Last week Burrill and Co. put on their 9th annual Personalized Medicine Conference. The Burrill meetings are known for straight talk on business matters, in depth panel discussions, working lunches, star speakers, and of course, Steve Burrill. While this year’s meeting followed in that path, there was more diversity, more disagreement, more complexity.
IPOs, and more IPOs
Burrill kicked off his usual state of the industry talk with a caveat that echoed throughout the show, “healthcare doesn’t follow normal laws of economics.”
In the past two conferences, Steve has insisted on a bit of doom and gloom in his talks to balance the hype which can bloom at such industry meetings. Burrill and Co has invested in personalized medicine and the hurdles have been depressing. Science marches to its own drum. And so do payers.
But this year Steve was compelled to acknowledge the drama of an aggressive IPO market which has seen companies go for ever higher starting bids, then see their stock jump 50, 100% in the first day of trading. Steve suggested Foundation Medicine, who IPOd at $18 and closed the first day up 96%, is the company to watch in the genomics space, much as the industry has looked to Genomic Health in the past.
It’s rare to see below Steve’s well earned cool when he talks about money. Afterall, he worked on the business plans for Cetus and Genentech and has been witness to the rise of the biotech industry. Still, his incredulity at the current IPO market was obvious as he returned again and again in disbelief to the fact that Foundation Medicine, founded in just 2010 and who lost $22.4 million as of 2012, would be valued at over a billion dollars.
The big takeaway from Steve’s presentation for me was his claim that we should be using the term “companion therapeutics,” rather than “companion diagnostics.”
“The value will be in the diagnostics side,” he said, accompanied by a slide showing the rise of generics and biosimilars.
The value will be on the diagnostics side--huh? Did I hear that correctly? Did he mean the same diagnostics which have run into such regulatory uncertainty and reimbursement hurdles? The diagnostics which can’t even get CPT codes, and when they do, still don’t find reimbursement from Medicare? (See this year's debacle.)
First of all, Burrill explains, 55% of drugs do not work. He says we are “moving to an outcomes world,” and that the information about each person’s unique biology will be where the value is. Therapeutics will follow from diagnostic type data.
Steve often points out that Google, Facebook, and Twitter don’t charge for their service. That this is part of their value, and they get paid for this value in other ways.
“What if you were on the board of Google before they put out their innovative search engine and you were asked if the company should charge a penny or a dollar for each search? You would have voted to charge, no?”
This question of how diagnostic companies will capture value is a gauntlet Steve throws down at the feet of the industry. Now get up in a panel, or a talk, he seems to be saying, and show what innovative way you’re going to capture value.
Scott and Reid
Most ready to take up this challenge was genomics super star Randy Scott, serial entrepreneur, founder of Genomic Health. His new company, InVitae, has raised $40 million and offers a CLIA panel of around 200 of the most common genetic tests for $1,500. Next year the panel will be 500 to 1,000 tests. And be cheaper. You see where the company is going.
As a keynote speaker, Scott had the podium for 45 minutes to say how InVitae would bring genomic salvation to planet earth.
“We’re at the dawn of the medical internet,” he began with a contagious enthusiasm, an attitude surely indicative of long days spent with San Francisco's "can do it all" techies.
Scott is convinced that consumers want their genomes sequenced. And that they have a right to have them. The only question is the price. When the price comes down far enough, it will just happen. Everyone will get their genomic data and know what to make of it. We’ll be living in a kind of genomic utopia.
To be fair to Scott, he is a CEO. His job is to hold the flag at the forefront. And he has been successful. Obviously he can raise money on demand. Steve Burrill interrupted and asked how much money he’d need before the company was making money. “$200 million,” came the answer. That’s all?
I get the sense that Scott, after founding and running a genomics company rooted in the current economics of healthcare, has had enough of the system. InVitae seems to be based more on a list of personal values than of strategies.
As part of his crusade, Scott makes a moral case for an accompanying campaign to “share the data.” InVitae has pledged to put all of their "clinically-observed" variants into a public database such as Clinvar.
One in fifty of us, Scott says, is carrying a gene that is on the ACMG’s must report list. (A controversial report published this year by the American College of Medical Genetics determining what to do with “incidental findings” -- those other things you find in the genome.) Not only should we know these genes, Randy is saying, but we should share them.
“The future will be more about sharing data than hoarding data,” he insisted, perhaps hinting at a business model that would take the industry beyond our traditional notions of privacy and IP.
So how will value be captured from this shared data?
Is InVitae the kind of company that in an interview here at Mendelspod this year, Cliff Reid of Complete Genomics had predicted would come into the space when he said that companies which have been wet chemistry, patent protected businesses will turn into generic database companies?
And what will be the quality level of this shared data? Complete Genomics has yet to deliver clinical genomes, at least in the US.
Fortunately Reid was on hand at the conference. Part of a panel immediately following Randy Scott’s keynote, Reid showed some enthusiasm for Scott’s vision but wasn’t up for drinking all the koolaid.
“It will be impossible to aggregate all the data. There’s too many IRBs in the way,” Reid cautioned.
And Reid argued that the first clinical genomes will benefit folks in other parts of the world first.
“Sharing is cultural,” he continued, referring to a couple European countries where medical information for every citizen is open for biomedical research.
Reid’s experience speaks volumes. Complete Genomics was once a darling of this meeting. And Cliff was giving keynotes. Now the company is owned by BGI.
Perhaps the biggest blow Reid exacted on the discussion came in his flat out statement that genomes are not going into EMRs. His reason: there’s no way doctors are going to risk the scary world of malpractice litigation that is sure to come. Say that a patient has their genome sequenced, and a report of it lies in his or her medical record. First of all, doctors don’t even know how to read such a report. Secondly, let’s say that the patient develops a disease which was predicted in the genomic data and then pursues the doctor in court for not reporting a certain mutation. This was one group that isn’t usually discussed in this kind of conference. I mean the twelve person jury.
I teased Reid at the break about throwing so many curve balls after Scott scored a hit. Assuring me of first of his optimism, Reid told of recent meetings with doctors.
“They’re scared to death,” he said.
A Bioethicist at a Business Conference?
The other big dissent with Randy Scott’s genomic utopia came the second day from the bioethicist, Hank Greely, of Stanford. I’ve been arguing at Mendelspod that there are some serious ethical concerns that have to be addressed before the genomic revolution will go mainstream. So I was tickled that Burrill and Co invited Greely, an unlikely speaker at a business meeting which has usually been focused around funding, regulation, and reimbursement.
Granted, Greely reflects the pro business enthusiasm that radiates unabashedly from Stanford.
“Whole genome sequencing is coming,” he said with an imperative stance.
Greely engages his audience with uninhibited pacing up and down the stage, speaking extemporaneously without the aid of slides. Giving an overview of the eithical issues surrounding genome sequencing, Greely threw out more questions than answers which centered around four areas:
- Analytic validity: What will be the protocols for sequencing that will have to be approved by the FDA?
- Interpretation: Who will we believe? And, when scientists don’t even understand the genome, how will the FDA deal with it?
- Doctor/Patient relationship: How will doctors educate patients?
- Other: What about privacy in a world where one’s clinical record could be used for forensic databases?
The most important question here is about regulation. Greely believes the privacy concerns center around an unreasonable paranoia. And business is already jumping at the chance to offer patients ways to learn about their genomes.
So what about regulation? In his talk, Randy Scott said that access to our genomes should not be regulated. I asked Greely to make his best argument.
“In America, there are all kinds of consumer items which are not regulated,” he answered. “But anything to do with health, we’ve always regulated.”
Other highlights of the conference were some excellent panel discussions on the microbiome, patent/IP strategies in the wake of the Myriad decision, and whether medical schools are preparing doctors for genomic medicine. The quality and variety of the discussions sparked strong advocacy and dissent on important issues and underlined a remark made by Steve Burrill at the outset of the conference.
“It’s not personalized medicine anymore. It’s just medicine.”
(Look for upcoming interviews on the topic of personalized medicine, including the patent strategies with a lawyer from Fish and Richardson and a chat about the relationship between business and regulation with Hank Greely.)