Nano CEO Steve Papermaster, Leonie Hill Capital CEO Arun Kant and TechCrunch Editor Mike Butcher discuss the future of health during the 2019 World Economic Forum in Davos.
Mike Butcher: So my name’s Mike Butcher. I’m the editor at large for Tech Crunch, which is a little news outlet you may have heard of. We’re going to sort of kick this off with these great four things. Because as we all know, one of the big things in the last few years has been this so-called Fourth Industrial Revolution, coined by Charles Schwab. And it’s appropriate we have four major themes because we do have the issues of health care coming up, with an aging population across the globe. We’ve got the rise of artificial intelligence. We’ve got the rise of blockchain. And we’ve got increasingly sophisticated hardware in chip technology. And so, when I heard about the formation and the launch, coming out in stealth a little bit actually, of Nano Vision, I was absolutely intrigued. And to kick this off, we’ve got Steve Papermaster. He’s the CEO of Nano Vision. Steve has a rather illustrious career actually as a serial entrepreneur. He’s been an advisor to the president of the United States for two terms: George Bush in the White House, and co-chaired the President’s Council of Advisors on Science and Technology. And next to him is Arun Kant. He’s the Chief Executive Officer with Leonie Hill Capital, and I think actually invested in PayPal back in the day, and SpaceX. So clearly people who know what they’re doing in terms of these early stage investments. Steve, if I could turn to you, first of all, you’ve got kind of a long career, a serial entrepreneur, but why did you decide to look at this particular area in the first place?
Steve Papermaster: Thanks, Mike. The area of healthcare and drug and cure development to me is more than just an additional frontier. It is the single most important area of development in the world today. And saying that is a bold statement, but I believe that the root issue to a lot of the economic and societal issues that we’re facing actually goes back down to the core of being able to dramatically advance the state of the art of developing and delivering cures and care. And I carefully choose that versus saying health care. I think one of the mistakes that we as society make today is to overly focus on health care as an industry. Not that it’s unimportant, but we’re talking about methods of payment and single payer and multiple payers and providers and insurance. We talk and focus tremendously on the economic element of how to somehow afford burgeoning health care costs when the very root issue is that we have failed to solve the underlying issue of developing and delivering most cures to the most expensive and highest self-impact disease states in the world.
Mike: So it’s your view therefore that what’s happened is, we’ve ended up with a health care industry, which is obsessed with feeding itself and not actually curing anybody?
Steve: It’s a hard area. When we get down to it, we have brilliant people across the world, fantastic companies, biotech companies, genetic engineering, pharma companies, etc. But when you get down to it, we’ve got an utter failure on our hands. Clinical trials have a 99% failure rate, $200 billion spent a year. Our regulatory processes are actual scientific development processes. Even starting with the Socratic method and moving all the way through is necessary, but not sufficient for where we are as a society in this period of the 2000s. It was probably okay 100 years ago. It’s not okay now. The innovation that we are capable of that we apply in financial services and transportation, technology, multiple areas, we have not done to that extent. That focus is because the payoff on it not only is healthier lives, but a dramatic societal impact on cost and the burden to society.
Mike: And Arun, now you are an investor. You’ve invested in some of the biggest companies in the world, but why healthcare and why now for you?
Arun Kant: In fact, health care I think is the most important sector right now for investments. For health care, we see the total market is in a big mess. The costs are rising. Costs are rising and also the medical development cycles are taking longer and longer and also, we have no targeted drug delivery. So, when Nano had pitched to us, it showed us very good prospects of reducing the time to delivery of targeted medicines, and lowering the cost. So it was an attractive proposition for us.
Mike: I see. But you, yourself, how do you assess an investment like that? Do you have a medical background, pharma background?
Arun: I don’t but we have a team of physicians and analysts. But we also seek outside help for giving us advice. Plus, also I am a patient myself. I see what medications I’m taking and how my costs are going up every day and how my employee costs are going up every day. So I think I should do something to find a cure.
Mike: Fair point. Steve, so let’s end up getting to the nitty gritty of this so we can know what we’re dealing with. So with Nano Vision, you’ve created a platform for, a future platform for, really assessing health. But the first implementation of that is going to be a hardware device. Tell us about that.
Steve: Well, the first part of our platform that has a physical manifestation has a device element. It’s a Nanobot. Nanobot is something we’ve engineered over the last several years down to the chip level and across to the device level.
Mike: So what’s a Nanobot?
Steve: Very simply, think of it as sequencing the environment. I say that because our health is really largely determined by two things. One is our genetics, and there’s a tremendous focus on genetics now which is great. A little over 10 years ago we had just finished the human genome project, which I had participation in in The White House in the 2000s. Now we have 23&Me and multiple other consumer-level services. So there’s now a much broader understanding that hey, understanding your own genomics will tell you a lot about what’s going to happen with your health. On the other hand, it’s only part of the picture, about 20%. 50-80 percent of your health is determined by everything that causes gene expression. Not to get too deep in the science of it, but basically the genes are there to direct what might happen, not what will definitely happen. So when you look at the air we breathe, the things that we’re exposed to, what we eat, everything about our exercise, our patterns, our movements, what pathogens we’re exposed to, how they can impact us, viruses, microbes and bacteria, etc., that starts to come down to what really happens. And so, in a lot of ways it’s kind of like, we’re going along saying, hey cars and planes are going to operate the following, but let’s assume there’s no weather and no environment. How about we don’t assume there’s no… because it’s real. And same thing with health. The Nanobots, phase 1, will actually gather on a continuous basis into a network effect, all of the environmental determinant data, from chemical markers, biomarkers, gene expression impact, and particulate matter.
Mike: And so, the first implementation of that is going to be a device that’s sits by a hospital bed I gather, is that correct?
Steve: It can go anywhere. I mean, the reality is that you’re grabbing information that we as humans are exposed to everywhere in the microbiome, in the environment. Of course, it has a pronounced impact in places like hospitals, hospital rooms, corridors. It’s not really a joke, even though we halfway joke about, but people go in the hospital and get sick and come out in worse case than when they went in. Why is that? Because hospitals are giant Petri dishes, even with all the tremendous care that’s given to try and make them safe and secure and hygienic. That’s just a scientific reality. But right now we have no real way to monitor. We can monitor the smoke alarms. We can tell all kinds of things. And yet we have absolutely no idea what’s going on around us from a germ standpoint.
Mike: So this is sort of like a smoke alarm for health?
Steve: It’s like a germometer. It’s like understanding that these are the real things. It’s every element of pathogen and particulate matter that impacts absolutely everything about our individual, collective health.
Mike: I wanted to ask you a little bit more about how you’re actually going to implement that. But just briefly to Arun, the health care industry’s notoriously slow moving. I mean, how do you feel that you’re going to be able to get to the point where hospitals and medical institutions, national health services would even consider bringing in a sophisticated monitoring device in this manner, especially from a private company. What sort of conversations would you have about that to convince them?
Arun: We took a different radical approach. We bought hospitals.
Mike: You just bought them.
Arun: In our portfolio, yes. So we have about 65 hospitals in our portfolio, including two in Japan, which is the most difficult country to enter into a regulatory medical environment. We are implementing the technologies right into our hospitals first, and showing it to the regulators how effective this technology is to reduce the costs. And we are involving the pension funds and the health departments of those countries to show to them that if you don’t implement such technologies, you’ll be broke in a few years.
Mike: Because what, because it gives you an early warning system about the health of the population?
Arun: Not only an early warning system. It’s about reducing the cost of curing a patient, reducing the cost of medication. How do you reduce the patient taking 5-6 medications a day? By having proper treatment to 2 or 3. That reduces the overall cost of the health care. So most of the big countries are going towards how to save Medicare and medical costs.
Mike: So this could be the magic bullet, as well?
Arun: I think so. Other investments we made, we often make it big.
Mike: And Steve, so there is a blockchain aspect to this, isn’t there? And it’s in its early phase, but how do you see that feeding into the system and contributing to the data?
Steve: Blockchain is a structure that allows obviously for decentralized data sharing and format tokenization and ways to do that, which can give you a tremendous optionality, both gathering and inviting in sources of data from existing and new sources, creating models for monetization that can create incentives, some financial, some non-financial to a vast range of participants. So to us, blockchain is a component of several components in a platform that will be operating at a scale that is larger than just about anything that’s ever done because molecular data far exceeds anything that we’ve imagined to date.
Mike: Are you talking about registering blood cells on a block chain for all time. In order to be able to gather vast amount of data and information?
Steve: You know Mike it’s obviously it’s a complex area when you start talking about physiological data, environmental determinant data, genetic data… but the reality is, so without going deep into each one of those, it’s kind of like just stop for a second and realize that with all the streaming content in the world today, 7 by 24, today’s data is literally a rounding error compared to the streaming molecular data of life. And we haven’t even touched it. So we are not only going to touch it. We are going to source it. We’re going to sequence it. We’re going to train the AI engines on it. We’re going to harvest all that and that becomes part of a perpetual care model, which sides into a perpetual cure model. So the answer is, all of that data has to be touched. How much of it is actually stored, how much of it is data that’s harvested from there, how much of it is training AI? That’s part of details of the platform.
Mike: There’s something intriguing about this idea isn’t it. Because for instance, if I could be monitored in this way for my health, over the course of a year or something, there’s so much data, so much interest around that data that even the AI systems of today would be unable to unpack a lot of that. But in a way you’ve held it, you’ve got it, 10 years hence. You could reverse engineer many of the problems that you might have had at that point.
Steve: Again, we’re just operating almost completed blinded today. Almost completely blinded. We have no idea what’s going on relative to where we should be. That doesn’t take anything away from beautiful advances in genomics, genetics, and certain drugs and a lot of beautiful medical devices and things that we focus on. But the reality is that where we are today collectively versus where we can be and need to be is a nonstarter. And our very method of dealing with is kind of like talking about all the cool things we do now except we’re pre-internet and pre-PC.
Mike: I know that your partnership is with ARMS, the global chip maker. But Arun, getting into the space of dealing with, going up against some of the biggest chip makers in the world. Isn’t that going to be problematic, especially for a startup?
Arun: No because if you take a look at the chip makers today they are concentrating on smartphones, PCs, smart devices, smart phones. But very rarely you’ll see those people are investing, concentrating on medical alternative device chipsets. And the chip industry is not making money, the costs are going up. The revenue model is going down. The only way they can save themselves is to have some new technology to help them to develop a specialized chip set, which can be globally used.
Mike: So do you think there’s learnings to be drawn out from this experience that Nano Vision might come up with something that could advance the state of chip design?
Arun: Sure. Because you see, any of the chip designs you see on the technology are really much more advanced if you are going to be using it on human beings and to be radically different from what you use on devices, which has to be polar optimized and so on. So yes, we are working very closely with ARM and a few other device-makers to blend them together.
Mike: Is there a competitive issue here in the sense that large companies like Merck, would they be able to partner with Nano Vision, as well? Or would they consider you to be competitors?
Arun: No, they partner because the bigger companies, I always say the elephants moves slower. So Nano Vision being a startup, we move faster than a big white elephant.
Mike: That would make sense.
Arun: But they have the technology, which Nano Vision can use to develop better products.
Mike: Let’s talk a little bit more about AI itself. You know there’s a lot of predictions made about AI’s capability for preventative health or for assessments of symptoms and then reverse engineering looking at machine data to develop new cures, etc. I mean, what’s the special sauce in the way that you’re developing your AI that as you said earlier creates this sort of interesting ecosystem of players. Where they are incentivized to choose the system, as well. Is that a blockchain based platform or is it some other platform?
Steve: Well, again blockchain is part of it. It’s a great new technology because it’s a lightweight, decentralized structure that gives a lot of structural and architectural components that are used to encourage and extend vast amounts of data with multiple levels of authentication, control and incentivization and disincentivization. But it’s but one component. This is a platform play as if you look at Amazon web services and say, what was the one technology in Amazon web services? By the way if I’m not mistaken that was invented by which computer company? Oh, wait a bookseller. That’s right. So the most transformative technology platform on the planet in cloud computing was invented by what started out as a bookseller.
Steve: And cloud computing starting in the mid-2000s coupled with the advent of smartphones and the iPhone, and structures like app store and iTunes together have lifted the capacity and output of the tech and software industry by several hundred thousand fold. In terms of developers, output, there are millions of new products called apps and integrated systems. There were hundreds of thousands. There are 10s of millions of new developers that did not use to be part of the ecosystem. We will do the same thing. The Nano Cures platform, cure developers will be brought to it. It’s an enabling platform, so whether you’re Merck or Glaxo-Smith-Kline, Roche or a biotech or a garage cure developer so to speak, you’ll have a platform on which you can develop and deliver a vast range of cures and components of those, small and large.
Mike: Is there, just to sort of push back on that, is there an issue about privacy? How are you going to make sure that consumer data is protected?
Steve: I think the privacy issue is of course very significant, but it’s actually a very manageable one because it starts with an architecture. Each person’s own individual genomics is theirs. You keep it. Don’t even bring it near any platform unless you want to. And if you want to there should be an advantage to it, and you should understand and trust the privacy-
Mike: But you’re obviously putting in security protocols to prevent that from happening.
Steve: I’m breathing in and out, okay? And right now if I say that air that I just breathed out, that’s mine, it contains actually elements of my own genetic imprint, how am I going to keep going with that Mike, right now? Right, I can’t grip my fingerprints on that table. I can’t control that. I can’t control… We fly blind. Again, privacy is of utmost importance but people have no idea what’s going on. Our entire model is to not only honor and extend privacy, but at the same time, build a platform that the benefits of which dramatically accelerates cures, development, shrinking timeframes, dropping costs and make it available to the breadth of humanity is so transformative that all these other components which are critical are just important things that we must do along the way to do it right.
Mike: Well I see. We’ll have to see how it goes when you start to roll out your trials. Arun, what about the competitive landscape: do you think this is so cutting edge, that it’s there aren’t that many competitors out there, or do you think it’s part of a wider trend in this direction, this marriage of AI hardware and down the line, potentially blockchain platforms.
Arun: It is a wider trend, and AI, blockchain and Nano technology is going to be the forefront of the medical sciences of the future and not only medical sciences in other financial industries, logistics industries, they will also play a major part. So, if you look at AI for example. There are companies which are targeting customer patients to give them proper advice about what offers to see and what symptoms to manage. There are blockchain companies which are looking at the EMR database and how to have the technology suited for that purpose and so on. So I think that Nano technology will reduce the time for drug delivery and the discovery, and the corresponding technologies like AI and blockchain will help this technology for mass adoption.
Mike: And Steve, I know you’re a fan of this phrase: self-driving cures. Everyone knows about self-driving cars. Self-driving cures…?
Steve: Self-driving cure is a really instructive model to begin to think about where we aren’t and where we should be because self-driving cure as a concept is a model that we exist on a 24/7 basis, and yet we have currently almost no information about what’s happening with our own physiological health on an ongoing basis. I can tell you more about whether my left rear tire is going flat, or lose a bit of air than I think will have anything happening in my metabolic system that is changing on a minute per minute daily basis. That is ludicrous. It’s insane. So self-driving cures are basically, think about all the technology it takes to have self-driving cars. The communication, the data screening, the sensor capabilities, the compute capabilities, the synthesis of all that, the AI, the decision-making. All of that with the concept of self-driving cars and transportation and now apply that to understanding basic health from a monitoring standpoint, a diagnostic standpoint and a delivery standpoint and that gives you the model. So self-driving cures is where we need to head, we need to do that in a way that is on both an engineering, data and on a delivery system basis as easy or easier to use than ride-sharing and where we’re headed with self-driving cars.
Mike: But we’re not going to get to that point are we until we have more constant monitoring. I mean, everyone sees… well, not everyone obviously, but quite a lot of people today now wear FitBits or Apple Watches or Garmin watches that monitor their heart rates and their blood flows to some extent, things like that. How small can you make your technology?
Steve: Well, the whole main Nano Vision is about how small you should make it because Nano Vision is about driving increasing molecular resolution. Now, think about the iPhone being introduced in 2007 in terms of resolution. Look at the first camera on an iPhone. We laugh now and say, oh my god. I can’t believe we even used that. Look at what we can do a little over 10 years later and what you can do with what you can actually get resolution in terms of photographs. It’s stunning. It’s a progression that has been hard to chart. We can do it. It’s massively transformational. And all of that enabled along with geolocation from mapping, live-streaming and we sit here today in Davos and everyone says, hey tell me where you are live and let me follow you. Well imagine you’re doing that on a blood cell or a virus or a bacteria. We’ll get there and it’s not going to take us 50 years. We’re worried about a 10 year zone on this.
Mike: I see, yeah. So it’s very early days, isn’t it?
Mike: It’s early days. Where do you see Nano Vision and it’s roll out in the next 6 months, in the next year, 18 months, as you go forward.
Steve: We have two main focal areas. We’re building out the develop and delivery of that physical and data ingestion part of the platform, driven by the Nanobots and the overall platform that that feeds data into. We’ll be very aggressive on that, and we’ll be driving that in layers from across both health care and healthy care. Which happens pretty much everywhere. And at the same time, we are rapidly advancing our cure development platform, working with several of the most sophisticated biotech companies in the world in pharma. In a world that certain academic institutions to build in a series of pathways, molecular pathways, genetic pathways, all of which are four parts of what you do to envision and develop cures and treatments. We’re just doing it in a highly systematic manor using a platform approach. Like any other great platform there’s a lot of work to do but it’s a cumulative effect of what we are building and what we can do with that.
Mike: I see. Arun obviously mentioned earlier that you are rolling this out in hospitals, such as in Japan and Singapore. What about in western markets. Could you foresee this being rolled out in Europe or the U.S.?
Arun: Yes, in four stages yes. Because the regulatory barriers in the western markets are very high. And once we prove that our technology works in Asia and the markets which we are comfortable with, then the regulators here will take a much better approach. That’s our process.
Mike: And I’m going to ask you all to contribute if you’d like to. I’d love to hear, perhaps you have some questions on blockchain aspect of this. Just quickly, you said it’s a regulatory aspect. Isn’t it the case that you’re going to be much faster in say, emerging economies. You’ll be able to move much quicker in emerging markets.
Arun: Yes, that’s why we are choosing areas like Japan and Singapore to be the first markets where this could be absorbed in the hospitals much faster than U.S. or European markets.
Mike: Well, Japan not being an emerging market obviously.
Arun: No, emerging market in terms of health care. So when I say emerging market it’s about the GDP or being in G20, but about being emerging technologies.