Artificial Intelligence in Medical Diagnostics
Artificial intelligence has already begun to drive major innovation in medical diagnostics, and regulatory authorities are trying to catch up. Read this article to learn about exactly how AI is improving medical diagnostics and the pressure that regulators are under to preserve the pace of medical innovation.
When you think of artificial intelligence, do any of these come to mind?
Enabling Autopilot and letting your Tesla drive you through rush hour traffic on the 405
Watching IBM’s Watson defeating Ken Jennings on Jeopardy
The cell phone surveillance system that Morgan Freeman created for Batman in The Dark Knight
Regardless of what you know or think about artificial intelligence and the associated hype, rest assured that it is real and has already made fundamental changes in the world. One of the areas where AI is making a major impact is in healthcare, and specifically in medical diagnostics.
Medical diagnostics work by measuring some aspect of your physiology, comparing it to what “normal” should be, and determining whether or not your result is healthy.
In the current paradigm of product development for medical diagnostics, developers have to “lock in” key characteristics of the diagnostic test early in the development process. This includes deciding
How much material (blood, tissue, etc.) is needed to perform a test?
How accurate will the results be?
What physiological conditions or diseases can be determined based on the results?
How frequently does the diagnostic device need to be checked or calibrated?
Once these parameters are determined, the developer has to reach a few major milestones before the product can improve patient lives
Complete extensive testing to prove the device can meet the requirements
Analyze all the results, summarize the data and submit the information to the appropriate regulatory authority
Receive approval to market the diagnostic device as described in the submission
This process typically takes about two years.
As the device is used in the real world, data is generated that can pinpoint ways to improve the performance of the test. This could include how to perform the test with less tissue, how to improve the test accuracy, or expanding the types of diseases that can be measured. This data is generated by customers who are using the existing diagnostic test, internal testing performed by the developer, and sometimes through scientific or technical advancements made by others in the field. Once the developer has gathered enough information to justify an improvement, the product development process is started once more. This improvement cycle occurs once a year or so.
If you add up the time it takes to develop and launch a medical diagnostic, with the time it takes to gather enough data to start an improvement initiative, you’ll realize that if you decided to start a medical diagnostic company in September 2019, it would be late 2024 before you’d released a second version!
This time frame makes sense for “traditional diagnostics”, where the majority of the analytical work is performed by consuming some amount of human tissue, purifying it, and observing how it reacts with chemicals which were precisely dispensed within a large test system.
In this paradigm
The tissue being tested has a limited shelf life
It is consumed during the analysis and must therefore be replaced
Performing one analysis requires a non-trivial amount of consumable material such as specimen containers or test chemicals
The diagnostic value of the test is fixed and pre-determined based on the understanding of the chemical interactions at the time that the test was created
Compare this paradigm to that of next generation of diagnostic devices, where the majority of the analytical work is performed by computer code which analyzes information about the tissue and observes how it compares to a given dataset.
Once information is extracted, it can be stored forever without degradation
The information can be re-used for an infinite number of tests
Performing a test has negligible cost or required material
As new information improves any aspect of the computer code, the diagnostic value can increase
This last distinction is where artificial intelligence can drive exponential improvements. The developer of a next generation diagnostic device (or a traditional diagnostic with some next generation capabilities) can imbue the product with the ability to improve itself - independent of input from the developer. Examples of such improvements include
Improved accuracy in detection of the test
The ability to detect new disease states
The ability to analyze patients in a new demographic group
Needless to say, this self-improvement ability can drastically reduce the amount of time it takes for an improved diagnostic product to be developed. Instead of taking two years to develop a version, one year to gather data to improve the performance, then another two years to develop the improved version, artificial intelligence can allow a diagnostic test to immediately improve in real time - as soon as new information is available and validated!
However, determining performance parameters and proving the diagnostic test’s performance is only half the battle when it comes to launching a medical diagnostic. The other half is creating the regulatory submission package and achieving approval to market the device. If the regulatory steps in the product development process don’t accelerate, the overall pace of medical improvements won’t change. Fortunately, the FDA has recognized the looming imbalance between the pace of technological innovation and the pace of the regulatory process and is actively developing a new approach to support the use of artificial intelligence in medical diagnostics.
In the next article in this series, I'll explain the FDA’s proposed approach and the major roadblocks that must be addressed so the regulatory process can keep pace with the exciting potential of Artificial Intelligence in medical diagnostic innovation.
Upgrade Your Medicine: Why Now?
The $20M Bioelectric Medicine industry is expected to reach $38.13B by 2026 - a health 8.6% CAGR. Much of the anticipated growth is attributed to a global increase in the geriatric population, as well as the related increase in cardiovascular disease and diabetes (1).
What has happened on the engineering and technology end to enable this growth? It’s easier to make implantable, battery-powered, and neurologically-connected devices when the components are tiny, batteries last a long time, and connecting to brain tissue is simple. That means that 2019 is a great year to be developing bioelectric medicine devices! In the last few years there have been significant improvements on the “hardware” end of the space
3-D printed bionic nanodevices: more than simply a collection of tech buzzwords, this innovation is allowing researchers and developers to combine biological and electronic material into single components. Biological tissue is generally 3-D, soft, and temperature sensitive; compared to electronic components which are flat, brittle, and static (2). Advances in 3-D printing and nanotechnolgoy have allowed scientists to interweave these previously-incompatible materials into the same structure with precise architecture. You could think of it like a papier-mâché project: the wet and mushy “paper” is biological tissue which integrates with host organs, and the wire frame is electronic componentry which provides stimulating or monitoring capability.
Miniaturized neuron monitoring technology: neurons communicate by transmitting electricity from one cell to another, and doctors use this as a way to monitor function in the brain (electroencephalogram or EEG) and the heart (electrocardiogram or EKG). However there are huge numbers of sophisticated neural pathways which are located adjacent to each other (especially in the brain). Existing monitoring technology can measure activity in a particular region, but isn’t able to reliably resolve signals at the cellular level. Recently scientists have developed a miniaturized “probe” technology that can be directly implanted into the brain and monitor neuron activity at the single-cell level (3). Two metaphors help understand this technological achievement and its implications. The technological paradigm itself is similar to retrieving a document from within a locked room. You can open the door with a battering ram, or pick the lock. In this example the door is your brain, and if you’d like to use it again then the pick would be very preferable. Evaluating neuronal function at the cellular level instead of regional is like saying “There’s construction on Santa Monica and traffic is backed up, so you should take Pico to get to Beverly Hills” instead of saying “traffic is bad near Beverly Hills”.
Modulating cellular polarity via electrochemical control: it’s tough to fulfill your purpose when you don’t know who you are. This is common to cells just as much as it is to humans, and cellular polarity is one way cells figure themselves out. Cellular polarity is a way that cells develop their “heads” from “feet” by directing certain subcellular components to specific regions of the cell. Recent research has demonstrated that this system may be controlled by an electrochemical gradient, which could potentially provide a mechanism to study and address cellular development malfunctions electronically (4).
These are three of the major technological innovations that are enabling the growth of the biolectric medicine industry. With science like this, the future looks bright!
References
1 - Biolectric Medicine Market Summary
2 - 3D printed bionic nanodevices
3 - Three-dimensional macroporous nanoelectronic networks as minimally invasive brain probes
Upgrade Your Medicine: The Tip of the Spear
Bioelectric medicine startups who are pushing the limit and investors who are funding them
Bioelectric medicine is an emerging field, with innovation happening at the concept, product, and clinical stages. The previous articles in this series showed how the technology can stretch from implantable pacemakers that have been on the market for decades all the way to cutting edge miniature stimulators that are still in clinical development. To give an idea of the cutting edge of bioelectric medicine, this article will dive into a few examples of the startups who are pushing the limit and the investors who are funding them.
The Startups
Description: early-stage company developing a novel neuromodulation approach to treat heart failure
Core technology: As of early 2019, Axon Therapies is the assignee for multiple patents related to splanchnic nerve ablation. Per patent US10207110B1, the technology works by blocking or inhibiting innervation of organs and vasculature near the heart. This can alter circulating blood volume, pressure, blood flow and overall heart and circulatory system functions, resulting in a novel approach to treat heart failure.
Product pipeline: The company provided some of the funding for a clinical study published in November 2018 exploring the Relation of Volume Overload to Clinical Outcomes in Acute Heart Failure. In October 2018 the company started recruiting for a small (n=10), open-label clinical study in Poland to study the effect of resection of certain nerves around the heart on patients with a particular type of heart failure
Funding: $2M round in 2016; $1.3M in 2017; $7.5M in 2019
Takeaway: Axon Therapies remains in stealth mode from a product perspective, and LinkedIn shows only on full-time employee. That being said, there appears to be strong momentum and a clear product strategy moving into 2019: assignment of key patents, initiation of human trials, and raising a funding round which should support the company through execution of the clinical trial. The market for heart failure therapeutics has a 13.7% CAGR with a predicted market size of $11B+ by 2025.
Description: Minimally invasive implantable brain device that can interpret signals from the brain for patients with paralysis. Development stage.
Core technology: Synchron has multiple patents related to sensing and stimulating tissue. Their leading technology, the Stentrode™, is a stent which is inserted into the motor cortex. The stent captures signals from the motor cortex, then transmits them wirelessly to an external receiver. The goal is to ultimately return bodily control to paralyzed patients.
Product pipeline: Synchron has demonstrated in sheep models that their stent-based electrode can control muscular response in the face and limbs at a level comparable to electrodes implanted via invasive surgery. Critically, this demonstrates that their minimally invasive device can effectively interact with the brain; however it only demonstrated unidirectional control (electrode->brain->muscle). The company launched a human safety and efficacy trial this month to evaluate interaction in the opposite direction. Specifically, Synchron is assessing whether the implanted electrode can communicate outward from the brain to a software platform designed to translate thoughts into control of assistive devices.
Funding: Synchron announced a $10M series A round in April 2017, with participation by the US Defense Advanced Research Projects Agency (“DARPA”) and Neurotechnology Investors
Takeaway: Synchron has a compelling vision that makes an immediate emotional and cognitive impact (“With our product, paralyzed people can walk again”). In addition, their minimally invasive neuro-electrode technology has huge potential as a platform for other bioelectric medicine interventions. That being said, their current leadership team is limited to CEO, CTO, and Business Development; no positions in operations, regulatory affairs, clinical, etc. This, combined with their close and ongoing ties to the University of Melbourne, suggest that the strategy is to develop novel technologies and IP that are then licensed to operational medical device companies.
Description: Implantable platform to power neuromodulation implants. Development stage.
Core technology: Neuspera has multiple patents related to powering an implantable medical device wirelessly using a midfield coupler
Product pipeline: Neuspera’s “Technology” page speaks in generalities about the ability to precisely power implanted devices through layers of air, skin, muscle, and bone. There are no distinct products described, and the only clinical study associated with Neuspera, exploring applications of their technology in urinary incontinence, was closed in January 2018 with no resulting publications.
Funding: $1M seed; $8M A in 2017; $26M B in 2018 (closed Feb 2019 after achieving certain product development and regulatory milestones)
Takeaway: Neuspera has potential as a platform play to support the growing bioelectric medicine field by enabling other device developers to reduce device size through novel power management. This strategy relies on an effective partnership, licensing, and distribution strategy (in addition to simply delivering an effective device), which complicates the business model. With $20M+ in the bank, only twenty employees, and no ongoing clinical trials, Neuspera seems to be planning to optimize their technology, increase partnership and corporate development activities, and position themselves as somewhat of an Amazon Web Services for implantable medical devices.
Description:Non-invasive wearable neuromodulation technology. Clinical stage.
Core Technology: Multiple patents for devices, methods, and systems related to neuromodulation including applications for controlling essential tremor, as well as overactive bladder, osteoarthritis, and cardiac dysfunction.
Product Pipeline: In April 2018, the FDA cleared Cala ONE , an individualized prescription neuromodulation therapy for transient relief of hand tremors in adults with essential tremor. This was supported by two clinical trials. In July 2018 Cala Health initiated the PROSPECT clinical trial, with n=263 participants studying the Cala TWO device for essential tremor. In 2019 licensed tech for Transcutaneous Vagus Nerve Stimulation (cutting-edge technology to improve action control through enhanced GABA and noradrenaline) and Transcutaneous Vagus Nerve Stimulation (hypertension treatment) from Massachusetts General Hospital
Funding:$18M in 2016
Takeaway: Cala Health has a foot in the door with the FDA-cleared Cala ONE device for essential tremor, and an IP portfolio covering the application of this cleared technology for additional potential indications. The technology licensed from MGH suggests that they’re exploring the application of noninvasive neurostimulation for modulation of the Inflammatory Reflex, setting themselves in competition to Setpoint Medical (which has already completed human studies of their technology). Of the 45 Cala Health employees on LinkedIn, only two are involved in manufacturing or operations. Taken together, Cala appears to be a few years from generating meaningful revenue by manufacturing a product and will likely be looking to close a large funding round soon to finance the continued development of their technology.
Description:direct stimulation of the vagus nerve using an electrode in contact with the nerve to provide the most effective and predictable stimulation of the Inflammatory Reflex versus near field stimulators outside the body. This approach has the potential to reduce or completely replace the need for pharmaceuticals or biologics as therapeutic agents. Clinical stage.
Core Technology: Leading platform is a microregulator pulse generator, which is implanted adjacent to the vagus nerve. It regulates stimulation of the nerve to modulate the inflammatory reflex, which has been shown to impact multiple inflammatory diseases. Setpoint has multiple patents related to devices, systems, and treatments of inflammatory disease using neural stimulation.
Product Pipeline: Preclinical testing demonstrating that one dose of bioelectric medicine can reduce and reverse demyelinization in multiple sclerosis. Proof-of-concept study (in humans) showing a significant reduction in disease activity among patients with Crohn’s disease. Proof-of-concept study showing vagus nerve stimulation attenuates symptoms of rheumatoid arthritis, with an ongoing pilot IDE clinical trial in the United States
Funding: Setpoint has raised ~$90M, with the most recent investment a $30M Series D in August 2017.
Takeaway: Setpoint has demonstrated the most clinical evidence among the latest crop of bioelectric medicine startups. It was co-founded by Dr. Kevin Tracey, who characterized the inflammatory reflex while researching at the Feinstein Institute for Biomedical Research, and benefits from being the first mover in this space.
The Investors
APVC is a stage-agnostic venture firm dedicated to advancing bioelectric medicine. It was launched in 2013 with $50M from GlaxoSmithKline; remains funded by GSK however invests independently. APVC has invested in many of the leading bioelectric medicine startups including Setpoint Medical, Cala Health, and Neuspera.
The existence of Action Potential VC demonstrates GSK’s ongoing faith in bioelectric medicine (as does GSK’s joint venture with Google, “Galvani Biosciences”). As of now, APVC is the only venture firm focused entirely on bioelectric medicine. Their portfolio companies range in maturity from product feasibility stage to clinical trials.
Coridea is a medical device incubator based in NYC, focused primarily on interventions for cardiac, pulmonary, and renal disorders. Coridea stepped into the bioelectric medicine game by investing in Axon Therapies, which was attractive based on its heart failure application. As of 2018, Coridea hadissued 120 US patents, raised $100M, and returned more than $1.4B to investors. With a strong engineering and medical pedigree, and a focus on translating medical technology innovation into clinical impact, Coridea has the ability to identify and develop, and commercialize products cutting-edge technology across a range of medical disciplines.
Neurotechnology Investors
Neurotechnology Investors was started by Martin Dieck (Chairman of Synchron) in 2016. The total offering size was $14.5M, with sold $900,000 to 18 total investors. Neurotechnology Investors participated in the Series A round for Synchron, and there have not been any publicized deals since that investment. It remains to be seen if the firm will extend to fund other early-stage companies or remain focused on funding Synchron’s development.
What’s Next
These examples give an insight into the types of technologies being developed within the bioelectric medicine focus, and the range of companies participating in the space. There are several macro issues that will continue to influence its development, including
Advances in electrical engineering, facilitating miniaturization and improved power management
Negative public sentiment toward the pharmaceutical industry stemming from the ongoing opioid crisis
Evolution of the regulatory landscape, making it easier to bring digital health products to market
The next article in this series will explore these factors in greater detail, with the goal of identifying systemic trends that will shape the continued development of bioelectric medicine.
Upgrade Your Medicine: The Technical Details and Theoretical Background of Bioelectric Medicine
…organs are controlled by nerves, nerves are controlled by electricity, and if you can figure out how to stimulate them appropriately you can use electrical implants to control physiologic responses .
Doctors have been zapping people with electricity for thousands of years. It’s a somewhat classic paradigm of medicine: “We’re not sure exactly how or why this works, but it seems to be effective; let’s give it a shot!”
Some of the earliest accounts of “electro-therapy” date from the first century CE. Scribonius Largus, physician to the Roman Emperor Claudius, prescribed that a sufferer of gout (leg pain) should place an electric ray under his feet, while standing on moist ground, until the foot and lower leg are numb. A contemporaneous prescription noted by the Roman historian Galen was to cure intractable headaches by holding a live black electric ray to the spot in pain, until it is numb. The final application, which implies an early intuitive awareness of the relationship between electric stimulation and muscle tension, was the use of black electric ray to treat anal prolapse.
In the following centuries, the understanding of human of anatomy and physiology began to flourish. Electricity and physiology were formally connected in 1889, when the English doctor John Mac William described the application of electricity to rhythmic contraction in a weakened or stopped heart. This theoretical accomplishment was seen in the real world with the first definitive use of an implantable electronic pacemaker in 1958.
Pacemakers control the speed and rhythm of a heartbeat by applying electric stimulation at a certain rate. This technology makes use of Dr. William’s discovery that the heart is controlled by electricity naturally.
The heart is a fist-sized muscle composed of four chambers: the right atrium, left atrium, right ventricle, and left ventricle. Within the right ventricle is a cluster of muscle cells called the Sinoatrial Node (“SA” in the diagram below). This cluster has the shocking ability to provide electric stimuli to the heart, regulating heart rate to approximately 100 beats per minute (“bpm”) as a default. There is also an elegant network of nerves (“vagus nerve” and “sympathetic ganglia chain” below) and cellular signals (ACh and NE below) which act on the sinoatrial node to further influence the heart rate in response to activity, stress, and other behavioral factors.
Given how complex this regulatory network is, it is easy to understand that occasionally signals are crossed. While the reasons can vary from genetic predisposition and diet to physical activity and emotional health, interruptions and communication breakdowns occur at both the nerve and chemical level. This is where pacemaker technology shines.
Pacemakers are composed of a generating element (battery, pulse generator, controller) which creates the charge and a conducting element (wire leads and electrodes) which carries the charge to the heart. In modern pacemakers, the controller can monitor physiological conditions such as blood oxygen and blood pressure and adjust the supplied power and frequency in response. The conducting elements travel from the generating element (implanted within the chest cavity) and provide electric stimulation directly to the heart tissue. Just like Wile E. Coyote’s hand holding a power line, the heart muscle contracts when the stimulation is applied.
All in all, pacemaker theory is incredibly cool while also relatively simple: the heart is a muscle, when muscles are electrically stimulated they contract, and pacemakers provide electrical stimulation at an optimal power and rate. Keep this paradigm in mind as we dig into the newest application of electricity as a therapy: bioelectric regulation of the inflammatory reflex.
The inflammatory reflex is a nerve-mediated component of the body’s overall immune response. The immune response is the cellular version of a surveillance camera and security patrol.
A foreign object (“invader”) enters the body
Certain signalling cells in the immune system recognize an invader and identify it as such, turning on an alarm for the rest of the immune system
Other cells in the immune system respond to the alarm and attack the identified invader.
This response results in inflammation until the invader is destroyed (think of the redness, swelling, and heat that characterizes a bruise or laceration)
Once the threat is gone, the signalling cells turn off the alarm, the responding cells leave, and the inflammation subsides
Similar to the electric regulation of the heart, the immune response is vulnerable to dysfunction if there is miscommunication in the identification of invaders or in the response to them. There is a range of disorders known as “autoimmune disease” in which the immune system identifies itself or other self cells as invaders and begins to attack them (Lupus, dermatitis, multiple sclerosis, and Crohn’s disease are all examples of autoimmune diseases).
One of the critical cells in the immune system is called TNF-alpha, which is a signalling protein that recruits other immune cells to attack an invader. Because of its critical role, reducing TNF-alpha has long been studied as a way to minimize inflammation. This is what Kevin Tracey was studying in 2002 when he discovered the inflammatory reflex.
Tracey was studying the effect of TNF-alpha inhibition by injecting an experimental inhibitory drug into the bloodstream of lab rats near the site of inflammation. In one experiment, he injected the drug directly into the rats’ brains rather than in the bloodstream. This resulted in a reduction of TNF-alpha at the site of inflammation almost 100,000 times more potent than when the inhibitor had been injected directly into the bloodstream - instead of simply reducing it in the brain as expected. Tracey further observed that the inhibitory effect went away when the vagus nerve, which the brain uses to control a host of involuntary functions, was severed. Tracey and his colleagues have since elucidated the precise electrical, cellular and chemical pathways involved in the inflammatory reflex.
Therapies targeting the inflammatory response are currently under development, and at a high level the approach follows that of the pacemaker: organs are controlled by nerves, nerves are controlled by electricity, and if you can figure out how to stimulate them appropriately you can use electrical implants to control physiologic responses.This fundamental approach has application all across medicine, thanks to the inflammation theory of disease: namely, that inflammation is intimately linked to both infectious and non-infectious disease. There is a growing belief that electric regulation of the inflammatory response will prove to be an elegant and safe way to treat a host of medical conditions.
The next installment of Upgrade Your Medicine will explore the companies who working to make this belief a reality.
References:
The Part Played by Electric Fish in the Early History of Bioelectricty and Electrotherapy
Autonomic and endocrine control of cardiovascular function
Boston Scientific - How Pacemakers Work
The vagus nerve and the inflammatory reflex—linking immunity and metabolism
Upgrade Your Medicine : Introduction
How bioelectric medicine will change healthcare
“Upgrade your medicine.” That could be the tagline for any of the new companies competing in the nascent field of bioelectric medicine. At a high level, bioelectric medicine seems like a concept pulled right from Dr. McCoy’s Star Trek sick bay: the implant can be smaller than a penny, doctors are able to customize the dosage size and frequency to a patient’s needs, and manufacturers can make updates wirelessly to improve and maintain the device’s performance. This article is a technical primer on the subject; stay tuned for the four-part series Upgrade Your Medicine for a deep dive .
Biolelectric medicine centers around two fundamental physiological concepts: all major organs of the body are controlled by nerves, and nerves are activated and controlled by electrical signals. Building from these concepts, scientists are researching ways to use electricity to manage and treat diseases. The use of electricity in medical technology is already well-established, including the well-known application of pacemakers. Pacemakers work because the timing of a heartbeat is directed by an electrical signal originating near the heart. Pacemakers are inserted near this nerve cluster and directly regulate electrical signalling to the heart to adjust the timing of a heartbeat.
The next generation of bioelectric medicine is poised to extend the impact of this approach to a wide range of diseases by leveraging advances in miniaturization and precision of electronic components. One company, Setpoint Medical, is using bioelectric medicine to address autoimmune disorders by interacting with a physiological mechanism called the inflammatory reflex.
The inflammatory reflex is the body’s natural response to injury and infection (think of the redness, swelling, and heat that characterizes a bruise or laceration) and it works by initiating a cascade of molecules that help to contain and repair the problem. In certain diseases, specifically autoimmune diseases like rheumatoid arthritis and multiple sclerosis, this pathway is overactive and poorly controlled which results in the body’s immune system attacking itself. Autoimmune disease is in the crosshairs of the next application of bioelectric medicine, and the therapy has been shown to be successful in multiple human trials.
Setpoint Medical’s approach uses a small electronic stimulator implanted directly on the vagus nerve in the neck. This stimulator applies a precise dose of electrical stimulation, similar to the amount of current in a hearing aid, to the vagus nerve. The appropriate dosage, applied a few times each day, has been shown to significantly reduce the body’s inflammatory response.
Bioelectric medicine has the potential to revolutionize how physical health is measured and managed. The four-part series Upgrade Your Medicine will explore
The technical details and theoretical background of bioelectric medicine
The companies leading the charge in this new approach and the institutions that are financing them
The macro environment for the platform including regulatory and commercial atmosphere
What could go wrong in the market
Stay tuned!
Stroke Intervention Market Gets Even Hotter
Why the stroke market will continue to dominate medical device innovation
The clinical practice guideline for stroke intervention was recently revised to expand the time window for intervention. I’ll start with a quick summary of the significance of clinical practice guidelines, then explore which companies are poised to benefit the most from the expanded guidelines.
Clinical practice guidelines (“CPGs”) are descriptions of the best practices for a given clinical situation, including direction for diagnostic approaches, treatment decisions, and follow-up activities. They represent the consensus opinion of key opinion leaders and specialists in a given medical field and are typically based on significant clinical evidence. In many ways, CPGs can be seen as a how-to guide for medical decision making.
Because of the influence that CPGs have on the way medicine is practiced, the introduction of new or revised guidelines has impact far beyond patient care decisions.
Reimbursement: CPGs are typically a major driver of reimbursement decisions by healthcare payers. A revised CPG which expands the recommended patient age for a certain therapy may result in a healthcare payer deciding to reimburse for that therapy across a larger patient age set.
Regulatory Approval: A major component of regulatory approval is the demonstration of clinical efficacy. Because CPGs often establish the time-to-intervention or appropriate patient population for a therapy, new CPGs often shape the context for regulatory decisions regarding data required to support clinical efficacy.
Commercial opportunities for existing products: as a result of items #1 and #2, companies who provide products or services that are affected by a revised CPG will likely see a direct change in demand, in line with the recommendation of the CPG.
New product development: items #1-3 directly impact the two macro factors that dictate whether a new product will be commercially successful: market value and regulatory environment. If a CPG expands the recommended patient age for a therapy, it could have the double-upside of increasing the value of the addressable market for that therapy as well as making the statistical support for clinical efficacy less burdensome.
The 2018 Guidelines for the Early Management of Patients with Acute Ischemic Stroke established that for patients with large vessel occlusion, mechanical thrombectomy (i.e., physically removing the blood clot) is safe up to 16 hours after the stroke for select patients; the previous guideline recommended intervention only up to 6 hours post-stroke. It also established under certain conditions, specifically when advanced brain imaging is available, that mechanical thrombectomy is safe up to 24 hours after stroke. Finally, the guideline broadened the eligibility for administration of IV alteplase (Genentech’s Activase) to include patients with mild stroke instead of only those with severe stroke.
Taken together, the major points of the revised CPG have increased the attractiveness of the already-hot stroke therapy market. This is because the revisions result in an increase in patients eligible for existing treatments (due to the expanded time horizon and severity criteria) and provide more margin for the analysis of safety and efficacy data for treatments currently being developed.
There are a few established players active in the acute ischemic stroke treatment space, as well as a growing number of companies with therapies currently in development. Refer to Table 1 for a summary of these companies and products.
Table 1: Summary of acute ischemic stroke interventions currently on the market or in development
Among these companies, there are two particularly poised to capitalize on the expanded guidelines
Medtronic ($MDT) is the current leader in devices to treat acute ischemic stroke, with their Solitaire platform and Riptide devices. MDT was a co-sponsor of the DAWN and DEFUSE-3 clinical trials, which concluded in 2018 and provided the evidence that drove the expansion of the clinical practice guidelines. MDT is also a co-sponsor of the SWIFT DIRECT clinical trial (currently enrolling) designed to demonstrate whether mechanical thrombectomy alone is as effective as a combination treatment of mechanical thrombectomy with IV t—PA pharmaceutical intervention. This puts them in the driver’s seat in shaping the next generation of acute stroke intervention.
DiaMedica ($DMAC) showed promising results in an early clinical trial of DM199 (which is a recombinant form of a protease already used in Asia as a treament for acute ischemic stroke) and in December successfully completed an IPO to fund REMEDY, a multi-center, double-blind, randomized, placebo-controlled Phase 2 clinical trial.
In summary, the ongoing unmet need for acute ischemic stroke treatments continues to drive paradigm-shifting research. This research has led to a recent expansion in the clinical practice guidelines for stroke intervention, and there are several companies who stand to benefit including $MDT and $DMAC.
Sources:
2018 Guidelines for the Early Management of Patients With Acute Ischemic Stroke: A Guideline for Healthcare Professionals From the American Heart Association/American Stroke Association, Stroke.
New ischaemic stroke guidelines widen mechanical thrombectomy window to 24 hours in selected patients, Neuro News.
Potential benefits, limitations, and harms of clinical guidelines, BMJ.
Clinicaltrials.gov
What Scott Gottlieb’s Resignation Means for Medical Device Investors
How to navigate a sudden leadership vacuum at the FDA
This Tuesday Scott Gottlieb, the US Food and Drug Administration (FDA) commissioner, announced that he is resigning at the end of April. Let’s unpack that a bit and dive specifically into what his resignation means for the medical device segment.
Gottlieb was confirmed as FDA commissioner in May 2017, immediately following a ten year stint in the private sector which included time as an investor, consultant, and board member in the biotechnology and healthcare industries. Given that background it is no surprise that Gottlieb has been viewed as generally favorable to the medical device industry, especially with regards to new product approval timelines as well as championing reform at the policy level to continue to accelerate approvals.
Industry sympathies notwithstanding, Gottlieb is most commonly associated with his pronounced anti-vaping agenda. This included restriction of flavored vaping juices as well as his recent stinging criticism of major corporations including 7-Eleven, Walgreens, and Walmart for selling vaping products to minors.
Gottlieb’s tenure as commissioner has been positive for the medical device industry, and his departure creates risk for medical device innovation in the short- and medium-term.
There are two specific areas of exposure:
Gottlieb was a proponent of “modernizing” the medical device approval pathway, specifically by revitalizing a rarely-used option known as the de novo process. This process allows manufacturers of certain high-risk devices to attain marketing approval with less documentation and clinical testing relative to the traditional Premarket Authorization process. The de novo process can therefore decrease the cost and approval time for cutting-edge devices. Although the ball is already rolling to expand the use of de novo approvals, if Gottlieb’s successor is not as supportive of the initiative it will take longer to see material upside from this policy initiative.
There has been negative public sentiment in general about medical device regulation not protecting patient safety (specifically vaginal mesh and steel orthopedic implants, as shown in popular Bleeding Edge documentary). Furthermore, During Gottlieb’s tenure the number of 510(k) clearances began to increase, reversing a slight decline from 2013–2016. These two issues may compound to create significant pressure for Gottlieb’s successor to be more conservative with regard to medical device approvals.
For investors in the medical device segment, the best way to mitigate against these potential risks is to reduce exposure to companies who rely significantly on new product approvals to drive growth and/or cash flow. This would necessarily mean allocating more capital to large, public medical device companies with stable product lines rather than early-stage companies or those driven by new product introductions.
This can be visualized in the chart above, which plots the percentage of revenue invested into R&D (as an estimate of revenue from new products versus existing ones) on the Y-axis and market cap on the X-axis. Companies in the lower right section of the scatter are large and drive revenue through existing product lines, and should therefore by minimally impacted by potential regulatory headwinds opposing new product approval.