Exciting changes are ahead in the life sciences. The disruptions are large and will affect the industry when they occur.
Most surprisingly though, the changes may affect the very way we understand the life science industry—disease, treatment, prevention and medicine itself—especially in the world of western medicine.
That is what we learned as we explored the implications of the recent mergers of Amazon-Berkshire Hathaway-JPM and Celgene-Juno, along with the impact of genomics, at the latest BIO CEO Summit Investor Night, following the BIO CEO event in New York City.
A full house of close to 200 high-profile biotech CEOs, senior executives and Investors in the life science industry gathered to contemplate the next evolutions of changes in the industry.
The industry is rife with disruptions right now, and the panelists—Laura Lande-Diner, Flagship Pioneering; Eric Steager, Independence Blue Cross; Robert Beckman, Orgenesis Inc. (ORGS:OTCQB); Cameron Durant, Humanigen (HGEN:OTC); Bill Farley, Sorrento Therapeutics Inc. (SRNE:NASDAQ); Bradley Robinson, Predictive Technology Group Inc. (PRED:OTCPK)—sunk their teeth into the topics.
Among the questions: What do alternative care, prevention, home health care, consumer health devices, Alexa, genomics, cellular therapy and data all have in common? An answer: They may soon be converging into a new healthcare eco-system.
We may be beginning to realize the reality behind the lip service of "better outcomes and reduced costs," which the industry has been saying for years. Perhaps it's not just a 2.0 version of disruption—it's a 10.0 version and that, after it occurs, we won't recognize the life science industry as it exists today.
As a starting point for projecting and understanding the near future, we should understand what's going on lately in terms of deal-making, how are these deals going to disrupt the industry, and what we should expect?
We first discussed the implications behind the Amazon-JPM-Berkshire Hathaway deal. Of the three companies, Amazon was seen as the most disruptive, given its history of complete disruption in the retail industry. What does the company's superior customer data analytics, history of cost and price reduction by "eliminating the retail middle man," and heightened customer experience and loyalty mean for healthcare? How can the "Amazon model" of cost, data and customer experience effect disruption in the life sciences industry?
Laura Lande-Diner of Flagship Pioneering, composed of a group of scientists that develop and run companies around new scientific ideas and innovations, applauded Amazon for the company's willingness to venture into spaces other companies don't or won't.
She discussed how, as a nonprofit business model, this Amazon-JPM-Hathaway venture gives its partners a unique degree of freedom. Given how much companies spend on healthcare, such as Starbucks, which spends more on healthcare than it does on coffee beans, Land-Diner proposed taking a different approach She thinks it's possible this new model will bring many changes to the healthcare industry, changing how drugs are sold and delivered and how employees are insured. "It hasn't been done before," she said.
When asked about the sudden $30 billion share drop in the insurance market hours within the deal, Eric Steager of Independence Blue Cross provided an interesting perspective, talked about how this new merger could shake up cost structure and heighten the bar of "customer experience" in the industry. Steager, from an "insurance guy" perspective, asserted that we're staring flat-out into the eyes of disruption.
He pointed out that Microsoft tried to get into healthcare in the 1990s and Google tried in the early 2000s. These are tech behemoths; why would Amazon succeed where they failed? According to Steager, Amazon has mastered the customer experience, which healthcare apparently can’t do well, so he believes Amazon has a chance to be truly disruptive.
The Amazon-JPM-Berkshire Hathaway venture has access to data, access to distribution. . .might it be possible for an Amazon customer to tell Alexa their symptoms as the embarkation point for treatment? For the purchase and delivery of medications? Will this venture give preventive care greater emphasis? Steager believes the merger will bring about fundamental infrastructure changes: JPM can handle the third-party administration; Berkshire Hathaway has the distribution arm with Geico; and Amazon has the data.
An audience member noted that Amazon has been buying patents for remote health monitoring, and that Amazon, with Alexa, will ultimately put companies like First Responder out of business.
Bill Farley of Sorrento Therapeutics Inc. (SRNE:NASDAQ), encouraged a look at the big picture, particularly toward where healthcare and tech are converging, such as in integrated devices. For example, Farley noted, Apple is working on the development of a glucose monitor and other medical devices. The Internet of Things, according to Farley, is happening with all appliances and devices, and this has begun to have a profound impact on healthcare. He also discussed how home care—sending doctors and nurses "out into the field"—is, in some instances, reducing healthcare costs by up to 75 percent.
He described the Amazon-JPM-Berkshire Hathaway deal as an "enterprise-wide solution," incorporating the Internet of Things as part of an array of tools that can improve preventive care. CVS and Walgreens failed to truly enter the market, but Farley believes Amazon will succeed, and will change the paradigm of how medicine is delivered.
The panel agreed that prevention is key to better health outcomes and costs. This includes managing disease before it occurs. Cameron Durant, chairman and CEO of Humanigen (HGEN:OTC), highlighted that in some economies, where there has been an emphasis on prevention for decades, healthcare outcomes are better. Here in the United States, Durant believes we've been spending more for worse outcomes. He believes we need to redistribute the resources we have, and that we need to push for horizontal innovation as well as vertical innovation. This means taking resources we have and putting them together in more thoughtful ways.
How can we incorporate these innovations into one healthcare ecosystem? It will involve a convergence of industries. We've traditionally thought of the life sciences, data, home health, consumerism, alternative health and retail as very different industries. What does that look like if they all came together?
In one scenario, you could tell Alexa that you're ill, describe your symptoms, receive a reply of a possible diagnosis, have artificial intelligence dissect the likelihood of that diagnosis, along with relevant data in terms of treatments (including alternative health), then send the information off to your doctor or nurse. You'd then get a video house call and prescription, have the prescription (and over-the-counter vitamins or other treatments) show up at your door the next day, and then have a follow-up session to check on how you’re feeling.
That's not to mention the potential for a photo diagnosis, saliva tests, temperature and vital signs readings that can be done in real time through at-home devices, and be analyzed at home. For chronic conditions, there are already devices that can remind you of when you need to take your medicine and automatically dispense the pills you need to take at that time. These home devices can also detect symptoms and dispatch emergency care to your home as needed.
Bradley Robinson of Predictive Technology Group dove deeper, asserting that the "responsive care" prevention model is going to be "old news," and that, in the near future, healthcare will involve predicting which conditions or diseases you are likely get by analyzing your genomes and the heritage linked to those genomes with a genetic test.
He discussed endometriosis as an example, which afflicts 27 million American women with only 2.5 million diagnosed per year. From an insurance perspective, he said, "It's crazy these women don’t know that they have this disease." His company provides a test that predicts which women will get the condition, and can proactively treat them or watch for symptoms, even when they are largely asymptomatic.
Robinson addressed the issue of predictive analytics by referencing Hippocrates, who said, "It's more important to understand the person who has the disease than the disease the person has." He urged starting at that point.
Predictive Technology Group plans launch a $70 genetic test for endometriosis in July, and currently maintains an ancestry database of 36 million individuals, so when the company looks at a disease, it can examine the patient's ancestry. "In some cases," he asserted, "Big Data doesn't cost so much."
Mr. Robinson admitted that, given the vast number of genetic diseases, we can't do anything about all of them. But, he maintained, we can start with the ones we can do something about, which connects to the continued importance of prevention, even with the evolved science of a "predictive genetic marker" in play.
The group also discussed cellular therapy, anther scientific breakthrough and game-changer.
Celgene Corp.'s (CELG:NASDAQ) acquisition of Juno Therapeutics (JUNO:NASDAQ) and its CAR-T product, a $9 billion deal, might provide insights as to what will occur next in the industry from a scientific perspective. CAR-T products have been drawing much excitement from the medical community and some believe represent the next evolution in science.
Rather than disruption from technology, this deal and category represents a disruption in science. Given the size and numbers—$9 billion for Juno and $11.9 billion for Kite Pharma (KITE:NASDAQ)—clearly larger pharma companies are "banking on a larger future" for cellular therapy. This is very significant—as it means a new era where, as an industry, we are using cells, and not drugs, to treat patients.
Farley said what drove the deal was that the CEOs of each company needed to dramatically reach toward the future. He thinks there will be real value in the market once we go beyond these initial therapies.
Robert Beckman of Orgenesis Inc. (ORGS:OTCQB) described CAR-T and similar products as platform products at the embryonic stage, and said the category has the potential to cause major change. Beckman pointed out that his company is modifying liver cells to be used to treat diabetes, and that cellular therapy isn't limited to CAR-T; that there's a lot going on in the space.
Durant added that he thinks the driver of the deal is the promise of where cell and gene therapy could be 20 years' time, and that investors need to see a company make a big bet: "Fifteen years from now, a lot of cancers will be things that you die with, rather than things you die from."
I concluded the discussion by highlighting that the two deals discussed are really not so different, and all of the various elements are folding into one game-changing solution that has the potential to change the way we think about everything related to being healthy.
Disruption is convergence, and we need to take a holistic view of healthcare, which includes what we traditionally think of as two different ends of the spectrum—the breakthrough science of cellular therapy and predictive genetics, and "alternative health," which includes preventive care, diet and lifestyle. We need to come together as an industry, start to examine the silos we've created in our heads, and determine how we can take them down, so that the industry will evolve and all of us—patients and consumers—can benefit.
Andrea Bartzen is a strategic commercial/communication consultant that partners with New York City investment teams looking to fund innovative biotech, life science and health tech companies. As a multidisciplinary strategic commercial pre-launch and launch expert, she has had successful results with the strategic planning, implementation and team leadership for some of the largest and influential pharmaceutical brand launches in the last 10 years. Through promo med ed, HCP promotion, market access and PR channels, she has directed full life-cycle development, from early commercial, medical need/disease-shaping at phase 2 (Ilaris), brand development (Keytruda), franchise positioning (BMS PD1) and post-LOE strategy (Lipitor). Bartzen has also helped develop breakthrough medical communication platforms in each category: Keytruda (Immuno-oncology/PD1 inhibitor); Pradaxa (stroke); Lipitor (cardiovascular) Atripla (HIV); Botox, Vimpat (CNS), as well as successfully developed education and communication strategies that shift KOL and specialists' mindsets, leading to the transformation of medical paradigms and treatment norms.
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