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Stop Talking About the Bubble and Start Telling Your Story

BY MICHELLE SNYDER

Unless you have been off the grid for the past few months (which frankly sounds kind of nice right now), you know that the digital health market has changed dramatically.   While not surprising to those of us who have been through the boom-and-bust cycles of the past two decades, it nevertheless has been an awakening for many investors and entrepreneurs.  

As an entrepreneur, there are some things you cannot control – the macro-economic climate, supply chain disruptions and narcissist led wars halfway around the world.  But what is entirely within your control is how you tell your company’s story and your ability to make investors want to join you on the journey.  

As a longtime storyteller for several digital health companies and a current story listener (aka investor), I’ve been thinking about this topic a lot lately.  Though the word “storyteller” can have negative connotations for some people, I value and appreciate great storytellers who engage me right off the bat, get me excited about the “why” and clearly articulate why it’s in my best interest to invest in their company.

The art of storytelling has always been important, but in the current digital health funding environment, it is quickly becoming essential for success.  Are you telling your company’s story in the most effective way?  Read on to find out.

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If You’ve Seen One Robot – Wait, What?

BY KIM BELLARD

If You’ve Seen One Robot – Wait, What?

We think we know robots, from the old school Robbie the Robot to the beloved R2-D2/C-3PO to the acrobatic Boston Dynamics robots or the very human-like Westworld ones.   But you have to love those scientists: they keep coming up with new versions, ones that shatter our preconceptions.  Two, in particular, caught my attention, in part because both expect to have health care applications, and in part because of how they’re described.

Hint: the marketing people are going to have some work to do on the names. 

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Let’s start with the robot called by its creators – a team at The Chinese University of Hong Kong — a “magnetic slime robot,” which some in the press have referred to as a “magnetic turd robot” (see what I mean about the names?).  It has what are called “visco-elastic properties,” which co-creator Professor Li Zhang explained means “sometimes it behaves like a solid, sometimes it behaves like a liquid…When you touch it very quickly it behaves like a solid. When you touch it gently and slowly it behaves like a liquid”  

The slime is made from a polymer called polyvinyl alcohol, borax, and particles of neodymium magnet. The magnetic particles allow it to be controlled by other magnets, but also are toxic, so researchers added a protective layer of silica, which would, in theory, allow it to be ingested (although Professor Zhang warned: “The safety [would] also strongly depend on how long you would keep them inside of your body.”).  

The big advantage of the slime is that it can easily deform and travel through very tight spaces.  The researchers believe it is capable of “grasping solid objects, swallowing and transporting harmful things, human motion monitoring, and circuit switching and repair.”  It even has self-healing properties.

Watch it in action:

In the video, among other tasks, the slime surrounds a small battery; researchers see using the slime to assist when someone swallows one.  “To avoid toxic electrolytes leak[ing] out, we can maybe use this kind of slime robot to do an encapsulation, to form some kind of inert coating,” Professor Zhang said.

As fate would have it, the news of the discovery hit the on April 1st, leading some to think it was an April Fool’s joke, which the researchers insist it is not.  Others have compared the magnetic slime to Flubber or Venom, but we’ll have to hope we make better use of it.  

It is not yet autonomous, so some would argue it is not actually a robot, but Professor Zhang insists, “The ultimate goal is to deploy it like a robot.”  

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If magnetic slime/turd robots don’t do it for you, how about a “magnetic tentacle robot” – which some have deemed a “snakelike” robot?  This one comes from researchers at the STORM Lab at the University of Leeds.  STORM Lab’s mission is: 

We strive to enable earlier diagnosis, wider screening and more effective treatment for life-threatening diseases such as cancer…We do so by creating affordable and intelligent robotic solutions that can improve the quality of life for people undergoing flexible endoscopy and laparoscopic surgery in settings with limited access to healthcare infrastructures.

In this particular case, rather than using traditional bronchoscopes, which might have a diameter of 3.5 – 4 millimeters and which are guided by physicians, the magnetic tenacle robot offers a smaller, more flexible, and autonomous option.  Professor Pietro Valdastri, the STORM Lab Director, explained:

A magnetic tentacle robot or catheter that measures 2 millimetres and whose shape can be magnetically controlled to conform to the bronchial tree anatomy can reach most areas of the lung, and would be an important clinical tool in the investigation and treatment of possible lung cancer and other lung diseases.   

Moreover, “Our system uses an autonomous magnetic guidance system which does away for the need for patients to be X-rayed while the procedure is carried out.” A patient-specific route, based on pre-operative scans, would be programmed into the robotic system.  It could then inspect suspicious lesions or even deliver drugs. 

Dr. Cecillia Pompili, a thoracic surgeon who was a member of them team, says: “This new technology will allow to diagnose and treat lung cancer more reliably and safely, guiding the instruments at the periphery of the lungs without the use of additional X-rays.”  

Watch it in action:

Magnetic Tentacle Robot – YouTube

The robot was tested on a 3D replica of a bronchial tree, and will next be tested on lungs from a cadaver.  It will likely take several years to reach clinical settings.  The team has also created a prototype of a low-cost endoscope and a robotic colonoscopy system, among other things.   

The researchers conclude

We demonstrate that the proposed approach can perform less invasive navigation and more accurate targeting, compared with previously proposed magnetic catheterization techniques… we believe that atraumatic autonomous exploration of a wide range of anatomical features will be possible, with the potential to reduce trauma and improve diagnostic yield.”

“It’s creepy,” Professor Valdastri admitted to The Washington Post. “But my goal … is to find a way to reach as deep as possible inside the human body in the least invasive way as possible… Depending on where a tumor is, this may be the only way to reach [it] successfully.”  

Nitish V. Thakor, a professor of biomedical engineering at Johns Hopkins University, told The Post: I can imagine a future where a full CAT scan is done of the lungs, and the surgeon sits down on a computer and lays out this navigation path of this kind of a snake robot and says: ‘Go get it.’ ”  He also sees potential for uses outside the lungs, such as in the heart.  

Similarly, Dr. Janani S. Reisenauer, a surgeon at The Mayo Clinic, declared to The Post: “If it’s a small, maneuverable autonomous system that can get out there and then do something when it’s out there, that would be revolutionary.” 

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Personally, I’m still holding out hope for nanoparticles, but these kinds of soft, flexible robots could be important until we get there.  Sure, maybe people will be reluctant to be told they have to ingest magnetic slime – much less a magnetic turd – or have a snakelike robot put down their throats, but it may beat having a scope inserted or being cut open.

The researchers can keep working on the robots; others of us can work on better names. 

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor.

Dibs on a RNA Computer

BY KIM BELLARD

I’ve given DNA a lot of love over the years — DNA as a storage medium, as a computing platform, as the basis for robots, as the tool for synthetic biology/biohacking, even used for the DNA-of-Things (DoT).   DNA is the basis for all life as we know it, in every category of life we’ve found anywhere on earth. That we are now using it to achieve technological goals seems like one of humankind’s greatest accomplishments.

But where’s the love for RNA, DNA’s putative ancestor and still-partner?  A few recent developments in RNA caught my eye that I wanted to give their due.

As you may remember from high school biology, RNA has a crucial role in how DNA transmits genetic information.  As one source explains it: “DNA holds information, but it generally does not actively apply that information. DNA does not make things.”  Instead, it transcribes the information onto RNA, which then actually makes things happen.  

Just last week researchers from Northwestern University were able to show RNA switching genes off and on, using a simulation model they “affectionately” call R2D2 (short for “reconstructing RNA dynamics from data”).  The researchers believe the “strand displacement” mechanism is what switches genes “on” or “off.”  

Professor Julius B. Lucks, who co-led the research, believes: “Many diseases are likely caused by something going awry at the RNA level.  The more we know about this, the better we can design RNA targeting drugs and RNA therapeutics.”  For example, genes could be “engineered to turn “on” in the presence of an environmental contaminant.”  

Amazing stuff.  But that’s not all.  

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Rooting For Schumpter’s Gale

By KIM BELLARD

Not familiar with Schumpeter’s gale?  You may be more familiar with the term “creative destruction.”  Schumpeter’s “gale of creative destruction” is the inevitable “process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”  

We need a Schumpeter’s gale in healthcare.

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Not Just Token Tokens

By KIM BELLARD

I recently watched some of the recent Congressional hearings on cryptocurrency, and, boy, if there’s anything funnier than watching experts try to educate most members of Congress on anything crypto-related, it’s probably me trying to explain it.  I don’t own any digital assets, still don’t see the point of NFTs, and am not going to buy any real estate in the metaverse.  

All that being said, there’s something about Web3 that fascinates me.  Knowledgeable people are talking about Web3 “reinventing the internet,” “democratizing” it, giving people more ownership of/control over what they do on it.  It’s a counterbalance to how the internet – both the traffic and the infrastructure — has grown increasingly dominated by a few very large firms, such as Google, Facebook, or Amazon.

As the Web3 Foundation declares, Web3 is an internet where:

  • Users own their own data, not corporations
  • Global digital transactions are secure
  • Online exchanges of information and value are decentralized

All that sounds very intriguing to me, especially as someone who has dim views of how healthcare likes to silo information, has placed too little value on patient ownership of their own data, and is rushing to centralize.

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Matthew’s health care tidbits: Athenahealth & Private Equity

Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

For my health care tidbits this week, it’s time to delve into the private equity firms’ buying and selling of Athenahealth. That’s of course the practice management/EMR firm bought by private equity companies led by Elliot Capital Management–they of the Israeli spy agency dirty tricks division–for roughly $6.5bn in 2018. Many (including me) have wondered how, given it was already doing about $1bn a year in revenue then, Athenahealth could be sold for $17bn three years later. After all it’s hardly likely to have tripled its revenue in a mature market! This comment by “Debtor 23” on @histalk is very instructive:

“Elliott did quite a bit better than 3x on its investment. The original deal was funded with about $4.8B of debt and $1B of equity from the hedge fund sponsors. Add in the acquisition cost of Centricity (call it $500M of equity, $500M of debt) and the equity investors are all-in with $1.5B of equity and $5.3B of debt. They sold off some assets for a total of ~$600M in cash, so net equity in play is $900M. They turned that equity into $11.7B (assuming no interim debt pay down), which is a 13x return. 13x feels ridiculous….but….if you’d invested that same levered-up $6.8B in the Nasdaq (QQQ) on the same timeline (Elliott began buying ATHN in spring 2017)…you could sell today for $18.1B. Absurd as this whole deal sounds, it has actually underperformed the market. This story is more about tech multiple expansion/bubble broadly than it is about improving management or running the business.”

So much like Renaissance and other hedge funds that rely on leverage, essentially Elliott leveraged Athenahealth up with debt to the tune of 80% of its value. So after slashing and burning R&D, selling assets (like the HQ which they apparently got $500m for) they probably got costs down & profits way up. When it was public under CEO Jonathan Bush, Athenahealth never tried to be that profitable. It was always fixated on the next big thing (the last one was building the future state inpatient EMR with Toledo & using the BIDMC tech it bought from John Halamka). That’s one reason its PE ratio was 100+.

So if Elliott can get some sucker to pay up and manages to turn $1bn into $13bn, how do the next greater fools–H&F and Bain Capital–do it? Well they need to layer Athenahealth up with even more debt (as money is currently so cheap) and keep generating enough cash to pay the debt. Of course at that price and with this mature a market it’s going to be super hard to grow the company enough to justify another leap in sales price, but it might be doable to service or even pay down some of the debt and take it for an IPO for a couple of billion more if the market stays nutso. So if H&F and Bain Capital basically shrink their equity portion down to $1-2 billion, and get it to IPO in a year or so for say $20Bn, they will at least double or triple their money. Not quite 13 x but not terrible.

And if it all goes wrong and Athenahealth can’t service the debt? Well the beauty of leverage and debt is that it attaches to the company – not to the PE fund that put it in that position. So all the new owners will have at stake is a reasonably small amount of equity. Of course if the shit hits the fan and Athenahealth goes bankrupt the employees and customers may not be so happy, but who cares about them? (Apart from that hasbeen CEO who got kicked out!)

Quantum Computing’s Sputnik Moment

By KIM BELLARD

General Mark A. Milley, chairman of the Joint Chiefs of Staff, recently expressed grave concern about China’s reported test of a hypersonic missile: “I don’t know if it’s quite a Sputnik moment, but I think it’s very close to that. It has all of our attention.”  Maybe it should be, but General Milley may have missed the real 21st-century version of a Sputnik moment: China has claimed huge breakthroughs in quantum computing.  

It’s inside baseball to those of us who are neither computer experts nor quantum physicists, but let’s put it this way: the countries/companies that dominate quantum computing will dominate, full stop.  Healthcare included.  

I won’t pretend to understand quantum computers or try to explain how they work, but they’re to “traditional” computers as those computers are to, say, a calculator, or to an abacus.  They’re much faster – like a quantum leap faster – and can quickly do computations that would take even traditional supercomputers centuries to complete, if ever.  For example, think you’ve got an unbreakable code?  Unless you’ve got the fastest quantum computer, think again.  

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You Want to 3D Print What

By KIM BELLARD

You know we’re living in the 21st century when people are 3D printing chicken and cooking it with lasers.  They had me at “3D printing chicken.”  

An article in NPJ Science of Food explains how scientists combined additive manufacturing (a.k.a, 3D printing) of food with “precision laser cooking,” which achieves a “higher degree of spatial and temporal control for food processing than conventional cooking methods.”  And, oh, by the way, the color of the laser matters (e.g., red is best for browning).   

Very nice, but wake me when they get to replicators…which they will.  Meanwhile, other people are 3D printing not just individual houses but entire communities.   It reminds me that we’ve still not quite realized how revolutionary 3D printing can and will be, including for healthcare. 

The New York Times profiled the creation of a village in Mexico using “an 11-foot-tall three-dimensional printer.”  The project, being built by New Story, a nonprofit organization focused on providing affordable housing solutions, Échale, a Mexican social housing production company, and Icon, a construction technology company, is building 500 homes.  Each home takes about 24 hours to build; 200 have already been built.

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CONFERENCE UPDATE–Policies|Techies|VCs: What’s Next For Health Care?

By MATTHEW HOLT & JESS DAMASSA

Policies|Techies|VCs: What’s Next For Health Care? is the conference bringing together the CEOs of the next generation of virtual & real-life care delivery, and all the permutations thereof. Today we add to last week's fantastic list of speakers with another 14 great speakers, including one CEO of  a company that has just SPACed onto the public market (Sharecare), and another that is about to (Babylon Health)! You can register here or learn how to sponsor. This week's new additions are:

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Ali Parsa
Babylon Health

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Julia Hu
Lark

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Niko Skievaski
Redox

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Rushika Fernandopulle
Iora Health

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Andy Coravos
HumanFirst

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Iyah Romm
Cityblock

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Pauline Lapin
CMMI

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Michelle Davey
Wheel

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Blake McKinney
CirrusMD

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Jeff Ruby
Newtopia

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Sami Iniken
Virta

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Deena Shakir
Lux Capital

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Jeff Arnold
Sharecare

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Stephanie Tilenius
Vida

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CONFERENCE UPDATE–Policies|Techies|VCs: What’s Next For Health Care?

By MATTHEW HOLT & JESS DAMASSA

Last month we told you about the new conference bringing together the CEOs of the next generation of virtual & real-life care delivery and all the permutations thereof. That's all those companies raising huge venture rounds and really getting to scale. You’ll see them at Policies|Techies|VCs: What’s Next For Health Care?, and they include Glen Tullman (Transcarent), Jonathan Bush (Zus Health) Roy Schoenberg (AmWell) and 17 more leaders in digital health.

Now we are announcing another 16 great speakers, including 2 publicly-traded digital health company CEOs!  And we'll announce a further 16 next week! You can register here or learn how to sponsor. This week's new additions are:

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Owen Tripp
Grand Rounds

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Paul Johnson
Lemonaid Health

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Mario Schlosser
Oscar

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Anil Sethi
Ciitizen

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Ashwini Zenooz
Commure

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Russ Johannesson
Glooko

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Jim Pursley
Hinge Health

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Peter Hames
Big Health

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Daniel Brillman
Unite Us

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Arif Nathoo
Komodo Health

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Raj Singh
Accolade

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Tim Barry
VillageMD

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Steve Yaskin
Health Gorilla

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Sean Duffy
Omada Health

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Stephanie Papes Strong
Boulder Care

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Abner Mason
ConsejoSano

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