A VC’s Take on Diabetes Innovation: Meet Ross Jaffe

Second in our series of getting to know the judges of this year’s DiabetesMine Design Challenge, please say hello to Ross Jaffe, MD, a board-certified internist and eminent venture capitalist with Versant Ventures in Silicon Valley, CA. His job is to lead investments in medical devices, drug delivery, and healthcare information systems companies. He was a founding investor behind TheraSense and Insulet Corp. (the OmniPod company), so he knows a thing or two about innovation in diabetes care.

I spoke to him from his car as he made his way home one evening last week:

DBMine) As an investor, despite the current economy, what do you see as the hottest trends in health right now and why?

People ask me that all the time, but I never think in terms of hot trends, rather hot clinical areas.  Certain fundamentals continue despite the poor economy — meaning continuous needs to improve clinical care for certain conditions, especially diabetes. What’s hot is creating a product to fill an important need, that satisfies that need very well.

DBMine) What about the roadblocks to healthcare innovation?

In this environment of economic downturn and increased regulatory demands, etc., it’s really raising the bar for innovations. Anything new will have to clearly demonstrate clinical value in terms of patient outcomes, as well as safety and efficacy. But the fundamental need for new solutions is still there.

DBMine) So what do you think stands out at the moment in terms of diabetes in particular?

For type 1 patients, improved glucose monitoring and insulin delivery technologies, of course. Continuous sensoring is a way to improve control, and further innovation is required, also for non-invasive options.

The attempts at non-invasive technology to date have been valuable becasue we learn what will not work. It’s a very hard problem to solve, because it’s not just about picking up a signal non-invasively — the question is, can you create a consumer product that’s small enough, accurate enough, doesn’t require multiple calibrations per day, etc.? We’ve seen some recent projects that involve very interesting work; I can’t comment further now because of client confidentiality agreements.

On the insulin delivery side, Insulet has led the way with its disposal insulin pump, ease of use, and functionality — this is great work towards, if not closing loop, then at least tighter integration between the monitoring and delivery device.

For type 2 patients, the issues of better monitoring and better treatments apply as well. Here something like smaller “patch pumps” that deliver small doses of insulin are very promising, because lots of type 2′s considering insulin currently can’t go on a pump because the minimum insulin delivery is too high for them.

Another big thing for type 2 patients is new technologies to help with obesity management that are less invasive – using endoscopic technology with restrictions or malabsorption or both. Many patients will do much better if they can take off 10% of their body weight.

This includes more, better ways to treat obesity with exercise, too. And we have looked at cell-based therapies for diabetes as well. These have been “10 years away” for the last 20 years, unfortunately. There’s still a lot of work to do before they become widely adopted therapy.

DBMine) Going back to the closed-loop for a moment: what are your thoughts about achieving it?

I’m not a big fan of an entirely closed loop, because of the risk of screw-ups. What if the system delivers too much insulin?  But I am very confident about that tighter integration of treatment devices.

DBMine) So what major improvements will we actually see in the next few years?

You know, it’s not so much about the various systems to get real-time data from patients to doctors; I’m worried that we’ll overload doctors with this, and they currently get no reimbursement for that work.

I’m personally more excited about everything we can do to make monitoring and insulin delivery better so that patients can improve care themselves. These personal technologies for patients to monitor their disease better are very valuable.

DBMine) What about all the talk of mobile solutions – embedding health programs in cell phones, etc.?

Of course, there’s a big push to improve information management of healthcare, to make it electronic. Being able to upload your information from your meter and pump and give it to doctor will be important – whether you do it via PC, cell phone, or some other web-enabled device like the Kindle. Those innovations great, but as noted, I don’t think streaming real-time data to your doctor is the answer.

My big push is where we can help patients better use their own information to take better care of themselves. So for example, we’re working on home monitoring for heart failure, so if things start to go downhill patients can intervene right away with medications or call their doctor. This is valuable in part because congestive heart failure is THE most expensive condition for Medicare.

So it’s good use of information technology that really helps, but there are lots of ideas that don’t deliver on their promise, mainly because of reimbursement issues. You have to create a sustainable business around your product to make it work — build a business plan and attract capital.

There’s huge promise in all of this, but the devil is in the business model.

DBMine) What’s a good example of a truly disruptive technology you’ve worked on, backed by a solid business plan?

Insulet and CGMS systems are both interesting examples. Insulet is really changing the reimbursement paradigm in diabetes – they offer a better pump, but also a fundamentally different business model for payers. They don’t spend as much on the device up front, and then it’s a pay-as-you go basis later for the supplies.

The insurers like this because if they spend a lot on pump and it doesn’t get used, that’s wasteful for everyone.

In other areas, I’m on the board of Acclarent, innovating sinus technology. They took the concept of balloon angioplasty and applied that to open sinuses for people with acute sinusitis. The current way to treat it was a very invasive surgery where they cut out tissue and bone, leaving a lot of scar tissue, and it was very uncomfortable for patients, who had to have their nose packed with gauze for a week.

Acclarent came up with something less invasive, that is safe and gives good outcomes. This will change the way we think about doing sinus surgery – and hopefully open it up to many more patients who need it.

There’s also St. Francis Medical Technology, that came up with a way to treat back pain in the elderly caused by a nerve root, where it becomes comfortable only to lean forward, hunch over, to avoid the pain. This typically required big surgery to fix, and a lot of older people couldn’t tolerate that surgery.

This group developed an implant called the X-Stop -– a little oval device with two wings on the side -– that can be inserted in a 30-minute outpatient procedure you can do on a 90-year old.

So there’s some really neat innovative stuff going on.

DBMine) The DiabetesMine Design Challenge is open to everyone — amateurs and tinkerers included. What potential do you see in an open innovation competition like this?

Getting people thinking bout innovation is important in itself – whether or not it materializes into a new product right now. The more we can get people thinking about being creative, the better. You just never know where the great input is going to come from!

Wasn’t it Edison who said he learned 1,000 ways that light bulbs don’t work?  So you try new things and learn from the problems you encounter, as you think the challenge through.

Hopefully we will see patient needs being approached from all sorts of interesting points of view.  We need input from all perspectives – doctors, clinicians, educators, patients, parents and families, etc. to yield the next great innovation…

Thanks, Ross. Nice to know the “Jesus Phone 3.0″ is not the only innovation in town