the Big Picture costs: does your technology reduce or increase overall costs to the healthcare system? At this point, you may need to consult with a healthcare economist to determine what to measure and how to measure it. And proving cost claims usually involves conducting a big, expensive clinical study. Of course, if you prove better outcomes at reduced cost to the healthcare system, congratulations again. Your product should be adopted rapidly and your focus will shift to keeping up with demand.

Takeaways: Obtaining medical device reimbursement is complicated and risky. It increases costs and time to market for many medical devices. You can’t go to market without knowing how (or if) your device will be reimbursed by insurers. During your business planning process, you should have an idea as to which of the three questions raised by the Cigna CMO you can positively answer for your device. That response should also help inform the size, cost, and duration of the clinical study you will need to conduct. And that will be an important component of the capital you need to raise for commercialization,

Read more: Cigna CMO Explains How to Get Payors to Pony Up For Your Device | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

FDA finally publishes final guidance for mobile medical apps | mobihealthnews

This has to be welcome news to any company competing in the mobile health market segment. Although the guidance is not binding in typical FDA fashion, it does remove some uncertainty about what the FDA considers mobile software that should fall under Class II (510k) device regulations.

Apparently, lobbying elected officials has some benefit. The story reports that the FDA promised to issue the guidance “in the current fiscal year” in congressional hearings last summer. We are in the last week of the fiscal year and true to the FDA’s word, the guidance is finally issued, two years after the draft guidance was issued.

As one might expect in a “land grab” environment, the absence of regulatory guidance has not been a barrier to market for a number of companies. There have been 100 510(k) marketing clearances issued for mobile medical applications in the past ten years, 40 of which occurred since the draft guidance was issued.

Some companies might have bigger concerns in that they are actively marketing apps that fall under the regulated category but have not obtained 510(k) clearance. Two acne treatment apps were removed from the Apple and Android app stores by the FTC recently.

The guidance treats mobile apps in four broad categories:

  1. Class II apps:

a. Apps that “are intended to be used as an accessory to a regulated medical device – for example, an application that allows a health care professional to make a specific diagnosis by viewing a medical image from a picture archiving and communication system (PACS) on a smartphone or a mobile tablet.”

b. Apps that “transform a mobile platform into a regulated medical device – for example, an application that turns a smartphone into an electrocardiography (ECG) machine to detect abnormal heart rhythms or determine if a patient is experiencing a heart attack.”

2.  Mobile Apps for which FDA intends to exercise “enforcement discretion” (meaning that FDA does not intend to enforce requirements under the FD&C Act).

From the Guidance:

FDA intends to exercise enforcement discretion for mobile apps that:

• Help patients (i.e., users) self-manage their disease or conditions without providing specific treatment or treatment suggestions
• Provide patients with simple tools to organize and track their health information
• Provide easy access to information related to patients’ health conditions or treatments
• Help patients document, show, or communicate potential medical conditions to health care providers
• Automate simple tasks for health care providers
• Enable patients or providers to interact with Personal Health Record (PHR) or Electronic Health Record (EHR) systems.

3.  Apps that are not medical devices and thus are unregulated: Apps that provide a means of monitoring and reporting health parameters and activities but that make no claimed benefit. Examples:

a. Mobile apps that are intended to provide access to electronic “copies” (e.g., e-books, audio books) of medical textbooks or other reference materials with generic text search capabilities. These are not devices because these apps are intended to be used as reference materials and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by facilitating a health professional’s assessment of a specific patient, replacing the judgment of clinical personnel, or performing any clinical assessment.

b. Mobile apps that are intended for health care providers to use as educational tools for medical training or to reinforce training previously received. These may have more functionality than providing an electronic copy of text (e.g., videos, interactive diagrams), but are not devices because they are intended generally for user education and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by facilitating a health professional’s assessment of a specific patient, replacing the judgment of clinical personnel, or performing any clinical assessment.

c. Mobile apps that are intended for general patient education and facilitate patient access to commonly used reference information. These apps can be patient-specific (i.e., filters information to patient-specific characteristics), but are intended for increased patient awareness, education, and empowerment, and ultimately support patient-centered health care. These are not devices because they are intended generally for patient education, and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by aiding clinical decision-making (i.e., to facilitate a health professional’s assessment of a specific patient, replace the judgment of a health professional, or perform any clinical assessment).

d. Mobile apps that automate general office operations in a health care setting and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease.

e. Mobile apps that are generic aids or general purpose products. These apps are not considered devices because they are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease.

Takeaways: While the FDA appears to move at a glacial pace in many instances, it eventually responds to market activity. Mobile health is a growing segment and should grow even faster in the coming years.

The trick to escaping regulation under the “enforcement discretion” provision is to avoid making diagnoses or recommendations for treatment. If your app/device interfaces with a class II device or provides diagnostic or therapeutic information or suggestions, you are going to need a 510(k).

 Read more:

FDA finally publishes final guidance for mobile medical apps | mobihealthnews.

Get the FDA Guidance here:

 http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM263366.pdf

Powerful Free 3D CAD Software: DesignSpark Mechanical

I’ve bought a few things from Allied Electronics and, of course, got on their email list. It’s usually an interesting email but not very relevant to me. Today, however, I received an email from Allied about DesignSpark Mechanical. DesignSpark Mechanical is a fully featured 3D design and CAD software application for Windows PCs and it’s 100% free.

Model and software from DesignSpark Mechanical websiteYou do need to register and provide contact information but after that, you get a rather large download – 500+ MB for the 64 bit version – and the program runs with all features and no restrictions – WOW!

I’ve downloaded and used Google’s Sketchup software. The free version is very limited in features and they charge $590 for their fully featured Pro version.

From the DesignSpark Mechanical website:

DesignSpark Mechanical is packed with time-saving features to help you design more easily, quickly and creatively than ever before.

  • Produce highly detailed dimensioned worksheets
  • Remove bottlenecks by making amendments and additions to your design in seconds, rather than waiting for the CAD department to rework in history-based CAD tools
  • Combine your creation with off-the-shelf components from RS Components and the Allied Electronics 3D library
  • Create geometry easily with powerful and intuitive gesture-based modelling, no need to be a CAD expert
  • And best of all, it’s completely free! This is not a cut down version of an expensive product or software with a time-limited license.

The software is extremely easy to use, almost intuitive. There are lots of hints and tips included with the various commands and options. The web page for the software contains a number of tutorials, both text and video, for beginners who want to master the software.

One of the most powerful features is the ability to import components from both RS Components and  Allied Electronics. These are dimensionally accurate. The program automatically generates a bill of materials and even estimates the cost of the project.

Another very cool feature is the ability to save directly to a 3D printer format, in an STL file. You could make a design, send the STL file to your favorite 3D printer shop and have a physical prototype the next day!

I’m sure the software is not as powerful as commercial CAD packages. For example, rendering 3D models is not offered. But it looks like it can do the job of creating 3D designs…and it’s free.

Takeaways: 3D CAD software once cost tens of thousands of dollars, then thousands of dollars, then hundreds of dollars, and now it’s free. Not only free, but designed so well that anyone with a slight bit of mechanical ability can learn it and use it. The companies involved are clever to include their 3D libraries of components. It’s a good bet that if you design with them, you will specify them and buy their components. Not a bad competitive advantage for companies in a commodity business like electronic components.

For resource-poor medical device startups, this free software is a huge benefit. The ability to create accurate and convincing prototypes using 3D printing has never been easier or faster. Now you can add 3D design to those fast, inexpensive capabilities. With DesignSpark Mechanical, anyone can do rapid prototyping very inexpensively and produce high quality designs and models.

Read more/Download the software: DesignSpark Mechanical » DesignSpark.

Give Us Our Damn Lab Results!! (etc.) | The Health Care Blog

Patients are empowering themselves. We are overwhelmingly using Internet sites like WebMD and social media to research and discuss symptoms, diseases, and treatments. We are purchasing and using digital health devices and software by the millions.

Now patients are starting to demand direct delivery of lab test results instead of waiting for that call from the doctor’s office that always seems to be delayed or worse, never made.

A little-known proposed regulation issued in 2011 by the Department of Health and Human Services would allow lab test providers to send test results directly to patients. While a final regulation has not been issued, perhaps due to the current political climate in Washington, the regulation is being welcomed by patient advocates and viewed with skepticism by some physicians.

As the article states,

Increasing the ability of patients to have direct access to all their medical information allows patients to more effectively manage their own health care and organize electronic copies of their own data – a major benefit of the health care system’s ongoing transition to digital records…Most broadly, this expanded access gives patients the ability to be as engaged as they choose in their own health and care.

Some unenlightened physicians are lamenting the perceived loss of control and cite the risks involved when patients have uninformed access to clinical data. Other doctors welcome the opportunity to stay in the loop while patients take more responsibility for their own healthcare and data.

Again, from the article:

… A 2009 study published in the Archive of Internal Medicine indicated that providers failed to notify patients (or document notification) of abnormal test results more than 7 percent of the time. The National Coordinator for Health IT recently put the figure at 20 percent.  This failure rate is dangerous, as it could lead to more medical errors and missed opportunities for valuable early treatment.

How can sending lab test results directly to patients be a bad thing if the doctor still receives a copy of the results and continues the practices of alerting patients to abnormal results while offering to interpret the data?

In another empowering development, some patients are now able to skip the dreaded visit image from geekwire.comto the primary care physician, the one where they wait, wait, and wait some more while being exposed to who knows what communicable diseases in the practice’s waiting room. People in the south Puget Sound region of Washington in the Franciscan Health System service area have the ability to have a virtual visit with a physician 24 hours a day, 7 days a week for a reasonable $35 fee (not paid by insurance). The consultation may result in a referral to a physical facility or prescribing of medications. How convenient!

From the article:

“In some cases, patients just want to know if they need to go to the emergency room,” said Dr. Ben Green of Franciscan Virtual Urgent Care. “In fact, most of the time our providers are able to keep them out of the emergency room and patients are quite happy about that.”

The virtual visit with a real doctor is conducted via Skype video teleconferencing or by plain old-fashioned telephone.

The telemedicine service is actually offered by Carena, a Seattle-based company, in partnership with Franciscan. Carena started offering the service in 2010 to private companies and is now expanding to healthcare systems.

Takeaways: Empowered patients and consumers represent an enormous opportunity for medical device and digital health companies. The pharmaceutical industry proved the viability and profitability of direct-to-consumer marketing in the 1990s.

As more patients are comfortable managing their own electronic health records and in keeping their records “in the cloud,” there will be increasing demand for apps, software, and web services to facilitate and secure those transactions and records. The market niche of people who self-monitor their health, fitness, and vital signs with digital health devices and apps will steadily increase as the devices and software get more capable and easier to use.

Read more:

Give Us Our Damn Lab Results!! | The Health Care Blog.

Feeling sick? Washington health system now offers virtual doctor appointments for $35 – GeekWire.

How did Israel become a hotbed for medical devices? | FierceMedicalDevices

I’ve often wondered this myself. For a tiny country the size of New Jersey and with a population about equal to that of Virginia, Israel seems to have a disproportionate number of medical device companies. There are about 700 medical device companies in Israel, making it truly a global hotspot for medical technology.

Here’s an interesting table from the Times of Israel comparing entrepreneurial countries:

http://cdn.timesofisrael.com/uploads/2013/02/OurCrowd-_-Funding-2.0-Why-Israel-635x357.jpg
from Times of Israel

It’s obvious that Israel is highly competitive internationally.

Israel’s focus on medical devices is partially a result of the large and growing defense industry in Israel coupled with mandatory military service, according to the article in Fierce Medical Devices. Defense technology is highly sophisticated. Young Israelis go into military service at 18 and acquire technical exposure and education, resulting in many engineers leaving the military and looking to start careers as entrepreneurs. The burgeoning medical device industry, with many technological similarities to defense and aerospace, offers opportunity, mentoring, and encouragement for aspiring entrepreneurs to start their careers.

It also helps that Israel has a smart, educated, entrepreneurial professional class. These business people are well-connected internationally and are able to detect trends and aggressively pursue opportunities in new market segments like renal denervation and neurostimulation.

Takeaways: Israel has become a nexus for medical device companies. Many of these companies are eager to access the U.S. healthcare market. There are opportunities for U.S. medical technology companies to partner with Israeli companies. Start by accessing your own network. It’s almost certain that you or someone you know has contacts in Israel. You can also contact the Israeli trade mission in the U.S., perhaps even in your state, as both the U.S. and Israeli governments are highly supportive of the industry.

Read more: How did Israel become a hotbed for medical devices? – FierceMedicalDevices.

3 things that will help hardware entrepreneurs build their startups | MedCity News

I’ve  suspected for some time that hardware, i.e., real life products, are tougher to successfully commercialize than software products.

hardware

For one thing, the cost of hardware product development is much higher. Assume that the hardware design cost is roughly equivalent to the development cost of a software product. For hardware, you then need prototype tooling, pilot tooling, and production tooling – all expensive. Real world testing and validation is time-consuming and also expensive. Animal and human clinical testing is complicated and risky. Then there are the costs of inventory and physical distribution as well as warranty and repair. Lastly, the profit margins are much lower than software!

“Starting a venture is hard — actually, if people knew how hard, they wouldn’t do it — but starting a hardware venture is three times as hard,” said angel investor and Txtr CEO Christophe Maire

The premise of this article is that there are a few things one can do to mitigate the risks inherent in hardware commercialization (these mitigations are not limited to medical technology):

  1. Launch the product online
  2. Simplify, simplify, simplify
  3. Combine hardware with a service

Starting with online sales and distribution limits your financial exposure by not having to stock a distribution channel/pipeline (assuming you can find distribution partners as a startup). You can also defer the substantial investment needed for a sales force. The upside is that you still have a global footprint. As demand and revenues grow, you can either bootstrap growth using early revenues or use the growth as evidence of demand to obtain angel or venture funding.

The big challenge with online distribution and sales is creating awareness and demand. Your online marketing skills will be put to the test. Of course, you could hire a freelancer or consultant for a short term project to “prime the pump” and get the product launched.

Creating online stores for physical products has never been easier or less costly. You can set up a store at Amazon.com for example. Amazon will take care of everything related to online sales, for a hefty percentage of the action, of course. You can even drop ship from your warehouse as the orders roll in. Companies like UPS and FedEx will physically store your inventory in strategic locations to minimize shipping time and customs delays to overseas markets.

Simplification is important, especially for a first product. You should select your most likely customer and develop a minimum viable product for that customer type. Extra features can be added later.

The prime objective is to get to market and scale up as quickly as possible. Since seed and angel funding is very difficult to obtain for early stage hardware startups, you will probably be doing a lot of bootstrapping and trying to save money everywhere possible.

Simplification can also be a competitive advantage. For every early customer you acquire, that’s one less customer for your competitors (unless you screw up the relationship with poor quality or unrealistic promises). Once you have established that early relationship, customers are more patient and more likely to wait for the enhancements you showed them on your product roadmap.

Finally, combining hardware with a service puts your startup into a different class altogether. You can create a recurring, high margin revenue stream in addition to ordinary product revenue.

There are obvious services like training, extra warranties, service and maintenance contracts, leases, short-term loaners/rentals and hardware upgrade/refresh cycles. There are new services being created every day like cloud-based storage of the data generated by your hardware. Many companies are developing mobile and desktop apps for remote viewing, control, or manipulation of their products and the data they generate. You may be able to offer data analysis or even offer access to anonymized, pooled data from all of your customers. That could be a strategic advantage for your customers!

Takeaways: Hardware commercialization is hard. Because we still live in a physical world, there will always be a need for tangible products. Because hardware development is expensive and risky, always try to limit your risk and exposure. Startups look a lot bigger online – use that to your advantage. Keep your first product simple. Ruthlessly eliminate any features or functions that are not necessary to get a sale. Lastly, look for alternate ways to generate revenue, especially recurring revenues through value-added services.

Read more: 3 things that will help hardware entrepreneurs build their startups | MedCity News.

Wow of the Week: A flu vaccination you could give yourself, with no shots involved | MedCity News

Very cool, and a great use of microfabrication technology. This microneedle array delivers its vaccine payload painlessly into the skin and the needles dissolve. Perhaps your healthcare insurer will mail your vaccine to you in the not too distant future.

The microneedle array (still in the animal research phase) could be an important tool for vaccine delivery in developing countries where vaccine doses must be transported to remote populations and refrigeration equipment is not readily available. And perhaps it will increase the participation in flu and other vaccine programs by people who have needle and/or pain phobias.

I’m aware of at least one other company commercializing a microneedle-based medical product. The startup company is Kitotech, based in Seattle, and they have developed a product called Kitostitch. The Kitostitch product is intended to replace steri-strips for primary wound closure. The value proposition is a little less clear in that case. In my experience, it’s tough to oust incumbent technology even if it’s mediocre, when there’s no nagging problem being solved.

Takeaways: There are plenty of unsolved medical problems, some big and some small, that can benefit from smart innovation. The technology of vaccine injection would seem to have been perfected or at least exhausted of innovation but these researchers created a completely new inoculation technology. Complacency is the enemy of innovation. Do not ever assume that a “better mousetrap” cannot be designed for a particular need. Most important is that you keep looking for unsolved problems and unmet needs.

Read more: Wow of the Week: A flu vaccination you could give yourself, with no shots involved | MedCity News.

Hips and knees: Consumers Union calls for no-cost revision warranties | MassDevice

Adding patient warranties to hip and knee implants would be a disruptive move if it’s ever offered…or mandated.

guaranteed

Implants are Big Business. The article states that there were 1.2 million hip and knee surgeries in the U.S. in 2011. That number is expected to increase to 4 million by 2030 as the last of the Baby Boomers ages into their golden years. Half of those surgeries, however, will be in patients under 65.

Of course, a major challenge in orthopedic implants is making them and implanting them so they last the life of the patient. With many people living well into their 80s and 90s today, an implant may be expected to last 25-30 years.  Revision surgery is messy and expensive. Patients are not happy about having to undergo implant surgery for a second time just because they outlived the first implant. And the risks of implant surgery increase as patients age.

Since implants are a fraction of the cost of joint surgery (a substantial fraction, but a fraction nonetheless), offering a warranty on the entire revision surgery would be a huge financial liability for the medical device manufacturers and unlikely to happen unless compelled by law. Of course, there are other big players involved, namely Medicare. Since most of the implant failures occur in older patients, Medicare foots almost all of the bill.

As we get deeper into healthcare reform and start to have fact-based discussions about costs vs.outcomes (one can hope, right?), issues like this should surface for policymakers to address. Why should a medical device company benefit from an inferior design by being paid for a second implant? What about surgeons and hospitals – if the implant is installed incorrectly, shouldn’t the surgeon and hospital bear some of the cost of fixing it, even if it’s ten or fifteen years later?

In my opinion, perfecting the design of hip and knee implants is a high stakes strategy. The first company to succeed in deploying a “lifetime” implant will start to gain market share at the expense of its competitors. Perhaps it will evolve a business case that enables it to offer the revision warranty. In that event, the market share gains will accelerate and weaker companies will disappear or be absorbed by the stronger.

I would bet that there are many biomedical engineers and researchers feverishly working on this challenge right now.

Takeaways: While in many ways we are in the golden age of medical devices, major changes are on the horizon. Things like lifetime costs and outcomes-based decision making are getting more attention every day. Advocacy groups like AARP and Consumers Union are becoming more vocal and more active. Government agencies are more involved than ever and there’s no end in sight. You should be prepared as the old ways are ending. Not for much longer can you count on selling a device by persuading a physician to demand it and then being able to bank on that revenue stream for years. Data – lots of it, and exhaustively analyzed – will be the most persuasive way to sell and to affect policy.

Read more: Hips and knees: Consumers Union calls for no-cost revision warranties | MassDevice.

Top 10 Pitfalls of a 510(k) Submission and How to Avoid Them | MDDI Medical Device and Diagnostic Industry

The FDA marketing clearance process (never “approval” for a class II or 510(k) device) can be maddeningly ambiguous, time-consuming, expensive, and risky if conducted incorrectly. There are, however, many companies that have a straightforward and relatively easy pre-market notification process. This article in MDDI lists a number of dos and don’ts to help you and your company end up in the latter category.

“Top Ten Pitfalls:”

  1. Misconceptions about 510(k)’s goals. 
  2. Not knowing the regulatory history of your product in the United States.
  3. Choosing the wrong comparison (predicate) device. 
  4. Choosing a predicate that is not available to test. 
  5. Choosing a predicate that is not available in the U.S.
  6. Not understanding (or being able to find) appropriate guidance.
  7. Not starting validation testing.
  8. Errors and inconsistencies in the 510(k). 
  9. Inattention to FDA’s instructions. 
  10. Missing and incomplete forms. 

My experience is that many people new to the 510(k) process misunderstand the FDA’s goals and role in the 510(k) process:

In the 510(k) review process, devices that meet eligibility requirements are “cleared” as opposed to being “approved” by FDA…The requirements and expectations for a properly completed 510(k) have evolved along with medical technology.

…the documentation must show that the device is “substantially equivalent” to a previously cleared (predicate) device. The device needs to have the same intended use and technical characteristics [as the predicate, but not necessarily the same technology]…The reviewers will also want to see data substantiating that the device’s performance, safety, and effectiveness are equivalent to the predicate.

Here are some of my own recommendations for avoiding FDA pitfalls:

  • Hire a regulatory professional, either a consultant or an FTE. Give special consideration to the regulatory professional’s experience and field of expertise. You want someone who has extensive experience with products in the same regulatory classification and preferably the same medical specialty as your products. If you can’t afford to have the regulatory person manage the entire 510(k) process, negotiate to have them help you with planning and to review all part of the submission as well as any communications with FDA.
  • Don’t second guess or micro-manage the regulatory professional. You should ask questions and have discussions, intense and challenging if necessary, about schedule, budget, indications, predicate device selection, test requirements and plan, clinical study requirements and plan, and so on. Once you have a recommendation, proceed. Trying to force an answer that is satisfactory to you will almost inevitably result in delays and increased expenses. If you find that you are spending a lot of time questioning your regulatory professional’s decisions, it’s probably not a good fit and you should find a new regulatory person.
  • Do not second guess the FDA and do not ignore their questions or recommendations. Also, do not assume that you can rely 100% on their answers to your questions. The FDA will always tell you that their guidance is not a legal opinion and is not binding. As the saying goes, “you pays your money and you takes your chance.”
  • On the other hand, don’t be afraid to ask questions of the FDA. This is particularly true if you fall into the “small manufacturer” category. You can get extra help free of charge from FDA staffers. Once again, however, do not rely exclusively on this guidance.
  • If you are concerned about risk, timing, and/or expense, consider launching your product in another market first. You can generate much-needed cash flow and perhaps even obtain clinical data for your 510(k) submission in places like the EU or a country in South America.

Takeaways: Regulatory submissions and clearances are among the most important milestones in commercializing a medical device. It would be foolish to leave this important function to amateurs or to ignore important recommendations and guidance.

If you are a medical device startup CEO, marketing manager, or product manager and especially if you are without much regulatory experience, be sure to budget for and recruit a highly regarded regulatory professional with experience and expertise in your market and your regulatory classification. The regulatory clearance process is complicated and can be daunting to novices but it can be successfully navigated by engaging experts and by learning and following the rules.

Read more: Top 10 Pitfalls of a 510(k) Submission and How to Avoid Them | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

What’s in a name? Naming and branding medical device products and companies

rose

We’ve all been there – needing a name for a new product or even more importantly, a new company. There are a number of schools of thought about naming. For example:

 

 

  • Name it for the doctor who invented/founded it. (covert endorsement or the medtech equivalent of vanity plates)
  • Just pick something generic and get it out there (Wile E. Coyote’s Acme Products company)
  • Smash two words together with a capital or two in the middle. (“CamelType”)
  • Make an implied promise with the name. (Intuitive Surgical, da Vinci)
  • Make up a serious sounding, semi-scientific name. Make sure it has a trendy consonant in it or is loosely based on some obscure Latin word. (the Immunex factor)
  • Let the engineers name it. (any number of unmemorable names)
  • Pay a naming/branding consultant a lot of money only to find out the .com URL is taken.
  • Convene a cross-functional branding brainstorming team to identify alternatives, then: a) have an all-employee company vote or (less likely to have long-term negative repercussions) b) let the CEO pick his/her favorite.
  • Use the code name of the development project. (more often than you would think)

It’s extra difficult in the medical device space, especially if you are in a “hot” segment like digital health. There are lots of other companies casting about in the same pool of potential names and with the same requirements that you have. And, ours being a Serious Industry, I doubt that we will see the medical device equivalent of “Cheezburger Network” in the near future.

Takeaways: Naming and branding is a lot like coming up with the perfect name for your first child. You put enormous thought and effort into finding the perfect name, perhaps even creating a unique name just for your offspring. You obsess over what message the name will send and how your child will be perceived, perhaps for the next century. Big stakes, I know.

The reality is that most kids make their names fit them. Most people use the name as an association to the child and the child’s personality rather than the other way around.

The same  holds true for product and company names (as long as you stay away from the really outlandish stuff). Pick a name without endless consideration of the implications. Then, spend your time and effort making the company and product fill the promise of the name to reinforce positive experiences with the brand by customers and other stakeholders. Soon, the actual meaning of the brand or product name will fade and be replaced by the (it is to be hoped) positive attitudes toward the product/brand.

It’s also helpful if, in addition to not being similar to another company or product in the same segment, the name or brand doesn’t require a lengthy explanation about what it means or how it came to be. Just think back to an acquaintance who insisted on telling you the derivation of the name of their son or daughter.

Here are a few examples about names of companies in digital health. I’m sure all of the people responsible for naming these companies had great intentions and thought their names would stand out. Unfortunately, at least one other person in another company had the same expectation and created a confusingly similar name:

Read more: The apparent shortage of digital health names | mobihealthnews.

Digital health needs more physician entrepreneurs | mobihealthnews

Are you aware of the Society of Physician Entrepreneurs (SOPE)? I was not. The CEO of SOPE, Dr. Arlen D. Meyers, a practicing ENT surgeon, says that doctors are not trained in business while in medical school or residency. That has certainly been my experience.

While many physicians have an entrepreneurial mindset, only a few I’ve met and worked with have business skills that would enable them to start and/or run a company. Some are just natural entrepreneurs although I think there are far more who believe they have business acumen but don’t have any or don’t have much business savvy. Those doctors are the toughest to work with as a medical device commercialization executive.

To address part of the problem, Dr. Meyers has created a certificate program in bioinnovation and entrepreneurship at the University of Colorado. The program is intended for postdoctoral students not interested in a career in academia.

Dr. Meyers also said, “most innovation in healthcare and medicine leaves out doctors and patients, particularly in the lucrative fields of drug and medical device development.” I’m not sure exactly what he’s driving at here. Most device companies, startups included, are happy to work with innovators or key opinion leader physicians to help create, develop, refine, and commercialize new products. They are well-compensated for commercial successes, much less so for market flops, of course. And patients are a necessary part of the process.

Medical device commercialization is not for amateurs and it’s not a part-time gig. Most physicians are incredibly busy people. It seems to me their natural role in a startup or on a new product development project in a larger company is to serve as a clinical/healthcare system resource, product endorser, and source of referrals. Of course, they are free to try their hand at business and create their own startups.

Dr. Meyers also points out that the burgeoning digital health segment is underrepresented by physicians. That may be because the technology, networking, and systems interoperability dimensions of digital health solutions and products tend to be far outside most physicians’ areas of expertise. However, there are multiple opportunities for doctors to innovate. For example, their detailed knowledge of the healthcare delivery system may have given them specific ideas about how to improve patient care delivery with apps. He also believes that non-face to face care using telehealth or digital health products and apps is going to be a substantial opportunity for entrepreneurs, whether physician or layman. Any of those ideas could be the basis of a digital health startup.

Takeaways: Medical device and digital health startups, even with their high failure rates, are attractive to at least some physicians – those with entrepreneurial mindsets. Startup founders and CEOs should identify and recruit like-minded doctors for their executive teams, boards of directors and advisory boards. If you are a digital health startup CEO with a tech/IT background, you can minimize the risk of making bad or just uninformed product decisions and enhance your commercial products by finding and engaging with an entrepreneurial physician.

Read more: Digital health needs more physician entrepreneurs | mobihealthnews.

Presence of sales reps influences coronary stent selection, price | MassDevice

As the saying goes, “that’s why they get paid the big bucks.” All kidding aside, a recent study published in the American Heart Journal confirms and quantifies what most industry insiders know intuitively: there is no substitute for a live salesperson at the point of use.

sales repMany cardiac catheterization (“cath”) labs either stock or make available more than one brand and more than one type of coronary stent. Since there are many different indications and technical features among the various offerings, it’s difficult for hospitals to standardize on just one brand. So instead of “converting” a physician or a hospital to permanent purchase of the company’s products, the sales rep gets to convert each case she or he attends.

Hospitals and physicians are aware of the influence a rep can have over the selection process. Many limit rep visit frequency in an attempt to be “fair.” Another factor is that some reps are technically and clinically more competent than others. They perform a genuinely valuable service for the physician by reviewing diagnostic information and making informed recommendations about the ideal product for the clinical situation.

On a darker note, some reps (and some companies reinforce these behaviors) have personal relationships with physicians, complicating the goal of unbiased product selection.

Some hospitals have even banned certain sales reps or even instituted blanket bans of every sales person from point of use contacts.

The study reported that the presence of a sales rep increased the per-case price of stenting by up to $230. One investigator also said that the company’s market share was increased by the rep’s presence, meaning that the physician used that rep’s company’s products over the equivalent competitive product. This choice occurred apparently because the rep was present and able to inform and/or persuade the cardiologist to use the rep’s products.

Some cocktail napkin math: say a typical rep makes $150k per year in cash compensation. That’s about $3,000 per week or $600 per day.  It doesn’t take many cases per day selling high margin stents to pay the rep’s salary and make a tidy profit for the company. And that’s why successful reps will do everything they can to spend the day in scrubs instead of a business suit.

Takeaways: While good sales reps are costly and rare, and a direct sales force is insanely expensive, you get what you pay for. Of course there are other options such as manufacturers’ reps, distributors, telesales, and partnering/sales force sharing. In all of those alternative approaches, you give up control and access compared with the direct sales rep model.

The key in marketing and selling high value, high price, high margin products is to recruit, hire, and maintain the highest quality sales force possible and to design an incentive compensation program that encourages desired behavior while dissuading undesirable behavior. Easier said than done, and probably merits the hiring of an experienced sales executive to create and manage the sale team.

Keep in mind that sales reps pay for themselves more directly than any other employee. Budget appropriately if you decide that a direct sales force is right for your venture. Plan for longer sales cycles and reduced market share if you decide that direct sales is a luxury your company or startup cannot afford.

Read more: Study: Presence of sales reps influences coronary stent selection, price | MassDevice.

mHealth, eHealth, Mobile Health, Connected Health: Not Fads, Not Going Away

Smartphones can be addictive. The convenience of obtaining information and maintaining social connections is a powerful benefit for just about everyone. Health-related smartphone apps have the potential to use that addictive property to inform and improve the health of smartphone owners.

Close to 60% of all adults in the U.S. use a smartphone. The proportion approaches 100% in well-educated, affluent, young-to-middle-aged, or urban/suburban demographic groups. Using “diffusion of innovation” terms, smartphone adoption has penetrated past the Early Majority and is deep into the Late Majority. That’s more than enough for a startup to base its technology platform on.

There are more than 40,000 smartphone apps focused on mobile health, growing each day. Many savvy entrepreneurs have identified mobile health as a Next Big Thing and are trying to stake out their territory during this “wild West” phase of the mobile health market.

According to an executive at Qualcomm, the exponential growth in mobile or connected health is being driven by two factors. The user experiences are getting better all the time and there is real opportunity for cost control at the provider level. App usage is growing even among clinicians: 34% of clinicians reports using apps to monitor data from medical devices now, up significantly from the 27% who reported doing so in 2012.

Of course, things like user interfaces and app features can make a huge difference in adoption and patient satisfaction. One recent study of diabetes patients showed that patients with passive monitoring and reporting apps on their smartphones to manage glucose levels had better adherence to their glucose management plans and also had better health outcomes than patients who used apps requiring manual intervention.

According to a Brookings Institution study, remote monitoring technologies could save $197 billion in the U.S. over the next 25 years. And adoption is spreading rapidly. For example, 45% of physicians report using mobile apps for data collection at the bedside compared to 30% in 2012. More than 70% of providers use mobile devices to access patient Electronic Medical Records (EMRs). Physicians are eager adopters of mobile devices with more than 66% reporting use of tablets in their professional practices.

Joseph Kvedar, MD in an article on The Health Care Blog, writes:

Mobile health offers us many transformational opportunities.  We can use smart phones as a data upload/home hub device.  We can use them as a device to engage the consumer around health content.  We can use them to display health-related information at  just the right moment in just the right context.  We can use the cameras to capture relevant health information (e.g., home test results).  We can use them to message you in the moment with contextually relevant, motivating messages.

Add to the list that we can harness the addictive properties of these devices to, perhaps, make health addictive.

Takeaways: The market opportunity for mobile health is here and now. Devices, sensors, networks, software, and connectivity have never been better, cheaper, or easier to access. Patients and providers have adopted mobile technologies in huge numbers. Yes, there is plenty of competition but there are rewards for any startup or company that can identify a market niche, develop a solution, and deploy a product that meets user expectations while maintaining a long term strategy of reducing costs and improving clinical outcomes.

Read more:

Why mHealth is not a fad but is here to stay (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Could Mobile Health Become Addictive? | The Health Care Blog.

The Perils of eHealth | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Robotic Surgery: Too Much, Too Soon? | medscape.com

With a market capitalization of more than $15 billion, Intuitive Surgical is a major player in the medical device industry. It is also the only source in the world for robotic-assisted surgery products. An evolving controversy is whether the patient benefit from a robot-assisted procedure is equal or greater than the additional cost to the healthcare system.

Robot

In recent articles, the editors at Medscape (a physician-oriented professional website owned by WebMD) have raised the issue of whether robotic-assisted surgery is being adopted too fast and being promoted too aggressively.

 

Some facts:

  • The number of procedures performed worldwide with Intuitive Surgical’s da Vinci Surgical System increased 25% from 2011 to 2012, to 450,000. 
  • The da Vinci Surgical System has been installed at more than 2,000 hospitals around the world at a cost per installation of $1.5-2.2 million plus annual service fees of about $160,000.
  • Intuitive Surgical has about 2,400 employees and had 2012 revenues of $2.18 billion, $908k per employee. That’s getting close to the almost mythical $1 million per employee revenue level and in the same neighborhood as Google ($931k).
  • The price for proprietary disposable instruments for the da Vinci System is $600-1,000. Each procedure uses 3-8 instruments.
  • A recent analysis reported that da Vinci surgeries add costs of 20% per procedure on average. The incremental costs are currently absorbed by hospitals because reimbursement rates are set by procedure, not surgical technique or technology. It is not yet clear if the extra costs will eventually be reimbursed by insurers.
  • Earlier this year, the president of the American Congress of Obstetrics and Gynecology (ACOG), issued a statement recommending against using robotic devices in routine gynecologic procedures – perhaps motivated by a 2013 JAMA study reporting that the percentage of robotically assisted hysterectomies increased from 0.5% in 2007 to 9.5% in 2010. Studies have shown that use of robotics has no clear clinical benefit over laparoscopy (the gold standard). Additionally, costs for robotically assisted hysterectomy were reported in the JAMA study to be $2189 more per case than for laparoscopic hysterectomy.
  • Some hospitals appear to be hyping and/or aggressively marketing their robotic capabilities. Investigators reported In a 2011 study that 41% of hospital websites promoted their robotic surgery capabilities and that clinical superiority was claimed on 86% of these sites, while none mentioned risks.
  • Just as with any new technology, there is a learning curve when adopting robotic-assisted surgery technology. During the learning curve, risks are higher.

Some opinions:

  • Intuitive Surgical has done a brilliant job in developing and marketing its da Vinci System, perhaps too good. The company shipped its first commercial system in 2000 and has averaged 25% annual growth ever since. The low-hanging fruit may be gone.
  • Whether deliberate or accidental, Intuitive has created the perception among the public that robotic-assisted surgery is “better” than alternative approaches. This creates demand for the procedures and indirectly, demand for Intuitive’s products.
  • There are few, if any, randomized clinical studies demonstrating a significant clinical benefit of robotic-assisted surgery over the gold standard technique, either open surgery or laparoscopic surgery. There are a few studies indicating limited advantages in outcomes in very specialized indications and a few others that show perioperative benefits such as reduced need for transfusion.
  • Some hospitals have irresponsibly hyped the benefits of robotic-assisted surgery to patients. Perhaps this is in response to competition and perhaps partly to attract patients in order to justify the large investments in robotic equipment and training.
  • Some surgeons are aggressively adopting the new technology even where there is no clinical advantage or indication. Perhaps they fear losing the revenue stream from patients or the patient stream from referring physicians.
  • The winds of change (healthcare reform in Obamacare, negative publicity about complications and costs) are starting to blow. Intuitive’s share price is down more than 34% from its peak value reached in February 2013.

Takeaways: There is a fine line between aggressive promotion and hype. In this case, the urgency and greed triggered by the “robotic gold rush” may have caused the hype line to be crossed by more than one party. Few healthcare companies conduct randomized clinical trials unless required by regulatory bodies or customers. Given the changes occurring in healthcare today, it is prudent to include outcomes and clinical studies in your commercialization plans. If your technology or product is radically different from the gold standard, you must seriously consider learning curve effects as part of market adoption. Basic training, advanced training, certification, proctoring, and partnering with professional organizations are all options when introducing new technologies.

Read more: Robotic Surgery: Too Much, Too Soon?.

A Twenty-Year Snapshot of the Health of the American People | JAMA

Fascinating glimpse into the state of our health in the U.S. and how it changed over a period of twenty years from 1990-2010.

This is a “glass half-full/glass half-empty” story. If you are in the healthcare industry, it seems that there is going to be a limitless supply of patients with chronic medical conditions for the foreseeable future. On the other hand, if you are a typical American or if you have some responsibility for public health, there is much to be concerned about. We’re spending more than ever and more than everyone else on healthcare. Although the overall health of our nation’s citizens is improving, it’s not improving as much as other wealthy countries (which are spending far, far less on healthcare).

A few examples from the abstract:

  • Ischemic heart disease, lung cancer, stroke, chronic obstructive pulmonary disease, and road injury were the most prevalent lethal conditions in terms of sheer numbers and were responsible for the most years of life lost (YLL) due to premature mortality.
  • Alzheimer’s disease, drug use disorders, chronic kidney disease, kidney cancer, and falls are increasing in incidence rates most rapidly on an age-adjusted basis.
  • Low back pain, major depressive disorder, other musculoskeletal disorders, neck pain, and anxiety disorders represented the conditions with the largest number of years lived with disability (YLD) in 2010.
  • While we are living longer, we’re living with disabilities. As the US population has aged, years lived with disability are growing faster than years of life lost overall.
  • Our lifestyle choices are disabling and killing us. Poor diet, tobacco smoking, high body mass index, high blood pressure, high fasting plasma glucose (pre-diabetes), physical inactivity, and alcohol use were the leading risk factors in disability and premature death combined.
  • Chronic disease and chronic disability now account for close to half of the US health burden.
  • We’re losing ground to our peer countries:

Among 34 OECD [Organisation for Economic Co-operation and Development] countries between 1990 and 2010, the US rank for the age-standardized death rate changed from 18th to 27th, for the age-standardized YLL rate from 23rd to 28th, for the age-standardized YLD rate from 5th to 6th, for life expectancy at birth from 20th to 27th, and for [healthy life expectancy] HALE from 14th to 26th.

No matter what you may think of Obamacare, single payer healthcare, or market-based solutions, these facts clearly show that we as a nation are not getting any “bang for our healthcare buck.” I don’t think that anyone believes we can spend our way out of this dilemma.

Takeaways: There is more data available than ever before to analyze health trends. There is an enormous interest in new technologies and methodologies that can improve a patient’s health without increasing costs. There are any number of clinical conditions upon which a startup could focus and have a significant effect on our healthcare system. Disease prevention and lifestyle modification look to be areas of focus and rapid growth. As you develop your latest medical device or as you plan your medtech startup, keep the big picture in mind. Show that your device or technology will not only work better than alternatives but that it will demonstrably improve patient health and save money.

Read more: JAMA Network | JAMA | The State of US Health, 1990-2010:  Burden of Diseases, Injuries, and Risk Factors.

Obamacare is Changing Market Access | MDDI Medical Device and Diagnostic Industry News

Access to the healthcare market is changing for medical device companies, particularly for startups with new technologies and no track record. It’s not clear to me if Obamacare is really the driver or if it’s the larger initiative of “healthcare reform” that’s causing providers and payers to make changes in the way they do business.

In any event, providers such as hospitals have become more demanding of new products and new companies. They want to see evidence of clinical efficacy as well as evidence of economic efficacy (outcomes) before they agree to purchase or in some cases, trial the products. Importantly, payers – private insurers and Medicare – are slowing, reducing, or even denying reimbursement for new products and procedures. The outcomes data is being called comparative effectiveness research. Most current data supplied by industry has been deemed insufficient. Evidence of the increased demand for data is the current emphasis on and support of healthcare IT applications by government entities as well as payers.

The authors of this article argue that responsibility for market access must be broadened to become an integral part of the commercialization process like regulatory clearance and that it should be applied to a broad cross-section of the organization and also throughout the product life cycle. This is a major change in the way that most companies conduct product development and commercialization. It will require executive management involvement and changes to strategic goals and plans to implement and sustain such a change.

For example, it is in the best interests of the organization to create and provide “strong evidence of clinical differentiation.” Not only will the evidence make it easier to get agreement from providers and payers, it also provides a degree of protection against premature commoditization. It’s equally important to lobby government officials, either directly or through a trade group. Finally the organization must be sure to protect itself by retroactively addressing products already in the market, as a demand for data could come at any time and cause significant disruptions to manufacturing, sales, materials management, etc.

Takeaways: Startup CEOs and medical device product managers, project managers, and program managers must incorporate comparative effectiveness research for both clinical efficacy and economic effectiveness into their strategic plans, product development plans, and go-to-market plans. Without outcomes data to demonstrate economic and clinical value (ECV), the risk of a failure at product launch because there are no willing buyers for your product is very high. This can kill a company or a career.

Read more: Obamacare is Changing Market Access | MDDI Medical Device and Diagnostic Industry News

How a cotton candy machine gave this NSF-funded, Indiana-based wound-healing startup its first big idea | MedCity News

If you’re interested in startups, here is a story about how one current medical device startup formed. There’s probably not a typical path for startups to follow but many do form to address one issue and ultimately become something very different.

The trendy term for this in Silicon Valley these days is “pivoting.” That’s when you fail at one thing and then figure out something else to do using your existing assets. It also goes by the phrase, “fail fast, fail cheap, and fail often.” Of course, if all you do is fail, you will never get anywhere! The methodology requires that you learn from each mistake and apply what was learned to the next project. You do need to show traction and progress before your investors and stakeholders run out of patience.

The startup in the article, Medtric, envisioned a fibrous wound dressing spun on site in a process similar to how cotton candy is formed. They failed, perhaps because they focused on a process instead of the problem. They learned from their mistake, however, and developed a nanotechnology-based dressing in their second attempt. That product along with a third seem to have tangible clinical benefits. It also helps that the products are simple and relatively inexpensive. Those attributes help attract investors. The company has received extensive grant funding and angel funding and is planning to commercialize its products in the next year.

Takeaways: Ideas for new products can come from anywhere, even cotton candy machines. What’s more important is to have a deep understanding of the problem you want to solve and the benefits your solution provides. Simplicity in explanation of your concept, plan, product, and technology makes it easier for investors and stakeholders to understand and buy into your story. Pivoting is an expected part of the innovation and commercialization process. It is always good to have a backup plan just in case your primary strategy fails.

Read more: How a cotton candy machine gave this NSF-funded, Indiana-based wound-healing startup its first big idea | MedCity News.

Fraunhofer iPad app guides liver surgery through augmented reality | engadget.com

Here is an excellent example of the innovative use of commercially available computer technology, in this case an iPad tablet, to address a clinical problem.

The problem is that surgeons performing liver surgery to resect a tumor must identify and then avoid the extensive vascular structure in the liver when removing the tumor. They must also be sure to leave sufficient liver tissue and blood vessels for the liver to function properly after surgery or the patient will die. Currently, surgeons either memorize the patient’s vascular structure after studying 3D CT scan images or they bring printouts into the operating room or they show the images on large computer monitors.

The first option for referencing the imaging information runs the risk of the surgeon forgetting an important detail or remembering something incorrectly (it happens). The second and third options’ risks are that the surgeon must repeatedly look away from the surgical field to get the structural information that will guide his/her excision. These “lookaways” prolong the procedure, cause the surgeon to lose his/her orientation, and can even cause damage if an instrument is moved during the period of inattention.

Fraunhofer, a German research institute that develops and licenses advanced technology, created a simple iPad app that allows the 3D CT images to be brought very close to the surgical field. The iPad is placed in a sterile sleeve so it can be manipulated directly by the surgeon or assistant. That would be plenty valuable if it was all that the app did. But (as the late night infomercials say) wait, there’s more!

The app uses the iPad camera to capture a live view of the surgical field and the patient’s liver. It then superimposes the vasculature from the 3D CT imaging study on the live image from the camera. That’s the augmented reality part. The app also enables the surgeon to measure the length of a blood vessel by marking it on screen and to “erase” excised blood vessels from the display. The app can also estimate the blood flow through the remaining vessels, helping the surgeon to determine if the remaining tissue will be viable.

The researchers plan to use the app next in pancreatic surgery, another organ that requires painstaking precision and relies heavily on preoperative imaging.

This app could be further improved, in my opinion, by adapting a head-worn, see-through display with a built-in camera. The surgeon would remain focused on the task and the 3D imaging would be superimposed on his field of vision. There would be no need for the awkward manipulation of a tablet on or near the surgical field. The other members of the surgical team could have their own headsets with the surgeon’s view displayed. Of course, there are no commercially available products in this category quite yet, although Google Glass is a promising candidate.

Takeaways: This is a great example of innovation in medicine by adapting the familiar (physicians are heavy adopters of iPhones and iPads) to a serious clinical problem through the development of an easy to use software app. The lesson for entrepreneurs and startup CEOs (again) is to leverage the billions of dollars of investments made by others in consumer technology and then to add value by 1. understanding the clinical problem and 2. developing a unique solution with the leveraged technology. It’s a fast, relatively inexpensive path to the market.

Read more: Fraunhofer iPad app guides liver surgery through augmented reality.

Medical Device Design Transfer to a Contract Manufacturer | MDDI Medical Device and Diagnostic Industry

It is increasingly possible to set up a medical device startup as a “virtual” company. With the ubiquity of high speed internet connections and inexpensive, even free, web conferencing applications along with cloud-based file sharing sites, savvy entrepreneurs focused on commercializing quickly and with minimum expense can use outsourced services, contractors and consultants for just about everything.

There are contract design houses, contract clinical research organizations, “rent-a-CFO” firms, freelance sites for graphic designers and all sorts of marketing experts, manufacturer’s representative sales organizations, outsourced customer service and support organizations, logistics companies to warehouse and distribute your products, websites that will display your product and process customer orders, and (the subject of this article) contract manufacturing organizations (CMO).

This article from MDDI explains in detail how to design in anticipation of using a contract manufacturing organization. The logic and elements should be easily understood by anyone with ISO9000 experience, as the process is to “plan the work and work the plan.” The first step is to create a Design Transfer Toolbox. In the toolbox are a number of specifications, documents, and plans. From the article:

  • User requirements specification (URS). What must the process do?
  • Sequence of events (SOE) chart. When will each assembly step occur?
  • Functional requirements specification (FRS). How will the process operate? How will the functionality be tested?
  • Design specification (DS). How will the configuration of the process with detailed drawings and databases be defined?
  • Trace matrix. How is each design requirement tested and verified? This directly relates each requirement to test functionality.
  • Process failure modes and effects analysis (pFMEA). How will the CMO prove it has built the right product in the right way? Input document is the product design failure mode and effects analysis (dFMEA).

It’s important to understand that this is a collaborative process between the medical device company and the CMO. The various specifications and processes must be detailed and agreed to by both parties before a contract is signed and work commences. The consequences of not following rigorous documentation and not having copious communications will be delays, quality problems, and regulatory infractions. On the other hand, investing time and effort before doing the design transfer can result in a high quality, cost-competitive manufacturing process and a successful long-term relationship between the medical device company and the CMO.

Takeaways: Not only are virtual medical device companies possible, there are high quality, reasonably priced companies and individuals operating as contractors, consultants, and freelancers that are eager for your business. If you are a medical device startup CEO with an urgent need to get to market, you should consider outsourcing areas outside of your core competencies. You will save money and time.

Read more: Elements of Effective Device Design Transfer to a Contract Manufacturer | MDDI Medical Device and Diagnostic Industry News

Crowdfunding for Medical Devices

The notion of crowdfunding early stage medical device development is spreading. By now everyone is familiar with Kickstarter and the many examples of companies that have successfully raised funds by appealing to large numbers of “average Joe/Jill” supporters. There are more than a few copycats now that Kickstarter has been successful. Most, however, do not encourage or permit crowdfunding of medical devices.

http://blogs-images.forbes.com/85broads/files/2012/03/crowdfunding-photo.jpg
Image from Forbes.com

There is obviously a funding gap for many early stage medical device companies. Venture capitalists have abandoned the early market except for blue chip prospects. Angel investors have become extremely risk-averse in my opinion and have functionally replaced VCs (although not the big VC investments of 10-15 years ago). Between federal budget sequestration and increased competition, grants from NIH, CDC, NSF, and DoD have dried up and take too long to be a reliable source of funds for most startups.

As usual, savvy entrepreneurs to the rescue! Here are a few specialized sites that are crowdfunding medical device startups:

  • Medstartr “Patients, Doctors, and Companies Funding Healthcare Innovation.”
  • Poliwogg “Put Your Money Where Your Passion Is”
  • indiegogo “The world’s funding platform. Fund what matters to you.
  • b-a-medfounder “A uniquely positioned crowdfunding platform dedicated to medical device invention and innovation projects.”
  • healthfundr “Accelerate health innovation. Invest in the companies shaping the future of health.
  • microryza “FOLLOW & FUND SCIENTIFIC RESEARCH

Many of these sites and organizations are new and do not have a track record. Most are focused on investors who want to put in a small amount of capital. Perhaps they are angel investment neophytes who are just starting out or maybe they prefer to make lots of small investments. Who knows? Others seem to focus on “donors” who are essentially giving a gift to the company, again, for very personal reasons. In any event, all of the crowdfunding sites seem like resources to investigate for early stage startups looking for that first $100k or so of seed funding.

It will be interesting to see how these services develop. As many of you know, early stage investors can get diluted down to almost nothing in terms of equity very quickly. And although medical devices cost only a fraction of what a biotech drug might cost to develop, it still requires a minimum of a few million dollars in capital to get a Class II device to market. If that funding is stretched out over a few rounds, the early stage investors almost certainly won’t get much, if any, return on their investments.

It remains to be seen if a relatively obscure and small niche like medical device development can attract sufficiently large numbers of investors. It’s also a big unknown if the proliferation of crowdfunding sites prevents any of them from reaching a critical mass of investors.

There are caveats in using these services, of course. Just as investors perform due diligence on you and your startup, so must you conduct your own diligence on the crowdfunders. Keep in mind also that these are for-profit businesses, not charities. They will take a percentage of the funds you raise. One popular crowdfunding model takes a percentage if you raise your target amount and a larger percentage if you fail to achieve your fundraising goal. I suppose that’s intended to be an incentive for you to work hard to promote your offer.

There is also some uncertainty about how these sites screen for accredited investors and avoid the laws against general solicitation. I’m certainly not well-versed in these matters but I’ve been keeping up with recent new regulations issued by the SEC on a blog written by a Seattle attorney, William Carleton. Read it here: Counselor @ Law.

There is also an older, more established online funding presence at AngelList.

Takeaways: Crowdfunding is a relatively new funding option for medical device startup CEOs and CFOs to consider. Add this option to your fundraising toolbox. Keep in mind that these investors may be less financially sophisticated and less experienced than the typical angel investors you are accustomed to dealing with. Some of these investors may be making decisions based on emotion. I strongly recommend consulting an attorney before signing up with any of these services and at least getting a thorough review of the service’s terms and conditions.

Read more: Inventor launches crowdfunding hub for medical devices – FierceMedicalDevices.