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Life Science
Trends 2014
Feature Article:
Big Data in the
Life Sciences
D. Alexander, C. Hamilton, A. McDowell, B. McMerty,
N. Burns, C. Hancock, J. McLaughlin

About Life Science Trends 2014

About this Report

Each year, Carlyle Conlan provides an overview of trends and innovations in the life science
industry, encompassing its drugs, biologics, devices and diagnostics sectors. This year is the first year our European Partner, george james ltd, has been involved in its production. Their participation in this and future reports will widen the breadth of the articles covered. Utilizing a number of in-depth, premium research reports available in the industry, Life Science Trends 2014 summarizes and presents a variety of the most up-to-date industry news under several macro headers: Research and Innovation, Fundamental Trends, Investing and Deal Making, Regulatory & Government, and Health Care. The result is a meaningful, "quick-read" white paper into which topics our clients, partners and constituents can dig deeper based on their individual interests. Life Science Trends 2014 captures significant advances in the industry from the past year and makes observations about developments of interest through the year ahead. Of central importance is the understanding that trends do not necessarily change on a yearly basis. For instance, the field of personalized medicine is expected to continue as a trend well into the foreseeable future. Our report may differ from others in that an early version is sent to CEOs, venture capitalists, and other industry experts for review before its final release. This report was created using both primary and secondary data. Secondary data is highlighted with associated links to further information as available in the public domain or credited to the appropriate source. We invite you to review the information contained in this report, which we trust you will find interesting and relevant to the sector. About Carlyle Conlan

Carlyle Conlan, headquartered in the Research Triangle Park, is an executive and professional
search firm focused on the life science and technology sectors. With a highly dedicated,
experienced, and professional team of specialists, we work with small, mid-sized and large companies to secure their most important asset, human capital. Our placement focus is on highly experienced individual contributors through C-level search in a variety of functional position types throughout North America. More information about Carlyle Conlan can be

About Life Science Trends 2014

About george james ltd
george james ltd was founded in 1999 to provide a range of both standardised and bespoke
recruitment and training service across Europe. As the network of contacts expanded new
services in corporate development were added in 2002. Founded by two experienced and successful senior industry professionals with global experience across a range of industries now served, they had been frustrated by the level of service they experienced in both sales training and recruitment. As a result the principals' initial focus was to develop and continually optimize services to address the issues they had encountered. Both founders' own career success had been based on the simple understanding that nobody can advance his/her own career, and no company can maximize its success without recruiting, developing and keeping the best talent. Helping their customers achieve this is their core goal and specialization. Other successful, experienced industry professionals who share this vision have joined to strengthen and expand the team. More information about george james ltd can be found at:

Table of Contents

Research and Innovation

In Vitro Diagnostics Growth to Spearhead Future of Medtech Iknife: Sniffing Out Cancer Wait, Did This 15-Year-Old from Maryland Just Change Cancer Treatment? Regenerative Medicine, Global Aging Were Hot Topics at Life Science Conference in Stockholm 3 Top 10 Experimental Cancer Drugs – 2013 Microbiomes Make Big News
Fundamental Trends

Open Innovation in Pharma: Defining the Dialogue Gene Scans Solve Mystery Diseases in Kids, Adults U.S. Outpaces Rest Of World By Large Margin In Research And Development Spending, And Its Patent System Helps the U.S. Keep The Advantage Pfizer Expands Clinical Trial Data Access Policy and Launches Data Access Portal Club of 2018 Confirms Big Biotech's Ascendancy Advanced Genetic Testing Paves Way for Personalized Medicine Tufts Report Confirms Domination of Biotech Products IBM and Cleveland Clinic Put Watson To Work Global Drug Spending to Reach $1 Trillion In 2014 Matters of Evidence
Investment and Deal Making

Royalty-Based Venture Financing, Born In Boston, Could Shake Up VCs And Startups From New England To The Northwest Funding Dries Up for Medical Startups Biotechnology Boom is Here to Stay, Investors Say F-Star Forges Immuno-Oncology Spin Off in Latest Test of Asset-Centric Model Vantage Point – Under Pressure to Return Profits, Venture Funds Raise New Money SEC Moves Ahead With 'Crowdfunding' Proposal Banner Year for Life Sciences IPOs NIH Cuts, Reimbursement Fears Cited as M&A Deals in Life Science Tools, MDx Industries Drop 15 Percent in 2013 Strong Momentum in Healthcare: Trends in Mergers and Acquisitions Biotech 2013 by the Numbers: A Blockbuster Year Summary of the Campbell Alliance 2013 Dealmakers' Intentions Survey
Regulatory and Government
Novartis Loses Landmark Drug Patent Battle in India NHS Medicine Spend to Remain Flat for Two Years Senate Spending Panel Approves $31 Billion for NIH in 2014, Restoring Sequester Cuts 2014 May Bring Unwelcome Change for In-Vitro Diagnostics Companies FDA in Personalized Medicine FDA to Regulate Some Medical-Related Apps Table of Contents
Misconduct Delayed Drug Approval FDA Releases Guidance on Research Use, Investigational Use Only Ivds Revision of the EU Medical Devices Directives US New Drug Approvals Slip In 2013 Vs. Prior Years Vantage Point – One year on, breakthrough designation remains an enigmatic accolade GAIN Act: A Great First Step
Health Care
Obamacare: Winners and Losers For Investors 5 Hot Startup Opportunities Created By Health Care Reform Obamacare - A Game-Changer in the Making 4 Ways New Exchanges Will Radically Alter Health Insurance As More Americans Have Surgeries Overseas, US Companies Consider 'Medical Tourism' a Health Care Option Featured Articles – Big Data In The Life Sciences
Clinton Health Access Initiative – Paul Domanico Eagle Genomics – Richard Holland Code-N – Marketta Silvera and Randy Haldeman Numedii – Gini Deshpande Research and Innovation
Finer Focus
In Vitro Diagnostics Growth to
Spearhead Future of Medtech
PARP inhibitors were all but written off a few years ago,with a focus on In vitro diagnostics (IVDs) is not only the BRCA1 and BRCA2 mutation-related cancers, largest segment within medtech, with forecast the Wall Street Journal reports. worldwide sales of $58.8bn in 2018, it is also one of the fastest growing, EvaluateMedTech's Pharmaceutical companies such as World Preview 2013 shows. The analysis of the AstraZeneca, BioMarin, Clovis Oncology, and top 20 sectors of the worldwide medical device Tesaro are beginning to see data indicating that market reveals that the IVD sector is their drugs may help shrink tumors. For expanding at a CAGR of 5.1%, outpacing the example, in one study of ovarian cancer, overall medtech market growth rate of 4.5%. adding AstraZeneca's olaparib to chemotherapy regimens appeared to allow patients with BRCA This expansion, fuelled by the increasing mutations to live a median 11.2 months demand for companion diagnostics and without their cancers getting worse — 6.9 interlinked innovations in molecular testing, is a months longer than those who received a contrast to much of the rest of the medical placebo, according to the Journal. technology world. The diagnostic imaging and orthopaedics sectors, for example, have below- Citigroup estimates that the per-month cost of average growth, with higher regulatory bars such drugs would be between $12,500 and and decreased investment working against the $15,000. "If we can specifically target the development of fewer transformative new patient, there's going to be a better benefit and people are willing to pay more," Mary Lynne Hedley, the president and CSO of Tesaro, tells Regulatory changes are afoot on both sides of the Atlantic, with the FDA finally issuing its long-awaited rule on device identification numbers. The Unique Device Identifier (UDI) will have to be printed on each product's label, along with a scannable barcode to allow physicians and regulators and even the public to track the devices and monitor safety, as the resulting data will be stored in a publicly accessible database. Research and Innovation
iKnife: Sniffing Out Cancer
Electrocautery surgical knives are widely used
in operating rooms to seal incisions with heat and thereby reduce bleeding. Now a new, "intelligent" version has been developed that can analyze the smoke generated during the cutting/cauterizing process to determine whether the tissue being cut is healthy or cancerous. The smoke is sampled and analyzed by a mass Wait, Did This 15-Year-Old from
spectrometer which identifies particles based Maryland Just Change Cancer
on their mass and charge. One type of charged particle commonly found in surgical smoke is Treatment?
fat, and different tissues and cancers have characteristic proportions of different types of If you're feeling anxious about how U.S. kids fat. So, by comparing samples to a database of lag the world in science and math, or just in a nearly 3,000 known standards, cancers and funk about politics or the mess in Europe, take other tissues can be identified with about 95 in this story of a high school freshman from percent accuracy. Results are delivered in 2.5 Crownsville, Md. who came up with a prize- seconds or less. winning breakthrough that could change how cancer and other fatal diseases are diagnosed His name is Jack Andraka, and he loves science and engineering with every inch of his 15-year-old soul. Andraka's diagnostic breakthrough is a humble piece of filter paper, except that it is dipped in a solution of carbon nanotubes, which are hollow cylinders with walls the thickness of a single atom, coated with a specific antibody designed to bind with the virus or protein you're looking for. Andraka's key insight is that there are noticeable changes in the electrical conductivity of the nanotubes when the distances between them changes. When the antibodies on the surface of the nanotubes come in contact with a target protein, the proteins bind to the tubes and spread them Research and Innovation
apart a tiny bit. That shift in the spaces during the recent 9th annual Swedish-American between tubes can be detected by an electrical Life Science Summit Conference, where a broad meter. Andraka used a $50 meter from the range of regenerative medical issues and Home Depot to do the trick but, he says, solutions took center seat. doctors can just as easily insert his test-strips into the kinds of devices used by millions of These included the continuing work in diabetics around the world. developing a novel hormone replacement therapy for Alzheimer's disease as a preventative for those who are at risk, treatment of tissue damage with Omega-3-based regenerative technologies such as tissue regeneration material derived from fish skin to accelerate healing of wounds and tissue reconstruction, and advanced treatment of various medical diseases and disorders through stem cell therapies that would enable people to take control of their own health at the most basic level – their own cell.

Top 10 Experimental Cancer
Drugs – 2013

With the help of open-minded regulators, pharma companies have ditched the traditional march through three phases of clinical trials for Regenerative Medicine, Global
some cancer drugs. Trials of targeted drugs Aging Were Hot Topics at Life
offer rapid proof of efficacy against molecularly Science Conference in Stockholm
defined malignancies, giving the authorities a basis for approvals before late-stage studies to Is "regenerative medicine" here and now, or is prove that therapies prolong the lives of it still a vision of hope that requires more research, if not further extended clinical studies to achieve its global promise? And how much of In Fierce Biotech's third annual report on 10 an impact does global aging have on the exciting cancer drugs, there are plenty of R&D bottom line of companies and governments programs zipping through trials with the blessing of the FDA, which has awarded "breakthrough" status for expedited Scientists and medical experts from various development to treatments in oncology more countries debated these issues in Stockholm than any other field. Take Novartis' LDK378, one of the featured treatments in this report. In Research and Innovation
March the next-gen ALK inhibitor joined the may "alter conceptions of what and who we "breakthrough" club amid Phase II trials, and are," Tina Hesman Saey writes. Novartis ($NVS) said it would seek FDA approval next year with only three years of Because only around 10 percent of a human's cells are actually human, with microbes making up the remaining 90 percent, it is useful to consider humans as a superorganism made up of ourselves, as hosts, and our microbe guests. Microbiomes Make Big News
For example, using the superorganism approach could help scientists better The spacecraft Voyager I sailed out beyond the understand how diet, chemicals, and heliosphere and into interstellar space. environmental factors impact health. Scientists inched closer to developing human body part replacements. The bones of Richard III were identified and yanked from their home under a parking lot and the cause of his death was revealed (crushed skull).

These were among the big science stories that
broke this year, but the biggest, according to
Science News, was the advance of the idea that organisms and the microbes that colonize them Revelations from the Human Microbiome Project and other microbiome research soon Fundamental Trends
Open Innovation in Pharma:
thus must collaborate with others?" Or did Defining the Dialogue
companies deliberately embrace it as a behavior they should adopt, a culture they should push forward? Or was it vice versa—did There are a number of highly innovative US the external environment intervene to force companies, many of them in the information their hand? The answer appears to be that technology (IT), electronics, and software because the high tech environment changed industries. What is interesting is that these over the past 30 years, companies had no companies were at one time fully-integrated choice but to adapt. entities—companies that made mainframe computers, wrote the software, and sold you the paper on which to print. Essentially, they did everything from soup to nuts. That model in the IT and electronics area has changed dramatically over the last 30 years. Many of the biggest names in those fields claim that their adoption of an open innovation model led to this result and saved their businesses. So, what is open innovation? Open innovation can be categorized three ways:

Type I is pure outsourcing, often touted as
open innovation, or R&D activity pursued by
external entities, such as contract research organizations (CROs) and universities. Type II
consists of licensing and its variations—
collaborations, joint ventures, even in some cases technology transfer, and perhaps what is called "crowd sourcing;" where a number of innovators come together to address a problem Gene Scans Solve Mystery
and solve it. Type III is R&D in the space
Diseases in Kids, Adults
beyond IP—an interesting concept, but which doesn't really help us much with what this means as applied to pharmaceutical innovation. They were mystery diseases that had stumped doctors for years — adults with strange Rather than digging further into the jargon, we symptoms and children with neurological need to ask what caused certain companies to problems, mental slowness or muscles too adopt what is called an open innovation model. weak to let them stand. Now scientists say they Did it just dawn on those companies to decide were able to crack a quarter of these cases by "Oh, we need to create common platforms and decoding the patients' genes. technologies to arrive at new products, and Fundamental Trends
Their study is the first large-scale effort to factor of 4-10 to one. ("How China Chases move gene sequencing out of the lab and into Innovation", U.S. News – The Outlook, by Bob ordinary medical care, and it shows that high Davis, WSJ) About 2/3 of all R&D spending in hopes for this technology are finally paying off. the US is privately funded. China was the "This is a direct benefit of the Human Genome closest in R&D spending, at about 1/2 the level Project," the big effort to decode our DNA, said of the US. Only Japan, Germany and South Dr. Christine M. Eng of Baylor College of Korea spent more as a percentage of GDP. Medicine in Houston. "We're now able to Interestingly, all the top R&D spending directly benefit patients through more accurate countries, as a percentage of GDP, had strong patent systems. The lowest spending countries, Brazil and India, have notoriously weak patent systems. Interestingly, despite its large R&D spend, China lags the world in "new ideas", still focusing on imitating Western technologies and producing them more cheaply. With the US leading in R&D spend, and China and other developing nations leading in low cost production, common sense tells us the patent system plays a vital role in protecting the US's R&D spend against free-riding, low wage, imitator nations.

Pfizer Expands Clinical Trial Data
Access Policy and Launches Data
Access Portal
U.S. Outpaces Rest of World by
Pfizer Inc. (NYSE: PFE) announced an update of Large Margin in Research and
its clinical trial data access policy that will simplify and broaden access to information Development Spending, and Its
gathered in Pfizer-sponsored clinical trials. The Patent System Helps the U.S.
updated policy builds upon and expands the Keep the Advantage
company's established methods of clinical trial information sharing, including Pfizer's long track record of submitting for publication On September 30, the Wall Street Journal results from all interventional clinical trials in reported that the US leads the world in R&D patients and its pioneering efforts to provide spending – at $450 billion – by a wide margin, outpacing Japan by a 3 to 1 margin, and most of the rest of the industrialized world by a Fundamental Trends
clinical trial results and data to study sharply, with Lilly andespecially hard hit and set to have just one top-50 drug each in 2018, against four and three respectively last year, as patent expiries on toll. upper hand in any case comes thanks to drugs such as and and thus largely owes its success And of cour Pfizer's updated policy meets or exceeds sole representative i the global best seller of both last year and 2018, which as a the "Principles for Responsible Data monoclonal antibody is certainly no typical big Sharing" issued by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the European Federation of Pharmaceutical Industries and Associations (EFPIA) in July 2013. Advanced Genetic Testing Paves
Way for Personalized Medicine
Club of 2018 Confirms Big
Washington - New genetic testing methods
Biotech's Ascendancy
may not only help identify the potential risk for individuals to develop certain diseases but may also open the door for more targeted therapies The ascendancy of the big biotech sector is and management strategies, which could be of beyond doubt. Nothing shows this better than particular benefit in higher risk patient an analysis of these companies' growing representation in the exclusive club of the 50 biggest-selling drugs between now and 2018. "Recent advances made in genetic mapping True, some big pharmas are maintaining the techniques such as the development of whole senior sector's blockbuster reputation, though exome and genome sequencing are allowing us not without help from their junior friends. And, to better and more quickly identify hereditary as EvaluatePharma data reveal, there now diseases ranging from genodermatoses such as seems to be no stopping biotech's biggest hidradentitis suppurativa and familial representatives such as which disseminated superficial actinic porokeratosis in five years could boast no fewer than three (DSAP) to a variety of cancers and other top-50 drugs and six in the top 100. inheritable diseases," Jorge R. Toro, M.D., said at the 90th Atlantic Dermatological Conference A couple of the sector's senior companies – in Washington. He is chief of the department of – do remain pivotal. But dermatology, Washington DC VA Medical beyond, big pharma's dominance diminishes Center. "These breakthrough technologies can Fundamental Trends
help forge a more personalized medicine approach for our patients." IBM and Cleveland Clinic Put
Tufts Report Confirms
Watson to Work
Domination of Biotech Products
IBM Research used the Cleveland Clinic's A new analysis from the Tufts Center for the Medical Innovation Summit to debut two new Study of Drug Development has highlighted the projects using its Watson computer system to way the pharmaceutical industry "has help doctors and medical students make more dramatically shifted its R&D focus from its informed and accurate healthcare decisions. historical concentration on small molecule drugs to today's dominant focus on "WatsonPaths" and "Watson EMR Assistant," biotechnology products". both early-stage projects with a focus on decision-support, may help healthcare The study notes that biotech products, which providers deal with growing pressures to accounted for only 7% of revenue generated by practice evidence-based medicine as the the 10 top-selling treatments worldwide in amount of available evidence balloons. 2001, made up 71% of the top 10 last year. The number of biologics in clinical trials grew "The vision is for WatsonPaths to act as a 155% in 11 years, from 355 in 2001 to 907 in useful guide for students to arrive at the most 2012, with big pharma involved in about 40% likely and least likely answers to real clinical of all biotech products in development last problems, but in a classroom setting," says J. Eric Jelovsek, director of the Cleveland Clinic Multidisciplinary Simulation Center. Watson EMR Assistant aims to help doctors uncover key information from patients' electronic medical records to improve the quality and efficiency of care they provide. Fundamental Trends
Global Drug Spending to Reach
$1 Trillion in 2014
Global spending on medicines is expected to hit the $1 trillion threshold in 2014 and reach $1.2 trillion by 2017, driven by greater access to medicines by the world's rapidly expanding middle class, together with stronger economic prospects in developed nations. After several years of spending growth below 3 percent per year, global drug expenditures are forecast to increase at a 3 to 6 percent compound annual rate over the next five years, according to new research released by the IMS Institute for Healthcare Informatics. The report, The Global Use of Medicines: Outlook through 2017, found that growth in global spending on medicines increased 2.6 percent to $965 billion in 2012 and is forecast to gradually reach 5 to 7 percent in 2017, the highest pace of growth since 2009. With the rising number of innovative new drugs expected to be approved over the next five years, particularly for the treatment of cancer, spending on specialty medicines is expected to reach $230-240 billion in 2017, up 38 percent from the $171 billion spent in 2012. Typically biologics that are used for conditions requiring complex treatment, specialty medicines will be the single largest contributor to branded drug spending growth through 2017. Fundamental Trends

Matters of Evidence
Ernst and Young's Beyond Borders 2013 report focuses on "Matters of Evidence". As the 2012 report
coined the term "HOLNet's" (Holistic Open Learning Networks) to describe collective efficiencies in the market, the 2013 edition describes the move toward outcomes-focused, evidence driven health care systems. Through a survey of 62 companies in the biotech sector E&Y found that, while companies overwhelmingly felt prioritized products should exceed the current standard of care and demonstrate value to payers, relatively few had taken steps to add payer / reimbursement expertise to their companies. Many companies, though, have considered discontinuing products that might not exceed the current standard of care. Through panel interviews with VC's and Big Pharma corporate executives, the report offers additional insight. Tao Fu, Head of M&A at Johnson and Johnson states, "we do extensive payer research for every significant business development project we manage, particularly those that are later-stage. We certainly don't expect smaller biotech companies, with their relatively limited resources, to conduct large payer studies. But we do expect them to thoroughly think through the incremental value their products will bring to medical practice and design their clinical development plans and target product profiles accordingly." Brian Edelman, VP of Corporate Finance and Investment Banking at Eli Lilly, adds "Why are biotech companies so frequently unprepared to demonstrate the differentiated value of their products? I believe that underlying this development is a paradigm shift. Our society has decided that it's only willing to pay for innovation up to a point. Effectively, this translates into a situation in which only one or two agents will be reimbursed in any area of care. We might lose something in the process. Lipitor, which was a late stage statin to get approved, went on to become the best-selling drug of all time, in large part because it was legitimately seen as a better treatment. In today's industry, a product like that might never get payer coverage in the first place." – Investment and Deal Making
Royalty-Based Venture
Financing, Born in Boston, Could
Shake Up VCs and Startups from
New England to the Northwest

Every once in a while, an investment model
comes along that turns the innovation
community on its head. The venture capital industry, still less than 50 years old, is one example. Now an emerging paradigm called royalty-based financing, applied to early-stage startups, may be another. The approach has its Investment in the medical-device and roots in the Boston area, and is starting to equipment industry is on pace to fall to $2.14 generate some serious buzz in the Northwest. billion this year, down more than 40% from If you're a VC, angel investor, or entrepreneur, 2007 and the sharpest drop among the top five it definitely needs to be on your radar. industry recipients of venture funding, according to an analysis of data compiled by The concept of royalty-based financing is PricewaterhouseCoopers and the National simple. Instead of buying equity in a young Venture Capital Association. Venture money company, an investor agrees to receive a received by the biotechnology sector declined percentage of the company's monthly 28% over the same period, while software revenues—up to a limit of, say, three to five startups recorded a 75% increase. times his or her investment. Instead of waiting five or 10 years for a startup to go public or get acquired, an investor can start seeing returns almost immediately. This approach means investors should be able to fund a much wider range of startups than just those that typically receive venture backing—the ones that have potential to grow huge, fast. As a result, the industry responsible for making prosthetic hips and other devices is having to Funding Dries Up for Medical
get creative. Entrepreneurs are taking on more debt and looking for cash in unusual places, including family investment funds overseas and high net worth individuals in the U.S., people in The medical-device industry, struggling to the industry say. adapt to a thriftier health-care system, is getting squeezed by a venture-capital drought. Investment and Deal Making
Biotechnology Boom is Here to
– immuno-oncology – it would seem to have a good chance of attracting interested parties, Stay, Investors Say
and providing proponents of the asset-centric model a well needed success story. There have been more than 30 initial public The so-called asset centric model – creating a offerings of biotechnology companies as of this company around one or more assets with the article's date, and there's a line around the primary end motive of finding them a new block of promising new entrants looking to owner – is being tested in various debut on the public markets. manifestations as venture capital-backed drug developers and their investors search for new But don't call it a bubble. Those in the know are business models that will help keep the cash calling it a boom, and saying the good times flowing in both directions (Index Ventures adds are likely to continue for biotech, even in the big pharma to asset centric model, March 21, face of clinical setbacks and other bumps in the For platform companies, providing investors These were the impressions of investors in both with an opportunity to sell out or at least publicly traded and privately held biotechnology receive a return is particularly tricky, outside a companies who served as panelists at the Bio complete takeover. Others have already turned Investor Forum in San Francisco. The to the asset-centric approach for a solution, for conference is organized by the Biotechnology example in the US by Nimbus Discovery and Industry Organization. Forma Therapeutics (EP Vantage Interview – Forma's fix for VC model driving deals, January F-Star Forges Immuno-Oncology
Spin Off in Latest Test of Asset-
Centric Model
Vantage Point – Under Pressure
to Return Profits, Venture Funds
specialist F-star threw its Raise New Money
into the asset-centric ring with the creation of a new company called F-star Alpha, which Private drug developers awaiting a thaw in the has a license to a broad range of its oncology last few years' frigid financing conditions will assets and €9.4m ($13m) in new venture take heart at the recent flurry of new funds raised by life science-focused venture capital firms. The past few months have seen the huge The hope is that this structure will enable the US healthcare investor Orbimed raise $735m company and its investors to capitalise more and early-stage California investor 5AM easily on leads that have emerged from F-star's Ventures raise $250m, while in Europe Edmond platform. Given that Alpha's focus is trained on de Rothschild Investment Partners and Gilde arguably the hottest area of research right now have both managed to close funds. Investment and Deal Making
At firms flush with new cash the mood is Banner Year for Life Sciences
inescapably upbeat. "You are about to see a huge resurgence in venture capital in healthcare," says Jonathan Silverstein of Orbimed. "This year a few funds managed to The boom in life sciences IPOs on U.S. raise capital– next year there will be a bunch exchanges, and biotech IPOs in particular, was more." However as investors return to these the biggest story of 2013 for the sector. During high risk propositions, venture firms will remain the best year for initial public offerings across under tremendous pressure to prove that they all sectors since 2000 in the United States, 52 can turn the biotech bull run into returnable life sciences companies completed initial public offerings to raise a total of $7 billion. that compares to 16 companies that went public in Much of the optimism emanating from the 2012 and raised $1.1 billion. venture capital community is being forged by the buoyant US IPO market and a belief that the FDA is becoming more co-operative, particularly over the most innovative products.
SEC Moves Ahead With
Crowdfunding' Proposal

Startups and entrepreneurs could soon reach
larger numbers of potential investors through investment websites under "crowdfunding" rules proposed by federal regulators. The Securities and Exchange Commission, in a 5-0 vote, outlined a plan aimed at helping startup companies sell shares online, allowing them to pool together small amounts of capital from ordinary investors. Supporters say the long-delayed plan could spur significant growth in the young The surge of IPOs reflected robustness in the crowdfunding marketplace. public markets, the strong performance of established biotech companies, and pent-up demand for good biotech stories. The approval in 2012 of 39 new molecular entities by the U.S. Food and Drug Administration—many of them innovative biologics, cancer, and rare Investment and Deal Making
disease drugs— and the agency's willingness to The number of M&A deals completed in 2013 or enable the advancement of promising therapies announced during the year totaled 47, down 15 for unmet needs, bolstered investor enthusiasm percent from 55 transactions in 2012, and down from 58 in 2011. Activity was down in both the first and second halves of 2013 year The post-IPO return for the 52 life sciences over year as 23 deals were done in H2 2013, companies that went public in 2013 is 47.6 compared to 28 in the comparable year-ago percent on average as of December 27, 2013. period. In the first half of 2013, 24 deals were A total of 41 companies, or 78.8 percent, completed, down from 27 a year ago. ended the year above their IPO price, and seven of them more than doubled their initial offering price. The 16 companies that went public in 2012 were up 61.8 percent on Strong Momentum in Healthcare:
average at the end of 2013, a sign that bodes Trends in Mergers and
well for the continued strong performance of the current year's newly public companies. The impending decrease in venture investment in healthcare companies is based on the time NIH Cuts, Reimbursement Fears
lag between funds raised and capital available Cited as M&A Deals in Life
to deploy. Equity investment from venture funds are deployed from two different sources: Science Tools, MDx Industries
1) dollars invested by "newer funds" — 2010 Drop 15 Percent in 2013
vintage and later — into new company investments, and 2) the mostly follow-on Though Thermo Fisher Scientific's pending activity supporting existing companies with $13.6 billion purchase of Life Technologies sent additional equity from the substantial amounts shockwaves through the industry and led some of capital raised in the vintage 2006–2008 to speculate about further deals, mergers and "older funds." The lion's share of the current acquisitions in the life science tools and capital invested in the last few years has come molecular diagnostics space were down year from these older funds, which will no longer be over year in 2013. available as these fund reserves are used up. Since 2010, the number of new funds and dollars raised has declined significantly. Thus, we believe that dollars invested into healthcare venture-backed companies will come down to the $5–$5.5 billion level in the next few years, leading to a smaller percentage of overall venture investment into healthcare — likely 18–20 percent of total venture investment — if overall investment remains consistent. Investment and Deal Making
The $5–$5.5 billion number is still higher than And yes, investors did very well in biotech in new healthcare fundraising dollars on a yearly 2013. This chart says it all: basis, although the fundraising data presented does not accurately take into account one In a year where the markets outperformed, the important part of the healthcare venture biotech sector performed even better, posting ecosystem: corporate venture funds. Corporate returns not seen since 1999. Phenomenal. No venture has emerged as an important source of wonder we saw a huge influx of generalist capital for healthcare companies, although investors into healthcare stocks in 2013. corporate venture fundraising (or dollars available for investment) is not adequately tracked. According to our estimates, healthcare corporate venture represents 15–20 percent of all capital invested into healthcare venture-backed companies. Even though corporate venture has become more active in venture investment and has helped to fill some of that innovation gap created by reduced healthcare venture fundraising (especially in Series A biotech), paired with a reduced amount of capital from traditional venture it is not enough to sustain the current capital investing pace. As a result, we will see decreased dollar deployment into healthcare companies from its current level. Doug Fisher, Partner with InterWest Partners, agrees: "We are already starting to see this trend among our portfolio companies who are raising money. The bar is higher and there are fewer funds able to invest."

Biotech 2013 by the Numbers: A
Blockbuster Year
Hello, 2014! Before we crack open the new year, let's close the books on what was a very big 2013 in biotech investing.


Investment and Deal Making

Summary of the Campbell Alliance 2013 Dealmakers' Intentions Survey

With 2012 being described as the "Year of the Earnout" the view of 2013 is that this trend is set to
continue with in-licensers forecasting increasing acquisitions with earnouts as acquirers look to reduce initial exposure and target companies continue to face challenges in raising finance. Overall the view of 2013 was a positive one with several interesting trends developing. Compared to previous years there is a shift towards increasing interest early stage assets with in-licensers less positive than out-licensers on the prospects for phase 3 deals, reversing previous trends for later stage deals being in the ascendance. Oncology remains the therapeutic area of great interest to in-licensers, particularly these early stage assets. Not surprisingly this move towards earlier stage assets has resulted in increased deal discussions but a significant drop in yield of deals with up-front payments, down to 1% from 7% in the previous year. The conclusion is that life for the deal makers whilst not being more productive is certainly a lot busier as a larger number of higher risk deals are Looking more closely into the numbers the most striking statistic as to why most deals failed is the difference in valuation and trust between parties. Figure 6. The perceived deficiency of pricing and
Investment and Deal Making

market access information was seen by in-licensers as the biggest issue leading to negotiation
breakdown. Figure 7. If negotiations are initiated with shared commercial assumptions, deal-term
expectations and trust deal conversion rates potentially increase tenfold. The message to out-licensers is that pre negotiation investment in detailed pricing and market access information is the biggest single factor within their control that significantly increases the potential for a successful When looking at the details of the negotiations, the valuation method most used by in-licensers is risk-adjusted NPV (rNPV) followed by the use of comparable deals. There is also evidence to suggest in-licensers have lower hurdle rates than out-licensers may realize; this assumption may be part of the reason unrealistic commercial expectations are presented by an out-licenser, which for the reasons above greatly increases the risk of a failed negotiation. One of the reasons for optimism on an increasing deal rate was a widening discount rate spread which is aiding deal making with 2013 reporting a significant increase in spread; in-licensers' discounted rates down 300 basis points and Investment and Deal Making
out-licensers' up 300 basis points. This results in becoming viable in situations in which the valuating gap was previously too large to bridge. Finally, looking at supply and demand there are indications it is a seller's market for approved oncology, antibiotics and vaccine assets with strong interest from in-licensers and a relatively restricted supply. Areas of particular interest are Orphan products and antibody-drug conjugates,
which were viewed as the two "hot" areas, Figure 14
Investment and Deal Making
NHS medicine spend to remain
flat for two years
After almost two years of negotiations, the UK
Government and pharma industry have agreed
a revision to the system for drug pricing of branded medicines in England to commence from January 1, 2014. Novartis Loses Landmark Drug
Patent Battle in India
One of the main points of the note in the new Pharmaceutical Price Regulation Scheme India's Supreme Court rejected drug maker (PPRS) is a price freeze on NHS medicine Novartis AG's attempt to patent an updated expenditure in England over the next two years version of a cancer drug in a landmark decision in order for the service to help claw back part that health activists say ensures poor patients of the £12bn annual drug budget amid wider around the world will get continued access to cost-cutting measures. cheap versions of lifesaving medicines. This comes despite previous growth forecasts Novartis had argued that it needed a patent to in NHS medicine spend of 3.87 per cent and protect its investment in the cancer drug 3.52 per cent for 2014 and 2015 respectively, Glivec, while activists said the drug did not meaning that pharma companies effectively merit intellectual property protection in India have to face a price cut on branded medicines because it was not a new medicine. In to stick to the revised budget. response to the ruling, Novartis said it would not invest in drug research in India. Prices will then be allowed to increase over the next three years, although at a rate less than The court's decision has global significance previously forecast. since India's $26 billion generic drug industry, which supplies much of the cheap medicine The agreement, which was negotiated between used in the developing world, could be stunted the Department of Health (DH) and the if Indian law allowed global drug companies to Association of the British Pharmaceutical extend the lifespan of patents by making minor Industry (ABPI), also clarified that pricing changes to medicines. assessment for new drugs could take into account the wider value of a medicine. Regulatory and Government
NIH has strong support from Senate Appropriations Committee Chair Barbara Mikulski (D-MD), who held a press conference yesterday to discuss NIH at Johns Hopkins University in Baltimore. Mikulski said that she is determined to reverse "reckless cuts to American biomedical research." NIH Director Francis Collins was on hand as well and Senate Spending Panel Approves
warned: "We're putting an entire generation of U.S. scientists at risk and our own nation at $31 Billion for NIH in 2014,
risk as well" with the sequester cuts. Hopkins Restoring Sequester Cuts
officials said that the sequester has cost the university $38 million in NIH funding this year The mandatory across-the-board federal cuts and will force the layoff of dozens of staff known as sequestration slashed $1.55 billion from NIH's budget this year and will result in belt-tightening at labs with ongoing grants as well as hundreds fewer new grants than in 2012. The measure approved by the Senate appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies includes $30.955 billion for NIH. That figure would provide a 1% boost of $307 million over NIH's 2013 budget (before sequestration), which was essentially the same as in 2012. An online summary states that the bill includes $40 million that the president requested for NIH's proposed BRAIN brain-mapping initiative. 2014 May Bring Unwelcome
Although the increase falls short of the $31.3 Change for In-Vitro Diagnostics
billion requested by President Barack Obama, Jennifer Zeitzer, legislative relations director for Companies
the Federation of American Societies for Experimental Biology (FASEB), said that her Earlier this year, the Centers for Medicare and group is "thrilled" with the figure. "It's far Medicaid, proposed a rule that does not spell better than the current situation and it's a welcome news for in-vitro diagnostics move in the right direction," she says. FASEB has been pushing for $32 billion for NIH in 2014 to shore up the agency's budget after a "If you come in for an outpatient procedure, decade of flat funding and losses to inflation. and they're doing any laboratory work, it's all Regulatory and Government
going to be packaged into the primary FDA in Personalized Medicine
procedure. [If this goes into effect] that would mean that it there would be no extra payment for those lab tests. Obviously that's a pretty big In ain October 2013, the US change," explained Barb Peterson, President Food and Drug Administration delineates its and CEO of Emerson Consultants, which role in — and the challenges it faces for — advises medtech companies on reimbursement implementing personalized medicine. strategies among other things. "We're very, very excited about this report because I think it captures the broad context of This proposed rule is part of CMS' annual what's happening in science and medicine updates to its payment and fee schedules. today and the role of the FDA as we enter the era of personalized medicine, and for us, personalized medical product development," said Margaret Hamburg, the FDA commissioner, at a press briefing The report notes that FDA has altered some of its regulatory processes to better fit with how personalized medicines and their related diagnostics need to be evaluated. For example, it says that the agency has moved three regulatory programs affecting in vitro diagnostics — premarket review, compliance, A difficult government reimbursement and post-market safety — into a single environment is not the only challenge that in- location, which should "[ensure] that all vitro diagnostics companies are facing these diagnostic device activity related to these days. Faced with the prospect of having to products would spring from a common cover millions of previously uninsured people, consolidated technical and regulatory base." and not knowing what their healthcare consumption is going to be like, private insurers are increasingly becoming very FDA to Regulate Some Medical-
Related Apps
"I know this is a general statement but they are saying "no' to pretty much everything," Instead of having all health apps follow Peterson said, referring to payors' covering new stringent requirements, the U.S. Food and Drug products, be it new medical devices, Administration announced that it will focus its procedures and tests. attention on mobile medical apps that might harm patients if they do not work as intended. The organization added that most health and medical apps only pose a low risk of injury for Regulatory and Government
consumers, and the majority will not be as misconduct at sites in China where clinical trials strictly regulated. were performed, reported published by the FDA reveal that "Some mobile apps carry minimal risks to during trials overseen by Bristol-Myers Squibb consumer or patients, but others can carry (BMS), which developed the drug in partnership significant risks if they do not operate correctly. with Pfizer, some patients were given the The FDA's tailored policy protects patients wrong drug, records were badly kept and while encouraging innovation," said Dr. Jeffrey secretly manipulated to cover up good-practice Shuren, director of the FDA's Center for violations, and "serious adverse reactions" Devices and Radiological Health, said in a went unreported. The news raises questions about the reliability of clinical trials carried out in China, which has become a hotspot for such research because of the huge pool of potential subjects and the low costs, which can be as little as half of those in the U.S., according to the Tufts Center for the Study of Drug Development. Thomas Marciniak, an FDA medical team leader who wasn't directly involved in the Eliquis application process but reviewed the trial independently, told Bloomberg that problems with data collection and misconduct will continue as long as drug manufacturers keep doing trials in places like China without providing better oversight. "What we need is high-quality trials," said Marciniak, who emphasized he was not speaking on behalf of Medical mobile apps can aid doctors in the FDA. "If we're not getting them in the low- diagnosing patients without having them come cost areas, either fix the low-cost areas, or stop into the office. They can also help patients doing them [there]." manage their chronic conditions.
Misconduct Delayed Drug
FDA Releases Guidance on
Approval
Research Use, Investigational
Use Only IVDs
US Food and Drug Administration (FDA) approval for the blood-thinning drug Eliquis The Food and Drug Administration has released was delayed for 9 months due to errors and a guidance document that lays out and clarifies Regulatory and Government
the rules for how in vitro diagnostic products for research use only (RUO) and investigational use only (IUO) may be used, labeled, or marketed. FDA created the guidance on RUOs and IUOs, which has bee because it is concerned that unapproved or uncleared IVDs are being used for clinical diagnostic use, even though their performance characteristics and manufacturing controls have not met the agency's clinical standards. The original European legislation was drafted over 20 years ago and since then there have The agency allows an investigational device been substantial changes. The number of exemption (IDE) for medical devices that Member States in the EU has more than enables them to be used in research without doubled and there have been technological receiving premarket approval or 510(k) leaps in device technology. clearance, but a lack of clarity in the exemption has created a loophole that makes it possible As a consequence, the application of the for RUOs and IOUs to seep into clinical use. existing medical devices directives is different across the EU. This makes it difficult for the legislation to achieve its objectives: the safety of medical devices and their free movement in Revision of the EU Medical
the EU's single market Devices Directives
The current system has operated well for the period that it has been in place. We cannot All of the current legislation regulating medical completely remove the risk to patients from devices is in the process of being revised at medical devices and there is a balance to be European level. This will replace the existing struck between subjecting devices to three European directives with two European exhaustive scrutiny and allowing innovative life-saving and life-changing devices onto the Nonetheless, we have to learn lessons from the safety concerns of some metal-on-metal hip replacements and fraudulent PIP breast implants, and it is clear that the regulatory system is in need of strengthening in some Regulatory and Government
U.S. New Drug Approvals Slip In
accolade is a material, disclosable event. If 2013 vs. Prior Year
anything is clear it is that the main beneficiaries have been big pharma and big The number of new drugs approved in the United States fell in 2013 compared with the It was perhaps not supposed to have been this previous year as fewer applications were filed, way. The FDA has, for instance, promised to though several products for hard-to-treat work closely with successful sponsors on diseases were approved in record time. clinical trial design and provide "intensive guidance" on development as early as phase I The U.S. Food and Drug Administration – a benefit surely aimed at small, cash- approved 27 new drugs in 2013, down from a strapped biotechs banner year in 2012 which saw 39 drugs June 26, 2013). approved, the greatest number since 1997 Yet almost 90% of the 19 granted according to FDA data. breakthrough therapy designations (BTDs) that have been disclosed so far have benefited mid The regulatory agency attributed the drop in and big-cap firms – an imbalance boosted by approvals in 2013 to fewer applications. As of Tuesday's receipt byof BTD for Dec. 11, 32 applications had been filed, compared with 41 for 2012, the FDA said. Over the past five years, the average number of new drug filings per year was 35. GAIN Act: A Great First Step
With over 2 million infections – and 23,000 Vantage Point – One year on,
deaths – caused by antibiotic resistant bacteria breakthrough designation
each year in the US, everyone agrees there is remains an enigmatic accolade
an urgent need to find new, effective antibiotic therapies. One measure designed to spur such development is the Generating Antibiotics it was a no-brainer. Once the Incentives Now (GAIN) Act, signed into law last private biotech group became aware of the US year. Given the growing threat posed by FDA's new breakthrough therapy designation it resistant bacteria, we decided to hold a realised that itproject workshop with leading experts about what ticked all the boxes and – just two effect the GAIN Act might have to incentivize months after filing – the agency approved its antibiotic development. The GAIN Act is a "pull" incentive, providing a Others have not been so lucky. But one year payout at the end of the development process after the new category was enacted by with five years of guaranteed market legislation much secrecy remains, and it is far exclusivity and priority FDA review for from clear whether receipt or non-receipt of the antibiotics that target qualifying pathogens. Regulatory and Government
The value of this incentive can vary greatly depending on how much patent life is left on a medicine when it receives approval, because market exclusivity is separate from the IP protections granted by a patent. During the market exclusivity period, the FDA will not approve another version of the same drug even if a drug's patent life is expired. Conversely, if a drug still has five or more years of strong patent protections in place, the market exclusivity provided by GAIN will not be of much additional value. Health Care
Obamacare: Winners and Losers
5 Hot Startup Opportunities
for Investors
Created By Health Care Reform
Martin Tillier - A key provision of the Affordable Care Act went I hesitate to wade into the quagmire that is into effect on October 1, 2013, as statewide politics, particularly regarding the Affordable insurance exchanges opened up around the Care Act (aka Obamacare), but good trading and investment decisions require at least an understanding of the issues. In the current US But that's just the latest in a series of changes environment it seems that anything which to the U.S. health care system that will open up challenges preconceptions is dismissed as bias; new opportunities for entrepreneurs. the best I can hope for here is to be accused of With the passing of th bias by both sides. I can assure you that, as I have been trained to do, I look at this purely in 2009, doctors got new from an investment opportunity perspective. incentives to move from paper-based to digital The desirability or otherwise of the law could be systems. As a result, investors poured funding debated ad nauseum, but my concern is how into new electronic medical record providers, best to profit from the realities of it. likandSince then, doctors' use of electronic systems has shot up This is the way traders are. They may have — in May, the department of Health and political views, but they are trained to assess Human Services announced tha potential economic effects and act on them. I have been following markets, and the political influences on them, for around 35 years. In that time, I think that Obamacare is probably Smart entrepreneurs are paying equally close the most misunderstood piece of legislation I attention to the Affordable Care Act (ACA, also have seen. People on both sides of the political known as Obamacare). We've already seen new divide have attached qualities, and therefore companies form to offer private health consequences, to the law that simply don't insurance exchanges so consumers can shop exist. Obamacare is not a cure for all of the for affordable care. These exchanges are open forthcoming problems that demographics will for business Oct. 1, 2013, enabling individuals present, nor is it a calculated attempt to to sign up online, by phone, or in-person, with health insurance coverage starting next year. Health Care
implement: Drexel University's John Cannan needed 42 pages to describe the legislative history in the American Association of Law Libraries' journal. The whole experiment might collapse of its own weight even if Republicans fail in their efforts to eviscerate it legislatively. But focus on the exchanges, the new electronic markets where health insurance will be sold the way flights are sold on Expedia or Orbitz. Eligible consumers—the uninsured, those who buy insurance on their own and certain others—will pick a policy from competing private insurance plans. Some will get government subsidies; some won't. The theory is that more choice and more competition will yield better value.

4 Ways New Exchanges Will
Radically Alter Health Insurance
Obamacare - A Game-Changer in
When the next phase of the Affordable Care Act the Making
(ACA) kicks into gear January 1, 2014, each state will be required to offer its residents What if Obamacare actually works? More access to health care insurance through an precisely, what if the new health-insurance online marketplace, often referred to as a marketplaces called exchanges work? They "health insurance exchange." These exchanges might just change the way most Americans get were open for business as of Oct. 1, 2013, health insurance. Admittedly, this is a big if. allowing individuals to sign up online, by phone The launch of the exchanges was marred by or in-person, with health insurance coverage software glitches, confusion and outright starting next year. resistance in some states. The Obama administration has delayed so many provisions Until now, buying health insurance has been a of the law, formally known as the Affordable daunting task for most individuals and small Care Act, that it resembles departure monitors businesses. But purchasing health insurance on a stormy summer afternoon at New York's through exchanges will more closely resemble La Guardia Airport. booking a vacation on Expedia or Orbitz. People using this vehicle to enroll will see lots of Messy drafting and a tortured partisan path options, common features among the offerings, through Congress made the law hard to and greater transparency around price, quality and consumer ratings. Health Care
Similar to the implementation of Medicare, we should expect program design and operational issues at the outset. We already have seen some technological glitches, which will need adjustments and mid-course corrections as these systems are rolled out in each state. But despite the initial bumps in the road, the exchanges will serve as a catalyst to alter the way health insurance is purchased. In the longer term, they will transform the entire health care system.

As More Americans Have
Surgeries Overseas, US
Companies Consider 'Medical
Tourism' a Health Care Option

With the rising costs of U.S. healthcare, an
increasing number of Americans are going overseas for medical care. Medical procedures that would cost U.S. citizens thousands of dollars out of pocket are paid in full by the company they work for when they decide to have the procedure done in another country. American companies now see outsourcing There are downfalls to consider. Patients who medical care as an alternative option. Also receive treatment overseas run the risk of known as "medical tourism," this option saves getting an infection or possibly dying. There companies and employees thousands of dollars have been documented cases of post op since surgeries and other medical treatments complications resulting in serious further injury. can be as little as half the cost in a foreign U.S. citizens needing expensive medical country than in the U.S. treatment must assess their options to determine if "medical tourism" is the right choice for them. Big Data in the Life Sciences
This year Carlyle Conlan and george james, Ltd. were pleased to interview several senior professionals involved in big data breakthroughs in the life sciences sector. The enormous increase in data volume from segments like sequencing and systems biology coupled with trends in pre-competitive data sharing and advanced computing frameworks is in the early stages of providing robust signals that will, ultimately, decrease the cost of drug development and maximize the industry's return on investment.
Clinton Health Access Initiative


Paul Domanico
The Clinton Health Access Initiati is a global health organization employing over
1000 people in dozens of countries that is committed to strengthening integrated health
systems in the developing world and expanding access to care and treatment for HIV/AIDS, malaria, tuberculosis, malnourishment, amongst other health issues facing these areas. With respect to AIDS care and treatment in Africa alone, CHAI has successfully improved drug distribution, reduced the cost of HIV treatment by up to 90 percent and HIV diagnostics by up to 80 percent, and has saved developing nations over $3 billion in overall treatment costs since 2003. Life sciences veteran Paul Domanico helps CHAI carry out its mission. Paul, now senior director of research and development (R&D) at CHAI, has 27 years of experience in discovering and developing drugs and medical technologies. Before joining CHAI Paul was a Big Data in the Life Sciences
managing partner at life sciences consulting firm, Innovalyst. His experience also includes R&D executive posts at GlaxoSmithKline, where he created the industry's first technology accelerator for early-stage companies combining GSK's expertise and infrastructure with outside investment. The goals for CHAI's R&D department are to identify, develop, validate, and transfer for manufacture and distribution better and less expensive formulations of existing AIDS, TB, and Malaria medicines, to use applied analytics to identify cost effective ways to optimize healthcare in low resource setting, and to grow an R&D portfolio of new medicines, vaccines, diagnostics, and technologies for these diseases and others. Carlyle & Conlan's Don Alexander recently interviewed Paul about his thoughts on big data.
Don: How do you define big data?
Paul: An extraordinary amount of information that comes from very different sources and
that includes structured and unstructured data. Big data involves a suite of sophisticated
analytical approaches to analyse this data to differentiate relevant direct and indirect relationships from the truly irrelevant. The purpose is to find a deeper relationship between disparate types of information to help inform and direct your business. And this is the critical bit, when you are trying to expand your understanding of a field, how do you ensure you have the focus tuned appropriately? Structured data is easier to work with but represents only a small part of what we analyse. For unstructured data, Big Data tools need to be trained to annotate this information for key words, grammar, and concepts. So, this means that to be successful you must build a strong team of domain experts and big data analytics experts who are committed to finding new correlations and causalities, and possess the rigor to stay focused and to ensure the findings are meaningful and will, in fact, impact the direction of your business.
Don: Can you offer a case study as an example?
Paul: CHAI is partnering with the Center for Innovation Management Studies (CIMS) at NC
State University's Poole College of Management to explore big-data analytics to discover
novel ways to diagnose and treat infectious disease in third-world countries. Initially, the CHAI-CIMS partnership will focus on developing faster, more cost-effective ways to diagnose tuberculosis (TB). The project is designed as a three-stage, proof-of-concept scheduled to take roughly 18 months to complete. In addition to advancing its TB diagnostics work, the Big Data in the Life Sciences
CIMS-CHAI partnership will also create capabilities within CHAI to address other infectious- disease efforts. Low resource settings bring into play a number of additional challenges associated with the diagnosis and treatment of disease. One goal is to improve our understanding of those factors that impact healthcare, and then rank and summarize them into target product and service profiles. As an example, we are looking to identify TB diagnostic platforms that do not involve lung sputum, which is difficult to obtain and to work with. Big Data will bring to our attention all types of information related to TB, pulmonary disease, latent disease, co- morbidities associated with infectious disease and as important put these into perspective by ranking them against investment, type of investment, development stage, consistency, etc.
Don: What discoveries did you make that you can attribute to big data?
Paul: We noticed that factors related to demography and healthcare systems were more
important than first realized. In many parts of the world migration of workers can have a real
impact on all aspects of disease monitoring and management. We also showed that as hard as one tries to stay connected to relevant information in a specific field, you can't and won't be able to know everything. So, Big Data tools can help make connections across scientific silos and help to verify those connections. Specifically, we identified some very exciting work related to miRNA exosome profiles from breath and blood as a potentially new approach to diagnosing pulmonary disease and potentially to diagnose both active and latent TB using the same platform. We were aware of exosomes but not the amount of work that has taken place and that was related to our work.
Don: What issues or limitations did you have or expect to encounter? For example,
would you have done anything differently in retrospect? What limitations do
current tools have that the tools of tomorrow might address?
Paul: The reality is that Big Data is currently not a product but a partnership or service
between client and provider. In the medical field, we are in the early days for Big Data
analytics. Irrespective, integrating Big Data approaches into corporate culture requires a sustained commitment or it will end up being a waste of time and money.
Don: Looking ahead in the next few years, what other types of challenges in the life
sciences, do you expect big data to help address?
Paul: Big data will revolutionize how research, business, and investors connect and
collaborate. From my perspective, the challenge is actually not the analytics but ensuring big
Big Data in the Life Sciences
data objectives and the queries associated with these objectives are excruciatingly clear. Only then will the output be meaningful and have a positive impact on business. For this to happen, I strongly believe that organizations need to bring in expertise from the outside to ensure that proper diligence is done on their big data objectives and approach. I am sure this is true not only for the life sciences but for all verticals exploring big data. My sense is that in data rich areas, such as consumer products and social media, the value of big data will be realized more quickly than in the life sciences but I am looking forward to changing that situation.

Don: What else?
Paul: It is very difficult to keep your focus when evaluating the results from a big data
analysis because you retrieve such interesting and potentially valuable information. It is like
being a kid in a candy store. Successful teams will have developed a mechanism to help
them stay on track and highlight trends and findings that should be explored at a later date. I also know that the very concept of big data analytics can be confounding to an organization. I suggest that organizations new to big data start simple, establish small successes, and then expand the scope of their big data efforts as their experience and confidence grows. Along the same line of thinking, big data will have its fair share of skeptics. This is good and healthy. The articulate skeptic can be your most important team member to help demonstrate big data's value and return on investment. Big Data in the Life Sciences

Eagle Genomics


Richard Holland

The explosion of data in the life sciences has sparked the growth of companies li
a specialist in helping clients manage and analyze genomic data. Eagle's client list covers a range of companies in drug discovery, agriculture and personal hygiene, all of them looking for ways to use genomic data to develop new products. Eagle's Chief Business Officer Richard Holland has more than nine years of bioinformatics experience spanning both industry and academia. He is a founding member of the Open Bioinformatics Foundation, the organization that backs most of the key open-source bioinformatics programming toolkits such as BioPerl and BioJava. Richard was also lead developer on BioJava, the primary resource for Java developers working in bioinformatics. Richard recently took time to talk with Carlyle & Conlan's Don Alexander about big data. Big Data in the Life Sciences

Don: What is your definition of big data?

Richard: Many people think of big data in the life sciences in terms of marketing and sales
information revolving around physicians and patient stratification. Eagle is involved in R&D data, genomic sequencing data, and NGS (next generation sequencing), so, the front end of R&D. The data is usually thousands of smaller files with different sources of information, dis-similar structures, and a diversity of data types and formats. Given the diversity, it can be a challenge to pull everything together.

Don: Can you give an example?
Richard: The use case cited often is fo a manufacturer of consumer goods such as
skin care products. The case study involved the bioinformatics of how products behave where
Eagle took existing workflows, moved them, optimized them and made them scale. The
design is what is important. Eagle is working on a platform to manage data more effectively as moving around data from place to place is an issue. Metadata management includes cataloging files and describing them at the experimental level, in a consistent manner, to work out gaps in organizational knowledge that occur or to test a new hypothesis.
Don: What discoveries did you make that you can attribute to big data?

Richard: As Eagle focuses on early stage R&D it is a little harder to say. The suspicion is that
there are R&D contributions to stratification of products.

Don: What issues or limitations did you have or expect to encounter?
Richard: Data is not homogenous. It is varied in detail and sometimes poor quality so you
have to separate and QC it. The second issue is what one is trying to achieve with
sequencing. Often, the approach is "I have this data, tell me what it means." while the
better approach may be "I have this question, what do I need to test to get the answer?" The other consideration is that requirements change rapidly and the data can change the direction of the product so one needs to make allowance for these directional changes.

Don: Looking ahead to the next few years, what other types of challenges in the life
sciences do you expect big data to help address?
Richard: Given early stage R&D, the data itself solves nothing. The ability to solve issues is
improved by the ability to access data. In order to forge ahead, there needs to be greater
Big Data in the Life Sciences
availability of public shared data. In order to get value, sources of data that include changes of consent systems for broader research use, need to be leveraged. The FDA, for instance, is often playing catch up with cloud infrastructures. Regarding data security, most cloud providers are more secure than the pharma companies themselves.
Don: What other big data issues are you thinking about?

Richard: The concept of Big Data has been around for some time. Ten to twenty years ago,
it was called data integration, so this is not a new problem and there have been many years of research ongoing. Only recently has the scale of the issue gotten to the point where people have to take it seriously. It is important to think of the lessons learned from previous data integration efforts. There will continue to be specialist niches in big data as there is only so much one can do in terms of standardization, mining and analysis. Clients shouldn't assume that off-the-shelf systems that claim to do "X" will do "X" 100 percent of the time. Regarding advances in machine learning and artificial intelligence, one has to understand that biological facts are less well-understood and hugely diverse when compared to physics or chemistry where systems can be very well modeled in great detail. There could be thousands of reasons why one has cancer and it is difficult to find combinatorial methods that would tell you why. The diversity of cancer is so huge, for instance, that the traditional methods of machine learning don't really work as well. Big Data in the Life Sciences

Marketta Silvera and Randy Haldeman

The life sciences have always produced large amounts of data. As the amount of data
produced grows exponentially, new methods are needed to glean useful insight from it. Cloud
computing companywas founded to solve Big Data problems that can't be solved with the keyword-based Internet software and search technologies. Code-N's technology spans the gamut of life science applications helping pharmaceutical and biotechnology companies more quickly and more efficiently discover new drugs, repurpose old ones and monitor the current slate of already commercialized products for both safety and competitive reasons. Code-N founder and Executive Chairmanhas more than 20 years experience as chief executive of four technology companies serving the health care and financial industries. Her Big Data background includes work with life science inventors and cheminformatics experts at the Netherlands Bioinformatics Center several years ago to develop concept-based technology solutions that leverage public/private partnering and Big Data. Code-N is led by Before becoming Code-N's CEO, Haldeman led the content division of Symyx/Accelrys (NASDAQ: ACCL), a leading provider of informatics solutions to more than 1,300 corporations in the pharmaceutical and biotechnology industries including companies such as Merck, Bristol Myers Squibb, Pfizer, Eli Lilly, Novartis, AstraZeneca, and GlaxoSmithKline. Marketta and Randy took some time recently to share their thoughts about Big Data with Carlyle & Conlan's Don Alexander. Big Data in the Life Sciences

Don: What is your definition of big data?

Marketta: Big Data is for real and it's exploding in our digital lives. Since the late 1990s,
assisted by the Internet, the world's businesses and population have freely participated in generating new data in numerous forms. By now there are many definitions for Big Data. The consulting firm NewVantage Partners' "Big Data Executive Survey 2013" defines Big Data as "collections of data so large, complex, or requiring such rapid processing (sometimes called the volume/variety/velocity problem), that they become difficult or impossible to work with using standard database management or analytical solutions." But it's the volume of Big Data that's unimaginable. Consider that just a year ago, the world was creating some 2.5 exabytes (25 billion gigabytes) of data every day, which on an annual basis is equivalent to filling 30,000 new U.S. Libraries of Congress. TechAmerica Association estimates that 90 percent of the data that has ever existed has been created in the past two years. Internet searches, satellites, massive research projects like the human genome, mobile devices, security cameras and remote sensors – all these data generators and dozens more, are fueling data proliferation on an epic scale. Big Data has become the new raw material in business, next to capital and labor. Today's big market opportunity lies in innovative technologies that help extract the intelligence and relevant insights from overwhelming quantities of information. The benefits of accessing this vast resource are extraordinary. For example, decoding the human genome took ten years the first time it was done. Now it can be achieved in one week. Companies' investments in Big Data are projected to rise from 19 percent in 2013 to 50 percent by 2016, according to the NewVantage Partners survey.
Big Data has the potential to transform everything.

Don: Can you give an example?

Randy: One of the impediments to rapid adoption of Big Data solutions in the life science
industry is that for each drug, disease and treatment, there are dozens of synonyms to describe each. In the past, there was no easy way to successfully connect these "dots" across databases; and thus, much of the potential discoveries due to cross-pollination never happened. The hurdle the industry must clear in order to connect massive amounts of data is to define a universal way, i.e. a conceptual way, to identify each entity involved, whether it be a chemical, gene, protein or toxic affect. No single software application can address that. a comprehensive approach must be taken. Big Data in the Life Sciences
Over the past 10 years, semantic languages have been brought to the forefront in an attempt to connect this data, but the fatal flaw is that they can't handle the massive redundancies and ambiguity. The next-level semantic technology is needed, and that's what Code-N is currently launching to the market – a concept-based approach that can connect and interpret this data as well. Code-N has created the world's largest meta-thesaurus of chemicals, genes, proteins and diseases. Starting with the 2 million chemical-gene-protein terms in the UMLS thesaurus, Code-N added several million more from sources such as DrugBank, KeGG, CAS, HomoloGene, HMDB, ChEBL, MeSH, and dozens of other industry sources to create the most comprehensive compendium of concepts, synonyms and database identifiers known in the industry. While leveraging this mega meta-thesaurus, Code-N built a series of solutions that can access multiple industry databases simultaneously, whether structured or unstructured, public or private, and connect the-dots between these no matter what the different genes, chemicals or proteins are called. These multiple databases can be queried using simple sentences, with no need for complex syntax or Boolean operators. Now that this concept-based technology is available, exciting advances are possible. Big Data can be leveraged to address current challenges such as competitive surveillance, drug repurposing, advanced safety and toxicology analysis, and resurrecting "shelved molecules."
Don: Tell me more about how Big Data can help overcome these challenges.

Randy: In competitive surveillance, a search for competitive information on compounds,
targets and diseases from two companies can simultaneously access 23 million PubMed abstracts, all patent grants and applications, clinical trial data, FDA repositories, and internal databases within 2 or 3 seconds, then send an alert to all interested parties within a company. Even if a competitor is trying to obfuscate its recent research by describing its findings with obscure terms, the concept-based system will be able to identify these and bring them to the light-of-day. Big Data can be used to find ways to repurpose drugs coming off patent. This research usually takes weeks or months to find viable opportunities. With new applications that can "connect-the-dots" in Big Data, this process can be made orders-of-magnitude faster. Being able to scour all published literature to find all the targets that "Drug A" affects, these applications can then "follow the trail" to see what disorders can be influenced in a positive way when these targets are affected. Big Data in the Life Sciences
Toxicology analysis benefits from Big Data. When comparing the potential effects of a new compound to known toxic chemicals, scientists are often limited to comparing the up- and down-regulation of just two or three genes and proteins at the same time. The advent of technologies that can more adeptly handle Big Data means there are no longer limits on the amount of comparisons that can be made at the same time. A "digital fingerprint" can be created with the combination of dozens of affects that a new compound is known to cause, and compare that with a library of known toxins within seconds. And Big Data can also salvage molecules that have been shelved for one reason or another. Every pharmaceutical and biotech company has a catalog or database of molecules or compounds that didn't meet expectations for a specific task. Some were too costly to produce for an intended market or didn't have the expected effect on the particular target. Others were toxic or simply lost out to a "superior" compound. What if these compounds and their known properties and characteristics could be aggregated in an open-source data store, and shared with the entire industry? This is a perfect challenge for Big Data. Sharing these data pre-competitively would help others avoid making the same mistakes again and again. Imagine being able to search on an idea and quickly see it's a non-starter because the drug class is associated with liver damage. Information like that would make drug discovery smarter and lead the field in more productive directions. Imagine if the billions of dollars "wasted" on failed molecules wasn't wasted, but leveraged to further the science on other discoveries industry-wide.

Don: What discoveries did you make that you can attribute to Big Data?
Randy: One example of using this breakthrough "concept technology" is a client who was
looking to repurpose the cholesterol-lowering drug, atorvastatin (marketed under the name
Lipitor®). Since it is now off-patent and has a fairly strong safety profile, they wanted to see how the Code-N solution could speed-up uncovering possibilities they might be able to market. They stated their scientists were able to come up with a new target about once every seven to 10 working days. While using the Code-N repurposing application, they were able to connect-the-dots between 23 million PubMed articles, 1.5 billion pharmacological data statements and 25 years of patents to produce dozens of unclaimed treatment ideas in less than seven seconds. For instance, the data suggested that atorvastatin might be used to treat Huntington's Disease, Multiple Sclerosis (reducing brain plaque), and xanthomas. The data does have to exist to "connect-the-dots" but if it does exist, a conceptual approach can extract these insights whether atorvastatin is called atorlip in one database and totalip, xavator, C33H35FN2O5 or one of its other 96 synonyms in the others. Big Data in the Life Sciences
Code-N isn't claiming to be an authority on the science of treating diseases – that is left up to the pharma and bio-tech companies it serves. But what Code-N does is provide the informatics solutions that can access massive amounts of Big Data from many disparate sources and bring-to-light ideas within seconds that scientists can then investigate and test. Another example of a problem that can be solved with Big Data is to be able to quickly identify safety issues with new compounds by creating digital fingerprints of their effects and matching them to a library of known toxins. Identifying those safety issues early can stop development of a compound immediately.
Don: What issues or limitations did you have or expect to encounter?

Marketta: Disruption in any industry needs to happen when the status quo begins to prevent
progress and innovation. It is healthy to challenge inertia and drive change. We've all
witnessed frequent reporting on the fact that the life sciences industry is lagging in its ability to innovate. The reasons include slowness and reluctance of converting old infrastructures to new technologies due to risk aversion that drives companies to stick with familiar business models and R&D tools. A scientist at a major conference said: "Unless we learn to value big, potentially disruptive ideas, we won't see transformational breakthroughs." We'll continue to get the status quo: linear, unproductive drug pipelines, siloed data that fails to support open collaboration and partnerships, and outdated regulatory structures and funding models that stifle R&D. The good news is that the phenomenon of Big Data is poised to fuel this disruption beneficially. Even though many health care organizations are still wrestling with basic transaction systems, such as electronic medical records, significant initiatives are under way to leverage Big Data to accelerate drug lead discovery, development, repurposing, and safety. There's a strong incentive to leverage all public and precompetitive private data sources to speed up innovation and disrupt the old paradigms. Open collaborative organizations are successfully being introduced to pursue cures for a wide range of challenging diseases. And, on the business side, pharma companies are using Big Data to drive new inventions to make up $35 billion in lost revenue from patent expirations just a year ago. The life science industry has begun the process of structuring itself more openly. Industry forums and initiatives are valuable contributors. Big Data provides "raw material" for the emerging open environment. New bioinformatics technologies and infrastructures are needed to "cross the chasm." Big Data in the Life Sciences
Of all U.S. industries, the life science industry has one of the biggest gaps in what can be done with Big Data and what is actually being done. Big Data can be leveraged in so many ways to advance science, improve safety and create positive results for patients but we are only in the initial phases of this revolution.

Don: Looking ahead to the next few years, what other types of challenges in the life
sciences do you expect big data to help address?

Marketta: Big Data has become a buzz phrase, which can easily be hyped inappropriately as
the long-awaited trove of missing answers and cures. In reality it's the "raw material" for all that and more when enabled through advanced technologies to connect all relevant data simultaneously, discard the "noise" and interpret the data in response to "smart" questions. It has the potential of providing deep knowledge for reasoning and predictive capabilities needed for the medicine of the future but not available today. Today we are dealing with the "first phase" of utilizing Big Data – establishing the baseline for required infrastructures, bridging the silos for instant, simultaneous data access and implementing integrated "intelligent results" via next-generation semantic analytics. It's quite exciting to think of what lies right ahead of us as a result of the vast Big Data "raw material" and technologies that can extract intelligence from it. Not only will we be able to use real-time data, for example, to repurpose drugs to treat multiple diseases and to discover new warnings of side effects, but also to unlock the power of data to improve clinical care. We'll be able to get to the genome level for real-time detection of diseases and find out in advance whether it's resistant, infectious, etc. We can look forward to relating the entire microbial genome to the human genome and targeting the best treatment, understanding what has to be done to prevent spreading of a disease and how to prevent it in the first place. Future Big Data will assist in "precision medicine" that is expected to use in-depth DNA analysis to personalize drug therapy for patients and search for the genetic causes of diseases.
Don: What other Big Data issues are you thinking about?

Marketta: The most interesting characteristic of Big Data is that it's heuristic by nature. The
information, hypotheses, innovations and feedback that the life sciences industry feeds into Big Data around the clock, increase its "brain power," which in turn enables our concept- based semantic solutions to point out the most up-to-date discoveries to build on, which in turn accelerates next innovations in the industry. We call that the "Heuristic Big Data Cycle". Big Data in the Life Sciences

Gini Deshpande

Finding and developing new drugs has always been challenging.faces those
challenges with technology that discovers potential new drugs and reduces some of the risks
in drug development. The key is big data. NuMedii's proprietary technology comes from
Stanford University, where it was developed in the lab of Atul Butte, a scientist and entrepreneur known for his work in biomedical informatics. NuMedii holds an exclusive license for the technology, which consists of hundreds of millions of raw human, biological, pharmacological and clinical data points that the company has normalized and annotated. These data are integrated with proprietary network-based algorithms to find both drug candidates as well as biomarkers that can predict a compound's efficacy for a particular disease. NuMedii is led by founder and CEO Gini Deshpande, who has more than 10 years experience incubating, developing and commercializing life sciences technologies that bring scientific innovations to patients. Gini has worked as a consultant helping startups raise money and in strategic marketing for Affymetrix, where she was responsible for the Academic Business Research Unit – the company's largest customer segment. At NuMedii, Gini raised the company's Series A financing, built the team and advisory boards and structured strategic partnerships with Thomson Reuters and Aptalis. Gini took some time recently to speak with Big Data in the Life Sciences
Carlyle & Conlan's Don Alexander about how NuMedii uses big data.
Don: What is your definition of big data?

Gini: Big data is quite a buzzword and is hard to define. Our definition of big data is data that
is unstructured, often dispersed and not always useable. In life sciences, the scale of big data is even more complex. There are big challenges that lie in synchronizing disparate data types with little standardization and from different platforms. Human biology is complex and profiled using many different tools, so there are several modalities of data that are collected and need to be connected together to extract meaningful information from life sciences big data.
Don: How is NuMedii using big data?
Gini: NuMedii might be characterized as a "Digital Pharmaceutical Company." The company
leverages a lot of life sciences big data but is very much a biotech company as the focus is on
developing effective compounds. Internally, we have developed tools for working with life sciences big data and as we are the primary consumers of this data, we have focused on the accuracy and quality of data, rather than building nifty user interfaces. Because we develop drugs to a certain point ourselves, all of the data that gets incorporated into our big data technology is tied to its utility for discovery of effective drug assets rather than building in new features with little practical utility. Recently, we have structured a partnership with that helps us to leverage the strength of Thomson's knowledge content with our big data platform to create a really robust technology to discover effective drugs.
Don: How do you monetize Big Data?

Gini: The fundamental value in life sciences big data is when we positively impact the life of
a patient. To that end, NuMedii focuses on discovering and de-risking effective drugs
identified by our big data technology. We are currently re-purposing existing compounds and our big data technology is being built to enable work with new molecular entities (NMEs) in the future. We test these drug candidates in appropriate preclinical models and our plan is to take these through a Phase 2a proof of concept (PoC) study in relevant patient populations. We plan to partner with or outlicense our drug candidates to specialty pharmaceutical companies that have formulation, clinical development and commercialization capabilities to bring these drugs to market. These partnerships will generate revenues for the company, with a combination of upfront and milestone payments along with royalties. For instance, the partnership with Aptalis Pharma for our gastroenterology and cystic fibrosis portfolio is a Big Data in the Life Sciences
good example of how we partner our programs. We anticipate doing more collaborations along these lines in the future.
Don: What discoveries did you make that you can attribute to big data?

Gini: There are papers on our web site covering the following discoveries

Don: What issues or limitations did you have or expect to encounter?
Gini: There are limitations in the types of diseases or conditions profiled with high
throughput molecular data. Smoking cessation, for instance, has not been studied using
microarray tools, so we may be unable to utilize our big data technology to identify drugs for this condition. There are also challenges that are not technological. Translating big data into drugs requires a good understanding of side effects, intellectual property, formulation or other issues that come into play in drug development. This is the reason we have built translational capabilities into our team. Additionally, information is sometimes siloed and there are barriers to getting data where trials, say, have failed. In terms of big data technology itself, there will be the need to work across technical architectures as more data types become available.
Don: Looking ahead to the next few years, what other types of challenges in the life
sciences do you expect big data to help address?
Gini: People are continuing to understand, through molecular biology, that diseases are an
amalgamation of different conditions and systems. Big data and methodologies that enable identification of subsets of patients and markers can be very useful in expediting the process and reducing the cost of drug discovery and development. Don: What other big data issues are you thinking about?

Gini: Resource challenges in finding people who have the skill sets to work with all of this
data. What we do requires very different training from the ground up. The skill sets to
tackle these issues requires a different way of thinking.
Contact Us:
For more information or to submit comments, please contact:
For Carlyle Conlan:
Don Alexander
Practice Head and Vice President, Life Sciences
[email protected]

For george james, Ltd.:
Neil Burns
Founding Director
[email protected]

Source: http://www.georgejamesltd.co.uk/files/82961393152505LifeScienceTrends2014.pdf