The Patient Graph

Social Graph
Image by Matthew Burpee via Flickr

We all know social networking as a major time-suck, real-time news source, and practical job-hunting tool. We also know that patients can often get better health information from the web than they can from their health care provider (e.g. WebMD.com). When ‘social networking’ meets ‘the search for health information’ we get online patient communities. Facebook, Twitter and GetSatisfaction are just the tip of the social iceberg. PatientsLikeMe and CureTogether are just two of the best known of dozens of web-based social networks for patients. The NY Times calls patient-centered social networks a “Lifeline for the Chronically Ill.” For medical device companies, patient-centered social networks bring new challenges and new opportunities.

As online communities have evolved from BBS’s and usenet groups, to forums and yahoo groups, to social networks and blogs, the quantity and quality of direct patient-to-patient interaction has dramatically increased. In March 2009, an article in Forbes called these new patient-centric social networks a disruptive innovation in patient care (Disruptor of the Month: Creating A New Kind Of Health Care Community by Renee Hopkins Callahan). If you’re developing a novel device or a novel procedure, there’s a chance you are already the subject of an online patient conversation. The more patient-facing your product (either used-by or implanted-in a patient), the more likely patients will share their experiences with each other online.

Any day now, the FDA is expected to issue some of its long-awaited guidance on its approach to the regulation of social media and the internet. Social media, though, does not move on the FDA timeline. While this blog post may need an update when that guidance comes out, medical device companies are already way behind the social media curve.

What does online patient interaction mean for medical device companies? How can medical device companies interact successfully with patients online?

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Competition On Multiple Fronts

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Most trade disputes between medical device companies involve intellectual property (IP). While the conflict between LightLab and Volcano is relatively small compared to others in the medical device industry (e.g. check out last year’s $1.7B battle between Boston Scientific and J&J), the lessons to be learned are large.

Briefly, Volcano is developing a competing product to LightLab’s OCT system, and accelerated their program by purchasing LightLab’s laser supplier Axsun. The dispute involves allegations of patent infringement, unauthorized disclosure of confidential information, and contract performance issues.

At the end of January, both LightLab and Volcano issued press releases claiming victory in the most recent rulings. Eric Swanson, LightLab co-founder and editor of Optical Coherence Tomography News, just posted an entertaining summary of the recent court documents. Despite these rulings, the legal skirmishes will continue, and the only safe prediction is that the lawyers will be the winners.

What are the lessons learned?

Continue reading “Competition On Multiple Fronts”

510(k) Action Items: FDA 25, Industry 0

Source: FDA-OCI
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On 19 January 2011, the FDA unveiled its much-awaited proposal for changes to the 510(k) process.  Medical device industry representatives were generally pleased with the modest scope of the proposal. In a press release, AdvaMed president Stephen J. Ubl called the plan “clearly a good first step that will address some of the major problems with the program.” Mark Leahey, President and CEO of the Medical Device Manufacturers Association (MDMA) commended “FDA leadership and staff for working with various stakeholders in an open and constructive process to develop consensus proposals that improve patient access to safe and effective therapies.”  The NY Times quoted Medtronic CEO William A. Hawkins as stating “This is a more balanced approach that sends a positive signal to industry that the F.D.A. is engaged, listening and concerned.”

Patient safety advocates were underwhelmed. Public Citizen’s Sidney Wolfe stated “the FDA is not being forceful enough about improving the safety and effectiveness of new devices.” Dr. Rita Redberg (UCSF, Editor of Archives of Internal Medicine) told theHeart.org that she is “worried about the implanted high-risk devices that are getting cleared without any data. There are lots of examples of stents, inferior vena cava filters, heart valves, that are [cleared through 510(k) but] not low risk.”

But is the FDA’s modest proposal really a good outcome for the device industry?

Continue reading “510(k) Action Items: FDA 25, Industry 0”

Medical Device Entrepreneur Readings

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Over the weekend, a friend asked what one book I would recommend to guide a first-time entrepreneur. I replied that just one book was not sufficient. My friend suggested Michael Porter‘s Competitive Strategy, which I agreed was an excellent choice. I also told him I’d address the question more fully on my blog, so that’s today’s post.

The Launching Tech Ventures Reading List

Fortunately, local entrepreneur and investor Ty Danco recently pointed out an amazing reading list for first time entrepreneurs. Harvard B-School Professor Tom Eisenmann is developing an MBA class called Launching Tech Ventures, and he posted his well-curated course reading list on his blog Platforms and Networks. As Ty says, the list makes me wish I was back in school.   While you’re working through the list, don’t skip Eisenmann’s earlier compendium of the web’s best advice for entrepreneurs.  For tech start-ups, Eisenmann’s recommendations are unsurpassed.

For medical device entrepreneurs, Eisenmann’s list isn’t quite enough, so I’ve put together a few suggestions from my own experience. Leave me a comment telling me what I missed or if you disagree with my choices.

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Ardian – A Case Study in Value Creation

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I’m surprised that there hasn’t been more written about Ardian since their sale to Medtronic last month. It may be the largest venture-backed medical device exit to-date. Ardian’s $800M-plus-milestone-payments may end up being larger than Medtronic’s purchase of CoreValve for $700M-plus-milestone-payments in 2009. Even more unusual was Ardian’s relatively early-stage. At the time of sale, CoreValve had implanted devices in 2,600 patients at 125 centers in 25 countries. Ardian exited much earlier, with about 150 patients treated.

Overnight sensations don’t happen overnight. While Ardian seemed to come out of nowhere in 2009 and exited large in 2010, the truth is that the company had been hard at work for almost 10 years. Ardian achieved more than 10X return on $66M invested – at least $732M of value created, before milestones. While the end of the story is still unwritten, Ardian’s first few chapters form a great case study for medical device entrepreneurs and investors.

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Stock Options – Wilson’s Rules

Fred Wilson of Union Square Ventures
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One of my most popular posts concerns employee stock options  (see Stock options – everybody in the pool).  Last week, Fred Wilson of Union Square Ventures described his formula for granting employee options, on his blog AVC. Everyone gets options, according to his transparent formula.  Makes a lot of sense to me, and I’m sure it will for you.  Read his post here.

Come Back When You Have More Data

Museum of Bad ArtOver the past several months, I’ve had the privilege of meeting many entrepreneurs who are raising funds for new medical device startups. One common VC refrain they hear: “Come back when you have more data.” Many times this can be a VC’s way of saying no without saying no. Sometimes though, the VC really means what s/he says: the current proof-of-concept data hasn’t proved the concept. It’s not just startups that face this challenge. I’ve seen weak proof-of-concept data in bigger companies too. How can you make sure your proof-of-concept data is solid?

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Begin With The End In Mind

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Wow – two big medical device exits were announced in the past week: Boston Scientific bought Sadra, and Medtronic bought Ardian.  Most successful medical device startups are ultimately acquired, enabling their investors to achieve a financial return and reputational enhancement. (With sufficient return and reputation, the investors will be able to raise another fund and keep their jobs.) Relatively few medical device startups remain standalone businesses, earning a return for their investors by going public or throwing off profits. Still, it’s usually better to build your company to be successful standalone, as it puts you in the best negotiating position vis-à-vis acquirers if and when they come.

There are likely to be four to six potential acquirers for your company, although there are occasionally less and sometimes a few more. Who are they?  Continue reading “Begin With The End In Mind”

The Legend of the Too Tall Lasers

Ed "Too Tall" Jones

For the past several years, every Candela employee has heard the story of the too tall lasers. It goes like this: All Candela US sales reps have company vans, to carry demo lasers as part of the sales process. Several years ago, after more than a year of development, a project team wheeled their latest greatest device out to the local rep’s van. You can imagine everyone’s surprise when the product just wouldn’t fit. For the next couple of months, the launch team fumed while the engineering group shaved a few inches from the design.

How could this happen? And what should the company have done differently? Continue reading “The Legend of the Too Tall Lasers”

Lean Medical Device Startup: Tales of Pivots

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To pivot is to change one element of your business model to improve product/market fit.  Iterating the business model via a series of pivots is easy to imagine in a software startup, where code is relatively mutable, but aren’t hardware timelines just different?  Is the idea of a Lean Startup really applicable to medical device companies?

Last month, Eric Ries posted a real-life story of the iterations of a lean hardware startup in a “Case Study: Rapid iteration with hardware.”  It’s compelling.  Hardware startups can pivot.

Medical device companies can pivot too.  Here are a couple of examples.

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