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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowWALL: I'd like to start out that life
science in Indiana has a lot of successes they can
claim. There was a study in 2012 by Bio that ranked
Indiana in the top 5 in just pretty much every
category for life sciences and yet the state kind of
continues to struggle, I guess, at attracting venture
capital, private investments early on when you
compare Indiana to even just its surrounding states,
which aren't necessarily the nation's leaders in life
sciences. We often lag. I would just like to
understand why is that happening, why do you think
that's happening? I'll start with the current
venture capitalist on the panel, Matt, can you answer
that one?
NEFF: Well, while Indiana has a very high
concentration of large companies, our development of
small startup life cycle companies is still nascent
in the sense that we haven't had a lot of exits yet
and that's, frankly, what drives the venture capital
business. Just as an alternative, if you look at the
tech marketplace and you check out all of the
companies that have been successful in Indiana in
technology, many of them, the entrepreneurs that run
them, can trace their roots back to Software Artistry
and that was a big success, an early success, and
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that spawned a lot of entrepreneurs who then went out
and started a bunch of other technology companies.
We have a lot of intellectual property, we have a
developing group of entrepreneurs and a relatively
healthy flow of new companies that are being created,
but what we haven't seen yet are a tremendous number
of exits that fuel that family tree being developed.
Fortunately, Dr. Low and his colleagues at Endocyte
are making great progress in that regard and there
are other examples, but I think what we need to see
is more of that. The venture capital business, as I
said earlier, it all relates back to exits, that's
the payoff that investors require in order to make
investments in venture capital funds. The exit
marketplace in the last five years has been
significantly depressed, you know, we had a financial
crisis, we have a tremendous amount of policy
uncertainty in terms of tax policy, regulatory
policy, administrative policy at the FDA, those
things have all created a drag on exits, and if you
look at the venture capital industry today, there are
large venture capital funds that are raising more
amounts of money than they did in 2009 but there are
a smaller number of venture capital funds that are
doing that and the industry is consolidating and
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what's driving that is the lack of exits. There are
a lot of smaller, younger venture capital funds that
were created in the early 2000s and mid 2000s that
are still waiting for exits and they cannot get
themselves funded for a second fund which impacts the
investment going forward.
WALL: Well, that's helpful. Who else has
some thoughts on this? Brian Williams.
WILLIAMS: I'd probably say part of our
challenge in Indiana is that there is a finite amount
of venture capital and I think the Money Tree Report
that PWC issues every quarter reflects these trends
that Matt was articulating. I think the challenge
we've had here in Indiana is we do have a finite
amount of capital and those bets that we can make we
should be making more to find successes out of them,
I think more dollars going into the seed and early
stage, which is the most difficult funding period. I
know the other brilliant "Brian" on the panel runs
one of those seed funds but it's, relatively
speaking, very, very small, and so the few dollars
that we do have to seed entrepreneurs should go into
that seed and early stage, we should put more dollars
into seed and early stage, which means a fundamental
shift in how we think about risk in Indiana and what
the game is when it comes to venture capital. The
game is you're going to lose a lot of bets and you've
got to be comfortable with that whether you're an
individual investor or an institutional investor, and
when we're ready to make that transition and put more
dollars, ten times the amount of money that Brian has
at his disposal today, then we'll be in a position to
start to compete more effectively nationally for
successes. Matt's right, we had one success with
Software Artistry that spurred multiple software
companies. Dr. Low has had one success at Endocyte.
We need more than one success, and so for those
public-private partnerships that are out there and
those efforts that are out there, we should focus
more and more of our dollars on seed and early stage
because it's short everywhere in the country.
WALL: Dr. Low?
LOW: I'm going to answer this question from
the perspective of a professor or an inventor,
someone that discovers technology, and I think we
have a major problem in Indiana in our culture, or
actually perhaps in our vision, of how to do this. A
professor at Purdue or at IU will come up with an
important discovery and in my interactions I see lots
of very, very useful discoveries being made on a
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regular basis, but we don't have a lot of examples
around the university like they may have in San Diego
or in Boston and other places like this where our
colleagues have taken a new invention, gone through
all of the proof of principle steps that are required
to attract even seed funding, our venture capital
investors don't want to invest in just a paper idea,
they like to see some proof of principle before they
lay down large amounts of money, and so in my
particular area of drug discovery you have to take a
drug that you may have discovered in a chemistry lab
and test it on, first of all, cells and culture,
meaning you have to learn how to culture cells, then
you have to take it into animals, meaning you have to
learn how to implant tumors or induce diseases in
animals, you have to then demonstrate that you don't
kill the animal or damage the animal with your drug
while you're treating the disease and then after that
you have to begin to examine the competitive
landscape, are there other drugs that have similar
capabilities? Can you compete? What is the cost and
time to market, and can I raise this kind of money?
And moving forward with all of these very early steps
is daunting to someone who is actually spending most
of his time teaching undergraduates how to balance
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chemistry equations, and so as a consequence and
without more examples of professors that can do this
and this vision, because what you can perceive you
can achieve and until you can perceive yourself
actually moving from this laboratory experiment into
the clinic you'll never move forward with it, it just
seems too daunting, so I think we need to bring in
people that know how to do it and pretty soon that
fear barrier will disappear and you'll see the
fantastic technology that is currently being
developed at our universities here actually being
translated.
NEFF: Phil makes an interesting observation
about the fear barrier. If you talk to people in
Silicon Valley, most of the entrepreneurs there will
say "Yeah, you know, I've started five companies, I
had two wins and three failures" and there's no shame
in failure. In the midwest we have a tendency
because we're still relatively new at this to say "If
you had a failure, what does that tell me? Maybe
you're not really a very good entrepreneur." We have
to learn to accept the fact that, and Brian may,
which is that most new businesses fail and venture
capital people have to get comfortable with that.
You know, 65 to 75 percent of companies that we
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invest in are going to fail. There is no shame in
failure, it's a great learning experience. So for
those of you out there that are entrepreneurs, don't
worry about that, at least as far as I'm concerned,
that is not a barrier to investment.
EILENBERG: And I would actually like to say
that I agree with everything that's been said here.
So we are getting ready to launch Digital Health
Accelerator here in South Broad Ripple and the focus
is to help bring in talent from around the world that
will allow us to start to realize the value of the
assets that we have here in the state of Indiana,
whether it's digital technologies that are within our
academic institutions or entrepreneurs who are talent
that we haven't been able to put the right structure
and support around so that they can succeed. Now,
what Matt is saying is there is a very high failure
rate here, we know that, but I would claim that we
have not done our state and our city and our region
justice in putting the right support mechanisms
around the talent and assets that we currently have
and we're sitting on, we're allowing them to be idle.
It's up to us to step up and figure out ways to
mobilize and bring the right ecosystem around
different things. We talk about Software Artistry.
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It's technology, and yet if I look in this room right
now I don't see many tech people. There is a
dichotomy right now when it comes to where we sit
today, there's the technology sector and there's the
life sciences sector, we need to start to merge
together and realize that if we come together we are
going to do something great and the venture
capitalists will come, the entrepreneurs will come,
the resources will come, and we will put ourselves on
the map for doing something beyond what people expect
of us Hoosiers.
ZAVALETA: J.K., I'd like to add to that.
WALL: Yes.
ZAVALETA: Venture capital is an expression,
it's a symptom rather than the cause. I think that
Kristin is right, the ecosystem needs to be built up
a little more. We are a very cautious midwest
attitude here. When you invest in even an
early-stage company, the demands on valuation are
very high, which in many ways impedes the follow-on
investment, it makes it difficult for investing. We
are afraid of failure, like Matt said. I can tell
you that in California the rate of failure is not
better than ours, they fail just as often as we do,
but there is a stigma about failure. I fail. I'm
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still an entrepreneur, but I've failed several times,
but you have to have that attitude of taking the risk
and doing it, somebody has to. And even though we
are building an angel investor base, I think it's
still a very cautious investment focus.
WALL: Brian Stemme, you haven't weighed in
here. Do you have some thoughts on this question?
STEMME: I think that everybody has made good
points. I think one positive I would say — I would
agree with Raul that our angels can be cautious, but
compared to when we started our seed fund back in
2006, there actually is quite a number of people that
are willing to do angel funding in the life sciences
and that's been different than when we started, so
that would be one point I would make. And the second
thing I would say is that a little bit of this has to
do with timing, you know, we had a little more
capital available around the 2005 timeframe when the
Indiana Future Fund was formed, our seed fund, as
well as some other funds that were invested in
through the IFF. When we started to get some company
formation, they started to make some progress kind of
2005 to 2007, and then we did have a hiccup with the
financial crisis which has led to a slowdown, there
has been less money available, the money that is
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available is harder to get, so I think that I would
add that it's a little bit related to timing because
we had more capital available, we started to get some
things started, and two or three years into that,
right when a company might be ready for an A round,
we had basically a freeze, or at least a very big
slowdown in that funding. For example, I know that
when we were spending some time in San Diego on a
project they came to us and said venture capital
funding, I think this was roughly late 2008, early
2009, venture funding in San Diego was down 75
percent in that particular six-month area. Now, you
know, it's gone back up, it's not something that is
going to be forever, but I think that just to add
that little bit of element that we started to get
some things going on the capital side and we've had a
little bit of a hiccup really unrelated to the
ability of some of the entrepreneurs that were out
there.
WALL: Okay, thanks. Go ahead, Brian.
WILLIAMS: In addressing that, we make public
policy decisions in Indiana all the time and where we
want to invest to try to grow the state, and we're
having breakfast at a very nice ballroom this morning
that we all as taxpayers contributed over a hundred
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million dollars to. We all as taxpayers contributed
800 million dollars to build the football stadium.
So we've made public policy decisions of where we're
going to allocate dollars into things that may
generate some near-term returns, but the things that
we are talking about are longer term investments, and
so I guess my encouragement would be for all of those
that are in the room that have an interest in life
sciences, when these kinds of decisions are before
our elected officials, that you weigh in. We are
making trade-offs, we have finite resources in
Indiana and everywhere else, and so the BioCrossroads
and others that were well-intentioned efforts and
raised a little bit of money, right, 75 million
dollars sounds like a lot, but when you compare it to
800 million for a football stadium or a hundred
million dollars for a hotel or some of these other
trade-offs that we have made with where we're going
to allocate resources, I think we need to be more
vocal as an industry to say "Look, if you want to
make that investment, let's think about the
ramifications of it to the other sectors of the
economy and is that really what we want? Do we
really want to have 45 football players making a
million dollars or would we rather have 45
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entrepreneurs who build a successful company and exit
and take home a million dollars and will take half of
that or a quarter of that to seed their next
investment, those are the kinds of trade-offs that we
as an industry need to articulate to our elected
officials to say "Hey, let's think more cogently,
more in-depth, about what the opportunities are, the
opportunity costs that we are making and the
trade-offs that we're making."
WALL: Thanks, Brian. Does anyone have any
follow-up to what Brian just said?
ZAVALETA: I think you're right, but as a
culture here in the Midwest we invest in things we
can see. Intellectual property, you don't see it, so
even for angel investors it's very difficult for them
to invest in intellectual property because it's not a
building, it's not a machine, so that clouds the
investment judgment of our policymakers and our
investment community.
WALL: Go ahead, Dr. Low.
LOW: Well, if you want to think in the blue
sky, so to speak, in the public domain I would love
to see some sort of an organization assembled where
the technology developed at Notre Dame, Purdue, IU,
the other schools in Indiana, private entrepreneurs
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and so forth, who are given an opportunity to present
in front of a panel of smart people that was
supported in part by the State of Indiana where the
very best technology was selected and supported
through this region that we call the "Death Valley of
Science" and taking something from an initial plan
into proof of principle, and that's where everything
dies, there's great observations and discoveries made
in the laboratories around the state and it's very
difficult to find the funding to take that to a proof
of principle, especially in the health care industry
where the costs associated with bringing a drug into
humans are formidable, but even if you have, for
example, a blueprint plan that you have conceived of
on paper for a new let's say car battery that will
allow you to drive for a thousand miles instead of 50
miles, it still is going to take an awful lot of
money to translate that and demonstrate to GM that
this is in fact worth investing millions and millions
of dollars and this is where everything falls apart
is this ability to take a great idea. The problem is
if you just willy-nilly give everybody who claims to
have a great idea money you're going to end up losing
a lot. First of all I would love to see the State of
Indiana put together an organized investment fund
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that really focused money on these opportunities that
would be developed within the state and lead to drive
the economic engine of this state and use state
technology to do so and then you'd, obviously, have
to have a panel of smart people to make sure you
chose the right technology.
WALL: Well, let's transition from there into
the public policy front around the life sciences and
one of those things is Indiana Biosciences Research
Institute that Governor Pence has advocated and other
large life sciences companies have gotten behind.
The Legislature gave it 25 million dollars to get it
started, the private partners involved are going to
raise a 300 to 400 million dollar endowment to help
sustain it over time. What difference would having
an institute like that including the idea or the
basic concept is that you'd have collaboration
amongst industry and academic scientists, what sort
of difference would it make here in Indiana? Do you
want to start on that, Dr. Low?
LOW: Well, yeah, I think what jumps to mind
to me off the bat is that those that invent are often
not well trained or educated in business and it's
very difficult to actually master both sets of
skills. If we were to pursue this strategy it would
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be great to have some capability of handing off
technology, not really handing it off because you
always want to have the inventor involved, there's
nothing that can replace the passion of someone who's
invented something for seeing that through 'til it
benefits mankind, there's a driving force that just
keeps me up late at night just because I love the
idea of trying to make something that I do really
matter. Not very many people on earth have an
opportunity to do something that really makes a
difference and to have that has this unique
opportunity and so this passion is something that
drives me constantly and I think you don't want to in
any way substitute that, you want to keep that
associated with the development, but at the same time
I'm clueless of how to run a business and I don't
pretend to have that information, nor do I really
find it very interesting, to be honest with you, so I
think you really have to provide that other component
to be successful, so somehow marrying the two would
be useful.
WALL: Who else has thoughts on the
Biosciences Research Institute and what impact it
might have here in Indiana?
STEMME: I'll throw some thoughts out there.
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I think, first of all, I would want to acknowledge
the folks from the State that have really made an
impact, Governor Pence, Ryan Streeter, both the
leadership of the House and the Senate, all
contributed to supporting this and really to make a
difference in an appropriation of that level, and so
there's going to be a great responsibility at using
those funds, combined with others to make a
difference. When you say what difference will it
make, I think one of the keys is that it's going to
enable the corporations locally to interact and
collaborate together, which would be relatively new,
and while not novel, would greatly increase their
collaborative activities together, as well as
bringing in new talent, as well as having a focus on
the research to address a specific problem that the
companies collectively have identified, and so while
it won't be, you know, limited to that particular
topic, there will be a very high level of focus on
translational work and collaboration, so I think that
given the status of NIH budgets, given the status of
the way the pharmaceutical and device industries are
going with looking to academia, looking to
partnerships, trying to maximize limited resources,
we think that it's going to be a great asset that
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adds to the research universities and the other
companies in the region.
WALL: Who else has thoughts? Brian
Williams.
WILLIAMS: I'm not familiar with all of the
details of the Bioscience Research effort, but I
certainly hope it connects to what Kristin's talking
about in terms of mobile health because not too many
months ago I was in Singapore for a similar
discussion along these lines and in that conversation
when you go around the world and you ask people in
the health care space who is your competition going
forward, it's the typical cast of characters, and I
always caution folks that there is this little
company in South Korea by the name of Samsung, you
may have heard of them. They have made a commitment
to invest [3] billion dollars to build up their
health care business. … They have already made
significant strides in this regard. So as you're an
entrepreneur thinking about "Where do I compete? How
do I compete?" the competitive landscape and the
innovation cycle that occurs is changing in a
fundamental way. Innovation within health care will
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start to occur on the same cycle speed that it occurs
within technology. Samsung has already purchased
four medical device companies. They have already
constructed and received FDA approval for a
biosimilar production facility in South Korea. If
they can make the big molecule stuff, they can make
the little molecules, and if you read the papers from
time to time you'll see that they have announced that
the next version of the Galaxy phone will come
embedded within it a smartphone health app and
peripherals to go into the device to help you manage
and track health care. So here is a company whose
decided "We can have the technology and the
capability to manufacture high-precision tolerance
machines that are medical devices and diagnostics and
we think that capability translates into
manufacturing the software, the therapies that are
administered," and so if you think about the future
of health care, sitting here today we know in the US
we have significant problems as it relates to access
to care and adherence to care. Right now today we're
a hundred thousand physicians short in the US to
provide care, we're 300,000 nurses short. That does
not contemplate the 40 million plus that will come
into the health care system as part of health care
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reform. It does not contemplate the continued demand
and the increased demand that will go onto the health
care system because of the aging of the population
here in the US, the heaviest users of health care, so
we know today that the only way that we will be able
to provide care in a manner that meets the standards
of quality that we all expect from care at a price
that we can afford we will have to deploy and use
technology in new and novel ways. So if you're an
entrepreneur getting into the health care space or
you're trying to build a business in the health care
space, you have to pursue the science, you have to
understand the human condition and the disease you're
targeting, but when it comes to commercialization,
you have to think fundamentally differently about how
I'm going to succeed and compete in the marketplace,
because Samsung is just one. There's a little
company up in Chicago called Avery Dennison that if
you go to your supply closet it probably has a few
labels and envelopes and that kind of thing, fairly
large outfit. They will release later this year what
looks like essentially a large Band-Aid that has an
embedded near field communication protocol to talk to
your smartphone, it's got an embedded galvanic skin
response, it's got a host of other devices embedded
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within that Band-Aid for 99 cents. If I'm in
Indianapolis and want to track Grandma in Florida, if
I'm a triathlete and want to see how I'm doing, here
is a very simple form factor that allows me to
communicate. Companies like Sanofi that are drug-
discovery companies have built a diagnostic that
plugs into your smartphone, a glucometer, and
software that sits behind it, so if you're investing
in diabetes, how do I manage that? A fundamentally
different health care landscape.
WALL: Who else has thoughts on the
Institute, or, if not, we can start talking more
about digital health, considering Brian sort of
kicked it that way anyway. Okay, Kristin Eilenberg,
tell us about digital health, what sort of impact in
either mobile apps, like Brian was emphasizing, or
even digital health that's more in the hospital
system, provider space with medical records, how is
that going to change health care going forward?
EILENBERG: I think that one of the biggest
challenges is what's the definition of digital
health, I'll throw a question back at you. A lot of
people ask me that, they're like "Well, what is
digital health?" Brian has already identified a few
examples of where technology is meeting health
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monitoring, and all of us right now are being
monitored. If we've got a cell phone on us, a
smartphone on us, Verizon, AT&T, Sprint, they know
where we're at. If we were at St. Vincent or if we
were at Community, they would also know we were
there. If that data was geo-tagged to say "This is a
health situation going on," you know, if we're
showing up and it's our employer every single day
it's not going to get flagged, but Verizon can see if
you're going places on a regular basis. The question
is how do we transfer that information into a usable
form so that we can use it to better improve our
patient outcomes? The way that I live my life, I
don't walk around saying "I'm a patient," I don't, I
don't think any of you do either, but yet when we
show up in a health care setting we're all of a
sudden tagged with "You are a patient." Digital
health will get us to a point where we are just
living our lives and we are producing health
information that can be used to help diagnose us,
help treat us, help monitor, help provide information
back to us in a relay system so that we can do things
differently and we can live differently but in a good
way so that it reduces the cost out of our own
consumer pockets because even though historically we
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haven't had to pay a huge price, now there are some
individuals that are self-insured and they'll debate
me on that, but typically we have to do copays or,
you know, minimum payments for types of things, what
we're going into is a world where we're going to be
paying more out of pocket. Price transparency of
health systems and what it really costs to get
access, so Brian talked about access, is a huge
thing, we're going to have consumer reports of health
care, we're going to be able to say when you go to
Dr. Bob and you are going to have an x-ray, it's
going to cost you $12, but if you go to Dr. Sue, it
can cost you 5 and when you look at the quality, it's
the same quality, so as a consumer of health care
that's going to benefit you. Those are all digital
health types of things because that's moving
information in many different ways, it's helping the
consumers do something different than what we've been
able to do historically because technology exists now
that didn't exist 10 years ago. The other thing
that's going to happen is, and this is my passion, is
how can we figure out how to tap Facebook, Twitter,
all of these other social settings that we engage in
on a regular basis, our families engage in. We use
Skype, we use all of these other types of
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technologies and we are producing lots of
information. I texted last week on Facebook "My
daughter had the stomach flu," I know that we're
clear, by the way, but everybody that was connected
to me on Facebook knew that we had an illness in our
family. How can that information be tagged and
pushed to our GP so that they're monitoring? It's
not like we're going to go into the doctor's office
because we know that it's a 24-hour bug, but that
information can be put as part of our record and be
used and referenced in the future. When people only
have 60 seconds, two minutes with a doctor once a
quarter, once a year, once every two years, and the
doctor says "How are you feeling today?" "Great!"
the reality is if you looked at the Facebook posts
for the last six months you'd know that they've been
on a rollercoaster and they're struggling with their
depression but at that very moment they're great, so
digital health is something that will bring
information to lots of different stakeholders that
are seeking that information and then it's also going
to help us do things differently as an end consumer
of that information.
WALL: Matt Neff, you're investing in
companies. What do the advances in digital health
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mean for the decisions you make, the companies you're
working with?
NEFF: Well, we're still in the early stage
of gathering digital data, we're in the meaningful
use phase of health care reform where electronic
medical records are now becoming more and more
common, but we're still, as I say, working our way
through the early part of that cycle. Then the
question becomes "Okay, you've got all of this
massive data, what do you do with it, how do you make
it meaningful, how do you organize it and what kind
of predictive value does it have for you going
forward?" So one of our investment theses is that
health information technology is obviously going to
be very important. We recently invested in a company
called Health Catalyst that is an electronic data
warehouse, big data for health care, and it cuts
across all types of software to accumulate data for
health management purposes. IU Health bought this
product, has implemented it and it was the first
health care system on the Cerner EMR to accumulate,
aggregate, organize 20 years of health care record
data from the Cerner system, so health care reform is
driving a near-panic search for solutions in terms of
efficiency. 2014 is going to be the big bang of
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health care reform, the reimbursements are going to
drop, all the large health care providers are looking
for ways to significantly reduce the cost of
operations. Digital health in all of its forms is
offering a major, major opportunity. The question is
going to be can you demonstrate some kind of
compelling impact on the problem, but if you can I
think you've got a heck of an opportunity given
health care reform.
WALL: Raul, do you have thoughts on this?
ZAVALETA: Yes. Let me take you to a not so
distant future. Right now we go to the doctor, as
Kristin says, wait an hour to see the doctor for
about 10 minutes and he asks you some very lame
questions in trying to determine what's wrong with
you but those questions are in a whole stack of paper
which he doesn't read to try to figure out what's
wrong with you and those are instances of something
that has happened to you. What digital health will
do is it will change that. I envision that we will
no longer have to visit the doctor as often, that
there will be a continuous collection of your vital
signs and other information about you that will be
fed to a big database where algorithms will
determine, certainly assist the doctor in the
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diagnosis, making that much more efficient. What
Samsung is doing is along those lines. Then you
listen to Andrew McCarty, who's an MIT professor,
that says that the future of work is a mix of people,
purpose, knowledge, (Raul difficult to understand,
please confirm), and you think about it and you say
"Okay, yes, there's a lot more data but people are
not going to be the ones interpreting that data, you
need algorithms to do that." At BioSystems, if you
go to our website and look at what our mission
statement and our business model is, it's to assist
scientists on the visual interpretation of data.
Well, what does that mean? Look at what Google has
done, for instance, with the driverless car. What is
the driver doing? He's really interpreting the
surroundings and guiding this car through the world.
An algorithm can do that and, actually, they did
that, they drove the car from San Francisco to LA,
I've done that many times and I tell you, it's a
treacherous road, so you can do that. So
interpreting data, especially big data, detecting
trends that a very small slice of what the doctor is
trying to ask you is not enough, you have to be
looking at a bigger slice of data, so that's the
future for work, that's the future of health care as
?
well, so mobile technology will enable to collect the
data but mostly you need the algorithms on the back
end to interpret all of these huge amounts of data
that will be generated.
WILLIAMS: I don't know that it's that far in
the future, Raul. Part of the competitive landscape
that's changing is that our competitors are outside
the US. For example, in South Africa they have a big
problem with HIV/AIDS, they also have a big problem,
because it's a complex treatment regimen, people
adhering to the treatment protocol, so we ran a pilot
down there using the phone, they're feature phones,
they're not smartphones, we can locate you, and those
individuals who are on the treatment regimen not only
do we locate you and send a text reminder of "You
need to take your pill today at 2 o'clock. By the
way, the nearest dispensary from where you're
standing is two blocks away. Please go there at 2
o'clock, they'll be ready for you with your
medicine." We did a very similar thing with
Telefonica, which is the Spanish telecommunications
carrier in the Basque region of Spain, for the
elderly of access to care, compliance with your
treatment, ways to outreach the social workers for
management. We did a similar thing in Brazil with
?
Telefonica for diabetes. Brazil is one of those
countries with an increasing incidence and prevalence
of diabetes. So how do you engage people in that
way? The result of that pilot, Telefonica, here's a
telecommunications company, how do I use my
infrastructure in a different way, purchased a
Brazilian diagnostics manufacturer as a way to link
diagnostics to their network to the data that they
have about you today. It will fundamentally shift
how we access care. And so as those companies
develop business models that work in Brazil, that
work in South Africa, that work in Indonesia, which
is a 240 million population country that has made a
public policy decision to have a single health care
system, things that survive and succeed in those
environments will come from there to here, they will
be lower cost, they will be more efficient, and they
will radically upset how we address health care in
the US, and our challenge in the US is that we don't
have a single model of health care, we've got a
government program in Medicare and Medicaid which
treat large numbers of population but they're the
most vulnerable, the poor and the elderly, and then
we've got this mix of private payers, so it creates a
challenge for us to implement some of these
?
technologies where it's easier outside the US.
ZAVALETA: And we also have the FDA that
continuously delays technology.
EILENBERG: The other aspect of this is just
the data itself, so we're talking about the ability
to move the data. Right now, and this is a global
issue, there's conversations happening actually in
the next few weeks over in Europe with the WHO, the
European Commission, several different pharmaceutical
companies, technology companies, it's about the
movement of the data, and right now on a global
level, even though you can do things within
individual country borders, who owns that data, who
governs that data, who has the rights to move the
data, who has the rights to access the data and use
the data, who has rights to archive the data, who has
rights to make money off of the data, is it the
health system, is it the patient, is it the
government, is it an individual entrepreneur that
creates the interface that allows the data to be
moved? There are things that need to be addressed so
that we can get to utopia because the technologies do
exist, the entrepreneurs exist. We've got to sort
through some of these cultural and social aspects of
privacy, ownership, use, those kinds of things, so
?
that we can move forward and get the efficiencies,
reduce the costs and ultimately benefit from the
implementation of these technologies to get to the
data.
STEMME: J.K., I would just add that, in
addition to Raul's point about the FDA having to
approve specific software that goes into a clinical
decision being made, it's going to be CMS making
decisions about how to reimburse and fund these, the
use of this technology that's going to have a big
impact at least on certain portions of the digital
health area and hopefully there will be a better job
of that done proactively than something, you know,
we've see recently with CMS was going to change the
way that they were reimbursing molecular diagnostic
tests, which has really been a disaster from a
perspective of companies that are providing those
tests, so hopefully, again not all of digital health
start-ups and technologies are going to be in —
they're going to be consumer oriented and useful in a
different way, but to the extent they're impacting a
clinical decision they're going to have to be touched
by the FDA and in many cases by the CMS and hopefully
our government can be open-minded and progressive
about how they utilize and approve of those
?
technologies.
WALL: Dr. Low?
LOW: I think someone should mention
something about the sequencing of the human genome.
It is now probably possible to sequence your genome
within a day for under 3000 and it's anticipated
within a few years it will be under a thousand, which
is less than the cost of a CT scan, and whereas in
the past we've recognized that a few genes can
significantly impact our behavior and our health, for
example, sickle cell anemia is caused by a single
nucleotide base pair change, or phenylketonuria,
we've known about these diseases for years, but more
recently the knowledge has advanced so that from
sequencing you can tell that you have a
predisposition, for example, to depression, to
Alzheimer's, to a number of different forms of heart
disease, to a kidney disease of all different sorts,
and my anticipation is that within a few years your
children are going to have their entire genome
sequenced at birth and you're going to be told ahead
of time that the probability is that by the time
you're 30 you're going to begin to develop restless
leg syndrome or you're going to have problems with
schizophrenia, or whatever, and you'd better start by
?
the age of 20 taking these preventative measures, and
so all of this is going to impact your health and
your management of your life, and I think this is all
going to have to be digitally communicated,
correlated and stored in a private manner that you
have control over and that you can access for
information that will benefit you. In this room
right here there are probably a million mutations in
your genome, that's the numbers that are passed
around right now, and these determine a lot of your
behavior, a lot of your health, a lot of your future
and so forth, and as that information is understood
in greater detail it's going to have an enormous
impact on your life.
WALL: I've got a couple questions from the
audience that pick up on something you said which is
the issue of privacy in relation to digital health.
We're talking about all of this data, moving it
around, analyzing it. Is that a concern, privacy?
How is that managed? How is privacy maintained in
this new world we've been describing?
EILENBERG: I'll go first.
WALL: Go ahead, Kristin.
EILENBERG: So I've spent a lot of time
looking at the amount of data that we create just
?
living our lives and people think HIPAA protects you
and the reality is that when you walk into your
clinic and you sign, you actually sign, it's
acknowledgment that you've been told, you're not
consenting, so there's a difference between
consenting and being notified. In the state of
Indiana we actually, because of policies that have
been put into place, when we show up and we get
medical treatment, our data goes to INPC, to
Regenstrief, to a lot of different places and it is
moved, it's portable, which a lot of other states —
So within the United States, every single state has
different policies in place on whether or not there
needs to be a consent process or whether or not
people are just notified that their data is moving.
I think that there needs to be more robust education
around when we create information what happens to it.
When we go in and we use Google, these are examples,
you go in to use Google, Google is text-mining all of
our e-mails, they're text-mining all of our searches.
They probably know more about you than you know about
yourself and they can start to do the predictive
analytics of things. Now, Google's interesting
because they don't share that data, they don't try to
monetize that data and give it to others, they tell
?
people "We've got the data, we know how to do
targeted ads, we know how to drive for traffic, we
know how to do things when it comes to searches and
let us take that ownership, we'll do this for you and
you'll pay us a price to do that to the commercial
entities." A lot of people don't realize that when
you go to Google you've already engaged in a
relationship and you're giving up that information,
you're giving up your IP address, you're giving up
any demographics that might be tied to your account,
all of that kind of stuff, they know where you go.
Facebook is the same. So I think overall we need to
have more robust understanding of the data that we
create today, where does it go, how is it used, who
has ownership of it, who's making money off of it.
It's not a bad thing. I like the fact that Google
can customize and tell me things that provide value
to my life. If I can do a search for something and
find information faster, it's "Yeehaw, this is
phenomenal!" right? I remember the old days of
AltaVista. It wasn't nice, it wasn't pretty. So I
prefer the more customized experience, but I'm a
knowledgeable participant in that interaction. I
don't think a lot of people are. When it comes to
the transfer of information for health, it is going
?
to be a challenging conversation and it is something
that does need to be addressed. I don't think it can
be a unilateral decision of "This is what we will
do," we will end up in a 1984 Orwellian type of
situation and I don't think any of us want to do
that, but I think that we need to become more
cognizant of how much data we produce just sitting
here just breathing, if you have any kind of devices
on you that's all producing information, it's going
somewhere, and so I just think that we need to do
that.
NEFF: So everybody's concerned about privacy
and, of course, we should be about health care data,
but, you know, the one immutable law of government is
the law of unintended consequences. HIPAA was
enacted 10-plus years ago and to this very day if you
say to a doctor "Can you text a message about your
patient to a colleague and ask him a question?" and
they will tell you "No, I can't do that because HIPAA
prohibits that." "Can I send an e-mail?" "No,
you're not supposed to use e-mail." "Well, how can I
communicate patient data?" "Fax." I don't know
about you, I don't ever use a fax machine anymore,
and so that's a deficiency by enacting legislation
that has criminal consequences and it makes people
?
terrified to share data. That's unintended. I mean
it ought to be maybe a civil penalty if you violate
somebody's privacy, unless you really intended
something bad with it, but it needs to be respected,
but we're generating so much digital data and it is
so vital to making our health care system more
efficient that if we don't find a way to flex on
things like HIPAA we're not going to be able to do
what Brian outlined. You know, if you wanted to do
what they did in South Africa with an AIDS
population, you talk about a couple million dollars
and a couple years of clinical trials to prove to the
FDA that you could do this and you wouldn't have any
unintended consequences, the by-product of that, I'm
sorry to say, and this is true with Endocyte and it's
true with most of our portfolio companies, is we're
going outside the United States to try a lot of
different things to innovate in order to prove to the
FDA when we come back that "We've got data and you
can be more comfortable with this and, therefore, you
should accelerate the approval," and that's a shame I
think from a policy perspective.
WALL: We're almost out of time. I'll ask
one last question, if someone can jump in here, to
wrap up. What factors that make life sciences hubs
?
successful around the country are missing in Indiana?
Can we do a lightning round with a couple people?
Can you just name one or two things? Brian Williams.
WILLIAMS: Seed and early stage capital, more
of it, a lot more of it.
WALL: Okay. Brian Stemme, do you have an
answer?
STEMME: I would say additional academic and
company collaboration.
WALL: Raul, do you have a thought?
ZAVALETA: I would say a better tech transfer
from our universities and commitment to work with
businesses to capitalize on the technology being
researched and developed.
WALL: Dr. Low, do you have any thoughts?
LOW: Yeah, more people to carry the flags to
set the example so that it is real to anyone that has
the aspiration to participate.
WALL: Okay, Matt Neff, do you have a
thought?
NEFF: Surfing.
WALL: Surfing, okay, in the oceans.
NEFF: What I would say is a government that
is more attuned to making long-term investments in
the growth of this industry. You know, you compare
?
Indiana to Ohio, the Third Frontier Fund is in the
billions of dollars.
WALL: Okay, Kristin, you get the last word.
EILENBERG: So everybody says "capital,"
right, I hear a lot of "capital"? I'm going to say
we need people, we need people that are willing to
take the risks because, and we brought this up
earlier, it seems that failure is a bad thing and yet
I see failure as an enormous opportunity, and so we
need people who are willing to take the risks to go
out there. We need to create the ecosystem system
with the capital, with the resources, training,
education, and just additional manpower to support
the ideas to move them forward.
WALL: All right.
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