Corporate Venturing in a Time of Innovation and Capital shortfalls

Maria Bartiromo, host and managing editor of one of the most watched financial news programs in America, “Wall Street Journal Report with Maria Bartiromo,” moderated a panel of corporate and venture leaders that addressed the difficulties in dealing with Corporate Venture Capital (CVC) that has been changing with the economic downturn of the financial industries since 2007. This was an in depth look into how the business of healthcare innovation is working now. Present for this discussion are industry movers like Mr. Darren Carroll, VP of New ventures Division of Eli Lilly, Mr. Roy Davis, President of Johnson and Johnson Development Corporation, Mr. Ven Manda, VP of Medtronic Ventures and New therapies, Mr. Harry Rein General Partner of Foundation Medical Partners and Mr. Mark Vachon, President and Chief Executive, Office of America, GE healthcare.

Corporate Venture Capital (CVC) is a form of investment by a corporate entity for assisting the start-up of a company with a promising product which has a potential for profit in the long run. I was familiar with the idea of venture capitalism but the logistics and details I learned from this conference were informative but however somewhat daunting, I must say!

The largest player in healthcare related CVC are made by the venture arms of firms who focus on biotechnology and pharmaceutical products. Eli Lilly for example spun out Lilly Ventures with a $200 million investment. They are focusing on human therapeutics in oncology. They are working with investors from Asia and with new partnerships with venture capital, to help small pharmaceutical companies in Shanghai grow. Building funds that have more capital and help making sure that the manufactured products are what are in demand. Actual profit gathering can take 8-10 years, with 3 ½ years just for the return of the investment amount.
New innovations and technologies are always in demand, and so are the means for development and production of those new ideas and technologies. Venture capitalism can be a good way to create advancements in technology and foster innovation.

Wrapping Up with Dr. Joseph Hahn

Dr. Joseph Hahn gave us a few thoughts to wrap up this year’s Medical Innovations Summit.


Dr. Hahn expressed a sincere thank you to all the people who made this successful. Dr. Hahn recognized all the effort and work that Chris Coburn, our Executive Director of the Cleveland Clinic Innovations program, for all of his work, enthusiasm, and commitment to our program. He also recognized Dr. Derek Raghavan, our Director of the Taussig Cancer Institute, for all of his contribution and dedication that were critical to the success of this Summit.

He discussed that, during the past few days, several themes came through and he wanted to comment on a few. The first theme that he highlighted was the emphasis placed on gene mapping and personalized genomic care. We all recognize the importance and potential. However, where is this heading? He believes it is still not ready for primetime yet. The overall consensus seems to be that we do not quite know how this is going to be useful and in what setting - whether for screening, treatment, or for prevention.

The second theme is wellness. He discussed a question that also came up throughout our sessions - who’s responsibility is it? Is it the responsibility of the government? Is it necessary to protect ourselves from ourselves? Or is it a personal responsibility? And how do we measure it? How do we reward it? How do we provide incentive for it?

The final theme is technology. There is a lot of interesting technology. There are a lot of things that could make it work. He reiterated Sam Palmisano’s sentiment – “The system isn’t broken. That would imply that we have one.” Using technology, is there a way to bring it all together? Could the electronic medical record be for our industry what the barcode is for retail industry?

Dr. Hahn challenged us to look ahead. He discussed that 45% of illnesses are related to behavior – obesity, drinking, and smoking. Obesity costs in this country exceed all the costs related to cancer therapy combined.

Next year’s focus will be on Obesity, Diabetes, and Metabolic Diseases. We look forward to having you join us for the next Medical Innovations Summit in 2010!

Q&A with Dr. Margaret Hamburg

David Ewing Duncan, best-selling author and science journalist, interviews Dr. Margaret "Peggy" Hamburg, Commissioner of the US Food and Drug Administration...

How do you grade FDA?
The FDA is incredible institution. It is an agency with a long, venerable history. It is the gold standard for consumer safety. It is responsible for the oversight and safety protection of over 2 trillion dollars of goods. Affecting lives of Americans every single day in so many fundamental ways. Overall, I believe it does an excellent job.

You have a public health background, I thought you would go to the CDC. How does having this background bring a different flavor to FDA?
I hope to return the FDA to it’s core mission of public health. It is a science-based regulatory institution with a primary focus on public health. I come with a strong background in public health, but initially began my career in medicine as lab researcher and clinical researcher in neuroscience. This also shapes my background and thinking.

What are your priorities for the FDA?
It is viewed by many as a beleaguered agency, under-funded, under-resourced, pillaried on the hill, attacked by critics, cirticized by the media. It wasn’t an easy decision to take the job. Setting priorities is essential to setting the tone and goals. We need to restore trust and confidence in FDA as a science-based industry for public health. We need to open ourselves up. Explain how we do things. Provide insight into our standards and decision-making. I plan on being a vocal advocate for our agency. Advocating for the resources we need. It is stunning the under-funding given the importance of what we do and the uniqueness of what we do. We fulfill critical activities for the health of the public. I have to be an advocate to ensure that we have the resources to do this.

How can FDA be supportive and gateway of innovation?
By being able to really affect health and well-being of public by leveraging all that it is going on in science. By ensuring that we do our review process in a more regulatory, efficient, and helpful way. It is a new paradigm is that we are all in this together.

We also have to strengthen the field of regulatory science…essential to improve nation’s health and healthcare system and economy. We need to develop and embrace this together.

How to restore trust?
We live in a world with risks. There will always be problems. Always will be a crisis for us to respond to. There is a great deal more we can do to prevent these things from happening and how we can respond to things that do occur. Transparency does make a big difference. Have to demonstrate that we want to contribute to regulatory system that is of the highest standards.

How about the power to regulate tobacco?
Tobacco has so many negative effects on our health. We have banned flavored cigarettes. Tobacco is now designated as regulated substance. We are planning on regulating marketing. We are examining the composition of cigarettes and tobacco products. Tobacco is the number 1 risk modification that we can target.

Five Ways Health Care Reform Will Change Your Life as an Innovator

This session was moderated by Debra Lappin, the President of the American Council of Innovation. Here are a few highlights...

The speakers included:
Edward Buckley (EB) - Director of Economic Policy, Biotechnology Industry Organization
David Nexon (DN) - Senior Executive Vice President, AdvaMed
Dr. Beth Seidenberg (BS) - Partner, Kleiner Perkins Caufield & Byers
Richard Smith (RS) - Senior Vice President, PhRMA

DL - Innovation is not at the forefront of politics right now. Medical innovation is quite popular in Washington, DC. President Obama discusses a war in cancer and that we will find the cure in our time. He says that we will devote 3% of the gross domestic product to research and development and a new innovation economy, and yet, in Washington, DC, we are looking at the largest positive impact on innovation through healthcare reform.

DN – A change is coming. It is just a question of whether a bill is going to pass before Thanksgiving or before Christmas, it is certain to pass. The real issue – is it going to achieve the goal that every American has a fundamental right to healthcare and how will it affect quality/efficiency of care? How will this affect medical innovation?

RS – We will see a passage of a bill. Probably at this stage, we are at the end of the beginning. There is still a great deal that may move around as bills are put around and votes are gathered and financial requirements are met and people react to specifics of receiving proposal. A great deal still may change, but a passage of bill will occur.

TB – It certainly will increase access for today’s patients to today’s innovations. The bigger question is what will it do for future patients. The answer is in a state of flux.

How will healthcare reform affect medical innovation?
DN – The key goals of health reform are to improve quality and efficiency. This is an important upside for medical innovation and progress. The goal is to improve quality by better organization, care, management of disease, universal practice, and reward for innovative products. There are potential negative concerns – freezing innovation in place, raising the bar for market approval that stifle products before they get to market. To improve efficiency, we need to reward those who develop new and better ways to treat disease or whether we are going to degenerate.

TB – How do we value innovation? Do we look at one step or look at societal benefit and how treatment affects caregivers and others? Healthcare reform can be an incredible tool to drive forward scientific knowledge. If undervalued, however, it could be major detriment.

Where does comparative effectiveness fall in healthcare reform?
RS – I am optimistic about where this will end up. Strong consensus that we don’t want to end up with a structure that ends up like UK Nice or any analogues in other countries. No proposals currently that would do that. There are other proposals on the table that are different. We need continued access to innovative products for patients, on an individualized basis. There is a proposal in the Senate, the Baucus bill, that does this. There are distinguishing characteristics – public private entity, public private partnership. This proposal is oriented towards clinical effectiveness. The Baucus bill recognizes that research needs to move in a direction with personalized medicine. This is generating a lot of excitement. House proposal would house the enterprise in Government and this doesn’t have the same orientation towards recognizing differences in patient subgroups and patient populations. Baucus bill is hopefully a template for what is enacted.

How do you see incentives that are being discussed aligning with health care reform?
DN – We need to look consciously at how this affects innovation. We need to get politically involved and strengthen our voice at the table.

BS – To the Venture Capital community, everything is ambiguous. We have to make decisions with millions of dollars upfront and hope that things will turn out 5-10 years later. Most will probably not bet on innovation. Most will wait until there is clarity. It is very frightening that there is lack of specificity and definition in these bills, so much debate is left open…venture capitalists may stall and innovation may be stalled. We need to increase our voice at the table.

RS – We are sitting here today at an Innovation Summit sponsored by the Cleveland Clinic. As DC politicians talk about what kind of systems they want, they frequently refer to CCF as a model system. As this effort to improve our health care system continues and we focus on bringing the kind of quality of care that patients receive here across the country, it will be impossible to do this without tapping into new medical technologies.

TB – Unfortunately, our society doesn’t realize that great innovation is built on incremental steps. It can take many years for progress to become apparent.

In regards to standardization or electronic medical record?
BS – “Standardization is a core pillar of reform - but we are talking about standardization of IT, the system by which you record patient information and use at point of care. This will improve quality, care, However, we do not want to standardize innovation.”

Meeting the Expectations of Innovation, Standards of Care and Society for New Therapies

This session was moderated by Dr. Ernest Borden, Director of the Center for Hematology and Oncology Molecular Therapeuties, Taussig Cancer Institute. 

Speakers included:
Dr. Richard Schilsky (RS) - Immediate Past President of the American Society of Clinical Oncology
Dr. Nancy Simonian (NS) - Chief Medical Officer, Millennium: The Takeda Oncology Company
Dr. Mark Trusheim (MT) - President, Co-Bio Consulting
Dr. John Wiggington (JW) - Director, Discovery Oncology, Bristol Myers Squibb

RS - At this time, the focus of cancer care, as highlightings ASCO’s theme this year, is personalizing cancer care. It is about giving the right care to the right person and now is the right time. Why now? Because we now have a better understanding of tumor biology. Current technology enables assessment of germ-line and somatic variation. We have a new opportunity to match treatment to tumor, select optimal dose, optimize drug development, and reduce the cost of care.

It is important to recognize that each tumor has a unique profile (unique biology and unique disease response). The drug effects can be highly variable - depending on genetics, metabolic processes, drug interaction, and environmental factors. Dr. Schilsky also introduced the term “pharmacoethnicity”, ethnic diversity in pharmacodynamics. Environmental differences, local practice differences, drug interactions, and genetic differences also affect outcomes. This brings importance to the power of personalized care.

Personalized care pays off. Better care is enabled by more effective treatment, lower morbidity, and fewer complications. The reduced used of ineffective therapy and less time in the hospital results in lower cost.

Dr. Schilsky also discussed that more than 800 new drugs are in development for cancer. However, only 5-8% ever move to marketing. Why is there such a high failure rate? There are several reasons. There is inadequate understanding of tumor biology. We have only poorly predictive animal models. Patient populations are heterogeneous and biomarkers are inadequate to enable enrichment (many biomarkers show what will not work and doesn’t predict what WILL work). There is lack of agreement on the definition of what is clinically beneficial.

So how can we do this better? We need to obtain biospecimens from every patient. We need validate biomarker assays. We need a more flexible regulatory system. There must be reimbursement and regulatory incentives for diagnostics. Pharma need to be willing to trade off market shares for treatment decisions.

We need to screen more patients and focus on finding biomarkers that can help select the patients that are likely, or predict if they are unlikely to benefit from treatment. We need larger effects and smaller sample sizes that may lead to more rapids results and greater benefit.

He highlighted that there are many complicated steps that need to be undertaken to open or activate a study. There are barriers to patient accrual including physician time/interest, dedicated research staff, lack of reimbursement for physician management of patients on trials, insurance coverage for clinical trials. There are regulatory challenges as well, including human subject protection, integrity of study conduct and data, drug/device accountability, adverse event reporting, and billing for clinical services. In this era of personalized medicine, we also face the challenges of co-development of drugs and molecular diagnostics, and combination therapy.

There needs to be a policy proposed for “targeted approval”. We need to facilitate the accelerated development and approval for a cancer therapy used in a population defined by a specific diagnostic test. The drug must be indicated for cancer. The diagnostic assay must be analytically valid. The drug must demonstrated clinical benefit. Regulatory processes must be in place that would approve the drug for the intended use of the subpopulation defined.

Are there other things that panel members wish to highlight or emphasize or add?
JW – There is terrific interest in targeted therapy and new developments in immunotherapy. There is new success in antibody therapy. Historically, real challenges in the failure of vaccine approaches and immune stimulants but now we are stepping forward. New findings demonstrate levels of clinical benefit that are refocusing enthusiasm in these fields.

NS – Personalized medicine is vitally important to how drug developer thinks about our decisions. Small incremental benefits are not going to have much value. We have to go for a selected patient population that will have the greatest benefit ratio. Combining novel therapies - we need to be more bold in our approach, let go of old standards, and be willing to use 2 new drugs together to see if there is greater benefit. Especially if old standards don’t make much biologic sense.

How about the FDA? It is often criticized and pillaried.
RS – Yes. However, you need to understand that the review done by the FDA comes way at the end of the process. To be objective, it is fairly expedient compared to the rest of the drug development.

NS – The science piece and trial conduction takes much, much longer.

MT – Science and the desire for real evidence prior to approval of a drug leads to a lot of human functional genomics happening in phase III. The need to understanding biomarkers early, understanding patient’s disease biology early, are critically important. We need to set phase II and III selection criteria sooner, this will have tremendous market impact as well. Setting inclusion criteria will set up marketability of a drug later on. It will make the process more efficient. Good science always works.

"Top 10" Medical Innovations for 2010

The highlight of our Medical Innovation Summit occurred today with the unveiling of the “Top Ten Medical Innovations of 2010”. Dr. Michael Roizen moderated this session and several prominent physicians at the Cleveland Clinic participated in introducing these exciting new developments.

10. Whole-slide imaging for management of digital data in pathology – Dr. Kandice Kottke-Marchant, our Chair of the Pathology and Laboratory Medicine Institute, introduced this transformative technology. Whole-slide imaging allows for glass slides to be converted into digital slides. These images can then be sent immediately and shared with pathologists anywhere in the world.

9. Devices for occluding left atrial appendage to reduce stroke risk – Dr. Samir Kapadia, a physician in the Department of Cardiovascular Medicine, introduced these new devices which could eventually obviate the need for long-term anticoagulation therapy for atrial fibrillation.

8. Oral thrombopoietin (TPO) receptor agonist that stimulates platelet production – Dr. Alan Lichtin, a prominent physician in our Department of Hematologic Oncology and Blood Disorder, discussed the importance of this advancement. We have growth factor support for white blood cells (i.e. growth-colony stimulating factor) and red blood cells (i.e. erythropoietin), however platelets have been harder to stimulate. This promising new treatment is important for patients with chronic immune thrombocytopenic purpura (ITP) and may also have use in other areas where thrombocytopenia occurs. It may also decrease the need for platelet transfusion support, which is often in short supply.

7. Outpatient diagnosis of sleep-related breathing disorders – Dr. Charles Bae, from the Sleep Disorders Center, emphasized the importance of this innovation. Obstructive sleep apnea is a disorder that is highly under-diagnosed and highly under-treated. It can have significant long-standing effects and increases the risk of heart attack, stroke, and other disorders. Outpatient diagnosis could lead to better diagnosis and early treatment.

6. Forced exercise to improve motor function in patients with Parkinson’s Disease – Dr. Michael Modic, our Chief Emerging Business Officer introduced this innovation. Dr. Modic quoted Jean-Martin Charcot. “Disease is very old, nothing about it has changed, it is we who change as we learn to recognize what was once imperceptible. Dr. Modic described this as a classic discovery leading to innovation. Patients with Parkinson’s Disease who received “forced exercise” had 35% improvement in motor function.

5. Fertility preservation through oocyte cryopreservation – Dr. Nina Desai, a staff physician from our OB/GYN and Women’s Health Institute introduced this exciting innovation. Although sperm banking has been available for some time, oocyte preservation has been much more complicated. This has improved with a technique called vitrification, in which the cells are frozen at an extremely rapid rate. This allows for maintenance of the integrity of the oocyte. This is extremely exciting, allowing for women to be able to choose to have children at a later age and also allowing for those who have to undergo therapies (such as certain chemotherapy agents) that may cause infertility to be able to have children. This year, the Cleveland Clinic celebrated their first 2 births from cryopreserved oocytes.

4. Non-Vitamin K antagonists as oral anticoagulants – Dr. Roy Silverstein, our Chair of the Department of Cell Biology introduced this innovation. Anticoagulants are widely used, both for short-term purposes (peri-operative prophylaxis of venous thromboemoblism) and long-term use (i.e., treatment of venous thromboembolism). Warfarin has been used in this setting, however this medication can be difficult to monitor, difficult to dose, and can be unpredictable. These new oral anticoagulants are promising alternatives.

3. Continuous-flow ventricular assist devices - Dr. James Young, Chair of the Endocrinology and Metabolism Institute, discussed these impressive devices. “For patients whose hearts are unable to effectively pump blood due to severe heart problems, this remarkable device can help them improve their heart function as they await a heart transplant.” He believes that this is going to be the wave of the future in treating hearts that have been irreversibly damaged.

2. Low volume, low-pressure tracheal tube cuff to reduce ventilatory-associated pneumonia - Dr. Edward Noguera, a staff physician in the Department of General Anesthesiology presented our next innovation. These devices dramatically reduce the risk of VAP by providing continuous effective airway seals at low pressures. These devices can be left in place for up to 30 days.

1. Bone conduction of sound for single-sided deafness - Dr. Craig Newman, Section Head of our Department of Audiology, presented our #1 innovation of the year. Single-sided deafness affects 9 million people in the US. This device is non-surgical, removable hearing device that is designed to transmit sound via the teeth, through bones, to both cochleae.

Enabling New Technologies and New Therapies

Dr. Ernest Borden, Director of the Center for Hematology and Oncology Molecular Therapies, moderates this informative session.

Dr. James Doroshow, Director of the Division of Cancter Treatment and Diagnosis, National Cancer Institute, opens our session today. Dr. Doroshow discusses that the past 5 years have noted several exciting innovations. There have been proof-of-concept advancements in anti-angiogenesis, epigenetic therapy, the role of developmental biology. There have emerged proof-of-mechanism advancements in pharmacodynamics, gene expression-based therapeutic signatures. There have been advancements in combination targeted therapy and epigenetic therapy.

In the next 5 years, he anticipates advancements in non-invasive biomarkers of therapeutic effects, convergence of receptor- and metabolically-mediated growth signally. There will be discoveries into metabolic genomics, pathway and stem cell therapeutics, expansion of academic drug and biomarker discovery with new hard targets and new clinical trial design paradigms. Pre-clinical imaging technologies for drug development will be developed. New initiatives will be undertaken to decrease the timeline to personalize medicine in cancer treatment.

This led into a very interesting panel discussion.

Richard Gaynor, Vice President, Cancer Research and Global Oncology for Lilly…
There is a move from not only developing new biomarkers, but also being able to develop standardization (such as transcript profiling, immunohistochemistry studies, search for genetic mutations). We need standardization to compare data. We need new trial designs with new trial endpoints (i.e., MRI, PET, circulating tumor cells). The next important areas will include targeted therapy, directed at tyrosine kinase inhibitors, mutated kinases, and metebolic targets will be important. We need to find new target classes.

 Richard Scheller, Executive Vice President, Genentech Research and Early Development…
An important thing to emphasize is what an exciting time this is in human biology. This century will go down as the century of human biology. It is now possible to really take a comprehensive approach to attacking cancer (through anti-angiogenesis, cell cycle targets, tyrosine kinase inhibitors, metabolic targets, cancer stem cells, etc). All of this is breaking way to an unbelievably exciting future. Trying to understand which therapy best and which combination best for each patient. Changing cancer to chronic disease and hopefully to cure. He is most excited about additional anti-angiogenic approaches. If we can understand the developmental biology around blood vessels, then new targets will be found. We can make good drugs to great drugs. Armed antibodies will becoming increasingly important. These proverbial magic bullets have been around for a long time, but this technology is really coming into it’s own now.

David Epstein, President and Chief Executive Officer of Novartis Oncology…
We need to move further down drug development paradigm. We need to move away from era of small incremental improvement towards patient population selection to find big improvements. Understanding molecular basis of disease and crosstalk of pathway and hitting multiple targets in a selected patient population is what it is all about. We need to build molecular diagnostics capabilities. Focus on developing biomarkers as we are developing drugs. We need to identify the correct patient.

Dr. Borden asked Mr. Epstein – In this era of focused targeted molecular treatments, how does the executive board deal with and manage pushing forward a niche-related drug? Is the executive board willing to wait for proof-of-concept studies?
Mr. Epstein described Gleevec as a classic example of success in this area. He said that if the drug works, the economics will work themselves out. Also, the executive board does not micromanage. They recognize that every drug is not going to pan out.

 Dr. Borden asked Dr. Doroshow – What about quality control of targeted tests? Are initiatives underway in FDA or NCI?
Dr. Doroshow responded that they are continually trying to establish central facilities and work with major medical centers to a level that would satisfy the FDA. To the highest level and the highest standard.

 How can we deal with the problem of resistance?
Dr. Scheller – We need better genetic mouse models, in order to cycle therapy and generate resistance and analyze molecularly and see that it’s the same that can occur in humans.
Dr. Gaynor – We also need to see how to study resistance and predict for it before getting therapies out into the clinic.
Mr. Epstein - We need to improve our ability to predict resistance and there is an increasing interest of finding ways to kill stem cells.

Closing remarks and moving forward in next 5 years…
Dr. Doroshow emphasized the importance of obtaining specimens from patients for research.

Mr. Epstein highlighted the need for increasing dialogue between pharma and to continue to pursue combination therapy regimens.

 Dr. Scheller also emphasized the need for obtaining specimens as it is critically important to understand how tissue is responding to therapy.

Dr. Gaynor emphasized the need for more clinical data with combination targeted treatments. More clinical data, observations, and lots of serendipity!

This is certainly an exciting time in clinical trials and translational research!