Business models and open IP platforms in personalized medicine

Personalized Medicine is a frequently discussed concept in healthcare thought to hold great value for the future. Since I am currently involved in a project where the technology could provide utilities for personalized medicine while at the same time co-authoring a paper on open IP platforms, I thought that a blog post that combines the two worlds could be interesting to write - so here it goes.

What is personalized medicine and why does it matter?

Medical practice relies on evidence-based medicine - the development of standards of care based on epidemiologic studies of large cohorts - a practice that has been around more than 50 years. The rationale is that a statistical approach to large cohort studies enables reduction of background noise, i.e. ignoring individual differences in the data points. Traditionally, individual care by a medical practitioner is built on the patient's family history, social circumstances, environment and behaviors - meaning that the doctor's personal observations, skills and intuition have been crucial factors.

Personalized medicine seeks to provide an objective basis for consideration of individual differences by the systematic use of genetic information about each individual patient to select or optimize the patient's preventative and therapeutic care. A simple example would be to be recommended to take a genetic test before being prescribed a certain drug to shows whether you have a genetic profile that makes you more responsive to drug A or drug B (used for the same disease). Obviously tremendous health-economic gains could also be expected where one example is hypersensitivity to gluten (for which Phadia is developing diagnostic technology) that currently takes an average time of eleven years to diagnose in the US according to Phadia.

Two examples of business models personalized medicine could enable in the future

1. Insurance model: Let's say that you consider buying a life insurance. Obviously, it is in your best interest as well as in your insurance company's best interest that you live a long and healthy life. With the latest advances in genomics your insurance company provides you with a voucher to get your genome sequenced and get access to a web portal where you can see your genetic profile - without the insurance company having any access to your data! This means that you can make dietary and lifestyle changes to improve your chances against your genetic predisposition toward obesity, diabetes, high blood pressure, dyslipidemia, etc. while lowering the risk for your insurance company. A win-win situation!

2. Diet model: Your latest cholesterol checkup suggests that you should reconsider your diet. At the dietist's office, your current diet is matched with your genetic predisposition to absorb nutrition. The results show that the diet is not the issue, it is your body that does not handle some of your daily intake very well. Consequently, your dietist recommends you to ask your doctor for drug X to enhance your nutrition absorption.

Personal Genome Project (PGP) - an Open IP Platform

The Human Genome Project provided the first drafts of nearly complete human genome sequences in 2001. This "generic" human genome sequence is now being used to advance medicine, human biology and knowledge of human origins. The available information, however, is not enough to determine individuals' risk profiles for disease. PGP - led by George M. Church, Professor of Genetics at Harvard Medical School - was launched to create a platform to do just that.

The cost to extract all the information during the human genome project was close to US$ 3 billion, which has decreased all the way down to US$ 1500 per genome by now (although most sequencing companies charge US$ 30-50k to sequence a genome). PGP aims - as its first milestone - to collect genomic information from 100 000 people together with their trait information (i.e. phenotypic data such as diseases). Sample collection is entirely built on samples contributed by volunteers all agreeing on their personal information being open for access to the public, mainly providing two utilities;

• Profiles of patients getting their genomes sequenced can compare their genetic profiles to the genotypes of risk profiles
• Statistical correlation of the data can provide novel gene-trait associations leading to new drug targets

The platform is open in multiple layers and several IP transactions take place in an open innovation fashion. Core R&D data making up the platform is - as mentioned - donated by volunteers by collecting cells that are then cultured in cell line libraries for future reference pooled together with written trait data collected via a virtual interface. Genomic data is available for download and cell lines are available to order. Analysis of the data is conducted through open source software to ensure that users can help develop the tools in case something seems to be missing. Sequencing technology and tools are inlicensed from commercial sequencing companies. PGP is conducted at nominal cost and most of the financing is raised through donations.

So what about IP ownership? The Material Transfer Agreement states that: " i) the Provider retains ownership and title to the Materials (including any Materials contained in any Modifications) and ii) the Recipient retains ownership and title to the Modifications (except that the Provider retains ownership and title to any Materials contained in any Modifications). The Recipient is free to file patent application(s) claiming inventions made by, or on behalf of, the Recipient through the use of the Materials, but agrees not to file any patent application containing a composition of matter claim on the original Materials or an Unmodified Product.".

To me, the PGP initiative exemplifies an extremely interesting example of an open IP platform with the potential to create value for both society and knowledge based companies leveraging diagnostic tools, drugs and preventative medicine and I may come back to do a deeper analysis in an upcoming blog post.

Tobias Thornblad

(Contact via Twitter)

Biological standardization of functional modules

My exploration into genetic engineering for my M.Sc. thesis has led me to an interesting path of new exciting research in gene synthesis. For those of you that have not been in contact with this topic before, it can simply be described as the synthesis of gene-length DNA from chemically derived oligonucleotides, which in turn are short Feb 23 posting in McKinsey&Company: What matters: ”Over the past few decades, most new jobs, wealth, and growth were created in the knowledge and digital realm. And while venture capital represented only about 0.2 percent of US GDP, the companies it created generated about 17 percent of economic activity. The Internet changed virtually every industry. Yet as far-reaching as the digital revolution was, the ability to code life will likely reach even further.“.

BioBrick Standardization Process
DNA cannot currently be fabricated purely using an in vitro process (it still requires an intermediate step using a host organism, e.g. yeast or E.Coli). Nevertheless, a transition period has certainly begun. An interesting model in regards to this is the BioBrick Foundation that was introduced (according to Wikipedia) by Tom Knight (MIT), Drew Endy (Stanford) and Christopher Voigt (UCSF). The trademarked words BioBrick and BioBricks refer to a specific brand of open source genetic parts, defined via an open technical standards setting process;
1. You develop some scheme for standardizing some aspect of synthetic biology work.
2. You convince at least one other person, at a different location from you, that the scheme would help them with something that they care about.
3. You each demonstrate that the proposed standard works for each of you (i.e., the standard must work and be good for something).
4. You document your scheme in writing.
5. You request a BBF RFC number by asking for one (email the list)
6. The BBF technical standards group (i.e., the folks on this list) comment on the standard, try it out, propose revisions.
7. You revise the standard if necessary.
8. The standard is formally accepted as part of the definition for BioBrick parts. Congratulations, you win (publishers are standing by), the BioBricks technical standards suite is updated.
9. New, possible standards tremble before you! Goto 1.

Productification of Functional Modules
BioBrick parts are DNA sequences held in circular plasmids with precisely defined up- and downstream sequences (both of which are not considered part of the actual BioBrick part). Larger BioBrick parts are simple to create as the up- and downstream sequences contain six restriction sites for specific restriction enzymes allowing for ”chaining together“ of smaller ones. According to the Guardian, there are 3 levels of BioBrick parts;
1) Parts: encode basic biological functions
2) Devices: made from a collection of parts and encode some human-defined functions (such as logic gates in electronic circuits)
3) Systems: perform tasks (such as counting)

Openness
I have not been able to find any IPR policies or ownership governance, but according to an article in Nature Biotech it seems as the objective is to create openness and accessibility: ”Quantitative descriptions of devices in the form of standardized, comprehensive datasheets are widely used in the electrical10, mechanical, structural and other engineering disciplines. [...] We propose to adopt a similar framework for describing engineered biological devices. [...] Finally, because the receiver can be used in many systems and because we hope to promote the collaborative development and unfettered use of open libraries of standard biological parts and devices, all of the information describing the receiver is freely available through the Registry of Standard Biological Parts”

Value Extraction
It will be interesting to see what type of interesting value extraction models that may arise from this open standard. Some early models related to education include;
* The International Genetic Engineered Machine (iGEM) competition
* The Build-A-Genome (BAG) class at John Hopkins University

To paraphrase Barry Schuler in his TED talk Genomics 101, about the fact that it is a fine line between playing god and learning the laws of nature. We are not creating anything artificial we are only changing around the already existing building blocks in nature to understand what the rules of the game are.

Tobias Thornblad

More state-of-the-art gene synthesis:
http://www.cell.com/trends/biotechnology/abstract/S0167-7799(08)00285-0

Value creation through offered access in Biotech...

Relating back to my previous post, I would like to continue the discussion about how intangibles are made into value propositions by applying layers of control. Last time I concluded that the vast number of control systems, both contractual and technical, enables the biotech firm to create a variety of “goods” by making these into an artificial state of scarcity where they are experienced as durable and non-durable depending on the combinations of control layers. From that discussion, it can be concluded that only the creativity by the firm will restrict what is possible. This time I would like to expand upon that concept by adding another layer to the value proposition that makes the business model options for creative design even broader, which is: access.

Biotech Market Transactions
First of all, it is important to realize that the traditional model where the seed seller offers a variety or hybrid with a set of fixed traits “locked into” a germplasm is obsolete. Nowadays, a biotech firm may isolate, sequence, redesign, and make a gene proprietary only to offer it to a number of simultaneous markets (e.g. healthcare, agbio, nutraceuticals, etc.) and applications. This means that the firm selling plant varieties to farmers does not necessarily have to be the same company that owns the pest tolerant trait in that very same variety nor does the company have to rely on a single source of income. Innovations in the seed germplasms therefore often create a number of transactions that all need to be controlled in some way for value to be maintained.
This value, however, will not automatically increase as customers or collaborators’ freedom is restricted, which seems to be how many companies measure the value of their intellectual property in many cases. As an example 26 leading corn insect scientists in the US recently submitted a statement to the EPA regarding how unreasonable restrictions in technology agreements hinder their research. Patent Baristas discusses the issue and links to Monsanto’s Technology/Stewardship Agreement (and Technology Use Guide) as an example, in an interesting recent blog post.

Access as Business Model
Control can instead be used as a gatekeeper to enable access rather than restrict it. Allowing farmers to save and replant seed is an example of a light form of this “enabling” thinking in contrast to the “protect and fend off” thinking. The right to save seed varies among countries and between plant species (according to regulation, e.g. UPOV directives) but the rule, in general, is that farmers should pay a reduced royalty fee if seed is saved and re-sowed the next season (with some prohibitions, such as brown-bagging: here & here). It is quite fascinating that despite the options for farm-saved seed (FSS) are in many regards rather limited, FSS actually still has created intermediate markets in Europe where organizations collect royalties from farmers for FSS to the seed companies, e.g. SVUF. It seems a whole range of new business models would be possible if access was made the focal point in the strategies of some of these companies. It is therefore particularly interesting when access is offered openly to technology such as when the US Department of Energy Joint Genome Institute in December released a complete draft of the soybean (Glycine max) genetic code freely to the research community.

Open vs. Free
I would like to emphasize that my viewpoint is certainly not that companies should offer their services without making a profit or even less. What I am suggesting is that business owners and developers should rethink how their value propositions are constructed, to create more value for their value recipients, which could mean that they could make even more profit but from multiple revenue streams. As pointed out above, a gene technology company does usually not have to rely solely on one particular product for revenue, but can often diversify by offering the technology in many simultaneous markets. The concept of how value recipients does not necessarily have to be the restricted to be the same as a company’s current customers is eloquently discussed more in-depth by Anders in tbmdb.com this week. Genetic engineering and software programming have many structural elements in common, so if profitable in-direct business models can be generated from open initiatives in software (e.g. IBM, second life, Linux Desktop business models, etc.) wouldn’t that mean that openness, and access, also could be made profitable in biotech?

Tobias Thornblad

Biotechnological determinism

TED recently posted a talk which I think was incredibly interesting from an intellectual capital perspective. The talk is given by Bill Joy, one of the co-founders of Sun Microsystems, who now is one of the partners of KPMG where he reviews business plans. Bill talks about the dangers of future technologies in education, environmental improvement and pandemic defense, which relates quite a lot to his article “Why the future doesn’t need us”.

The "dangers" of technology
Bill talks about incredible scientific discoveries, such as the carbon nano tube, before moving on to his take on what the future technologies may hold for mankind. Bill states in his cover story (as well as in the TED talk video) that “Given the incredible power of these new technologies, shouldn't we be asking how we can best coexist with them? And if our own extinction is a likely, or even possible, outcome of our technological development, shouldn't we proceed with great caution?”. His suggested solution and recommendations are focused on restricting the free flow of information, in particular those technologies which can be leveraged to create many to one ratios of cost to damage. Bill seems to have a mindset of a social deterministic nature, believing that technology always is developed with a particular societal purpose or objective to benefit those that are capable of funding its development. This stands in contrast to the technological deterministic perspective, which says that social changes come about as a result of the new capabilities that the new technologies enable.

Creating societal ethics
It is difficult, if not impossible, to determine which of these views that is the true way of seeing things. My viewpoint however, is that predicting the capabilities, utilities, opportunities and threats of new technology is close to impossible in an early stage and restriction at this stage could potentially stifle our societal development. That is also why I experience it as worrisome when Bill mentions that we should have policies in place to govern the innovation process.
Legislating to create ‘societal ethics’ is a phenomenon that biotech has a long history of and is still experiencing. An example of this is the national laws around stem cells allowing for artificial fertilization for research purposes in some countries, e.g. Sweden, Belgium and the UK, whereas it is illegal within the countries to extract stem cells from human embryonal cells in Germany and Italy (... but which are both allowed to import these from the formerly mentioned countries). Another example are genetically modified plant varieties which are patentable in the US, but which are to be protected by plant variety protection governed by UPOV, within the EU, to enable a more open approach to proprietary genetic information.

All in all, I think that ethical considerations are governed by so many other aspects than the law, such as education, so my hope is that there will be other ways than stronger legislation to make this happen in the future.

Tobias Thornblad

Credit Crunch IP

I have a hard time to trying to hide my obsession regarding the financial situation and the worldwide economic downturn. Here are some IP-related thoughts I have absorbed during the last months from various sources.

Venture Capital
Many start ups get funded on the promise and vision of turning their intellectual assets into valuable intellectual property to enable value extraction or be acquired by bigger fish. The current economic climate seems to restrict the flow of new capital to the VC funds. Moreover the model of VC funding is, according to some, about to change. This will probably change the innovation ecosystem and have an effect on IP generating possibilities for start-ups relying on venture capital. According to Bob Kagle and VentureBeat, about half of all VCs going out of business.

IP (patent) liquidation
The strategic focus of the usage of IP will be to generate money to support the operations. The companies have to turn their intellectual capital management to become a profit center instead of a cost center. This includes increased IP transactions and more focus on alternative costs since money in the bank is more attractive then IP assets with no clear purpose except a potential FTO function. To tie on to Marcus' blog post some while ago, perhaps a increased number of transactions can be a driver for a common market place for IP to reduce transaction costs.

Technology transactions
Is this the time where open source and open platforms gets the formal recognition in the corporate world? I am not completely sure that open source solutions, when speaking of software, is less expensive. However, the cost is distributed in another way to reduce upfront costs.

Moreover, open collaborations or outsourcing could be measures to lower costs in development activities or in day-to-day operations. To what extent this will actually happen is yet to see. To manage relationship and results in open platforms are demanding. My view is that not many firms have developed capabilities in relation to this, but I am too inexperienced and lack some insight to do a proper prediction regarding the adoption level dependent on corporate capabilities.

Strategic research
Less capital and commitment to strategic research. Cost cutting means lay-offs. Lay off could implicate loss of knowledge and research momentum . The impact of this will be hard to predict. Some claims that the societal value of having companies doing strategic research will decline vastly during the downturn period. The


That's all for now. Given the media buzz regarding the economic downturn and the effect on our lifestyle and future this topic will be revised in the future.

Mathias Hellman