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How VCs Use Advice From Experts

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By JOHN STEUARTPicture 91

Recent media articles have scrutinized the use of doctors, scientists and experts by pharmaceutical companies and hedge funds, often casting them in an unflattering light. Experts can play a valuable role, but it is a case of caveat emptor – and sometimes for the expert, as well as the organization hiring him. Biotech or medical device companies that are trying to promote new products, for example, could undermine a medical expert’s perceived objectivity if financial ties are not clearly disclosed upfront.  Experts providing information to hedge funds must be particularly careful not to disclose non-public information about publicly traded companies and run afoul of insider trading restrictions.

Venture capitalists also commonly rely on personal and business expert networks to help gather investment information to make smart investments in private companies.   Because early-stage venture firms do not invest in public stocks or promote independent projects, experts can work with VCs and VCs can work with experts without risk of reputation or objectivity.

Here is how I and other venture capitalists use outside experts:

Personal networks, by far, tend to be most valuable. For example, sometimes I contact a childhood friend who is now an orthopedic surgeon at the Cleveland Clinic. If CCV is thinking about investing in a product related to surgery, I ask his opinion. His input is good — and it’s free counsel from a valuable source.

Like other VCs, I also look for expert guidance inside existing portfolio companies. I’m currently working on a project related to a software system for gene sequencing, for example, and I have consulted a chief technical officer at a CCV portfolio company who is highly knowledgeable in this space.

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Conflicted

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By MARYA ZILBERBERG, MD, MPH6a00d8341c909d53ef0148c6ea7105970c-320wi

I want to digress from our recent focus on methods and talk a bit about conflict of interest (COI for short). There has been a lot in the press lately about doctors taking money from the biopharmaceutical manufacturers, and doctors inserting unnecessary hardware into patients’ hearts and spines. All of this has been happening against the background of a low hum of an ongoing discussion of what constitutes a COI, how much is too much and for what (for example, can a doc who takes research and education dollars from a manufacturer with an interest in anticoagulation sit on a committee that develops the guidelines for prevention of thromboembolic disease?), and how to mitigate these ubiquitous and pesky COIs.

In some ways watching this discussion has been amusing, while in others it has been downright sad. Medical journals, while insisting that advertising money is OK to take (presumably because the editorial and marketing offices are separated by some sort of a fire wall), though professional societies should not be able to take this tainted education money. Professional societies, on the other hand, are running away from the accusations by tightening their continuing medical education (CME) criteria and scrambling to replace the lavish budgets derived from pharma to develop their coveted evidence-based practice guidelines. And while all the pots are calling all the kettles black, academic researchers are being barred from collaborating with the industry on research projects, and industry researchers are being precluded from presenting their data at professional society meetings. While all the time the public is being whipped into lather about these alleged systematic transgressions, and forced to cheer for the ensuing retribution.

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500 Meetings a Day

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By JOHN HALAMKA, MD Picture 1

In the early 1980’s when I was running a small software company while attending Stanford as an undergraduate, my business activities were limited to the number of phone calls I could receive in a day. At most I could have 5-10 phone teleconferences.

In 2010, with email and social networking, all of the limits on synchronous group interaction have disappeared and I now have limitless meetings per day. When you count the emails I send, the blog comments I respond to, and the Twitter/Forums/Texts/Linked In/Plaxo/Facebook interactions, I can have 500 meetings a day.

What does that really mean?

One of my staff summarized it perfectly when I asked him what keeps him up at night

“The flow of email and expectation upon us all to respond quickly  has become more challenging for me than probably most because of the great diversity of areas that I cover. I’ve been making changes and removing myself from unnecessary support queues(previously used to monitor day-to-day), delegating as much as possible, and making the needed staffing changes.”

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Don’t Tell, Don’t Ask

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By LISA SUENNENPicture 49

A few weeks ago I wrote a post about the unbelievable cost associated with Alzheimer’s disease and how large a population it is likely to affect.  According to an op-ed piece written by Sandra Day O’Connor, among others, it is estimated that by 2050 approximately 13.5 million Americans will be stricken with Alzheimer’s, up from five million today, and that the cumulative price tag for treating Alzheimer’s, in current dollars, will be $20 trillion.  In contrast, remember that the cost of our ENTIRE healthcare system today is around $2.4 trillion.

This week there was a follow-up piece in the NY Times entitled, “Tests Detect Alzheimer’s Risks, but Should Patients Be Told?” The article described how new diagnostic tests have become available that make it possible to detect early Alzheimer’s and, more interestingly, to predict more accurately one’s likelihood of getting Alzheimer’s in the future.  The focus of the article was the moral and ethical dilemma presented by the availability of this knowledge.

Since there is no known treatment for Alzheimer’s and none on the short term horizon, physicians with knowledge of a patient’s Alzheimer’s risk are put in an interesting spot.  If they tell their patients the bad news, it may have a profound negative effect on their psyche and lead to debilitating depression; if they don’t tell, they are withholding information that might enable a person to prepare their life more effectively to deal with the oncoming challenges.  As the article so well articulates:

“Modern medicine has produced new diagnostic tools, from scanners to genetic tests, that can find diseases or predict disease risk decades before people would notice any symptoms.  At the same time, many of those diseases have no effective treatments. Does it help to know you are likely to get a disease if there is nothing you can do? “

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