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Medical Technologies Claim the New VC Interest

Dinesh Patel
Wednesday, March 3, 2010
Dinesh Patel
Personalized Medicine is a key trend in life science investing, and is being driven by two converging factors. The first being the completion of the human genome project which led to the cataloging of human genes and the second being an informed consumer base that demands more information and more participation in their own health care decisions. Personalized Medicine on the whole is comprised of three related technological approaches - predictive, personalized, and preventative/ prognostic technologies. Predictive technologies include molecular diagnostics and whole genome sequencing that determine an individual’s disease susceptibility or pinpoint where along a disease course an individual may be prior to the symptomatic presentation of the disease. A pioneering example of such predictive technologies is the BRCAnalysis diagnostic test, which assesses a women’s lifetime risk of developing breast and ovarian cancer based on their genetic profile. Personalized technologies include therapies targeted to the exact molecular mechanisms associated with, or causative for, a disease, such as Herceptin for certain forms of breast cancer and Selzentry which is a targeted treatment indicated for patients infected with a specific form of HIV. The third technological approach is preventative/prognostic technologies, which are aimed at assessing how aggressively a disease might proceed, based on an individual’s genetic make-up and the genetic cause of disease.

While still in the early days of technology development, prognostic technologies will enable a doctor to determine whether a disease is more likely to progress at a slow rate or at a fast rate. For example, if a disease is more likely to progress at a fast rate, then the physician can prescribe a more aggressive treatment plan such as surgery, or if the disease is more likely to proceed at a slow rate, then prognostic technologies will prevent unnecessary surgeries which in turn will reduce the costs of health care.

Molecular diagnostics, next-generation sequencing, and single-cell/single-molecule analysis are emerging technologies in the Personalized Medicine investment sector. In particular, Molecular Diagnostics that are based on novel disease causing mutations such as Single Nucleotide Polymorphism (SNPs) or Copy Number Variation (CNVs) will be critical to developing targeted drugs (pharmacogenetics) and will enable the earlier identification of disease and disease susceptibility.

The key areas of innovation that the more successful molecular diagnostic companies are incorporating include the use of genetic information related to the individual patient, and opportunities that integrate good science with the ability to interact online. The other area of innovation is on the operating side of the business. Specifically, there are opportunities to differentiate a business by adopting innovative operating strategies that are less capital intensive – such as molecular diagnostics versus therapeutic drug development – and those that are more capital efficient by outsourcing non-core, commoditized activities and not incurring fixed overhead when possible.

Focus on financing as the value-generating milestone, and interactions with the customer are key factors for any startup in this line to grow. Most entrepreneurs are cautiously optimistic by nature, necessarily optimistic that they will be successful, but at the same time are cautious about taking more money than is necessary to achieve the critical value-creating results. Entrepreneurs should bereft themselves “over-funding” their companies, as that tends to result in solving non-urgent, non-critical problems that detract from solving the urgent and critical ones. Secondly, entrepreneurs in the life sciences should talk with customers early and often. The laboratory is quite a distance from the end-user of a life science technology. An example of this is a primary care physician as the end-user of a diagnostic test. It is critical to talk to the customer in order to determine what the customer sees as “value” and not what the entrepreneur or start-up company might see as a “quality product.”

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