Welcome
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Kevin Johnson: Good morning. Welcome to UC-Davis School of Law. Welcome to the new new Kalmanovitz Appellate
Courtroom. Just a few weeks ago, we had the attorney general Ken Davis debate in this very courtroom. You maybe have
seen some account by Harris's ads [ph?] the UC-Davis School of Law logo, which is in the background. I want to welcome
you to the third Fenwick and West Lecture series of technology, entrepreneurship, science, and the law. This year's
exciting topic is personalized medicine, getting the prescription right. Now, I wish I could
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take some credit for this symposium, and I plan to steal some credit by claiming that I was responsible for the blue and
gold prescription on the cover your program. But I was told by David Bell that that was his idea to see to that. We have an
intellectually action-packed day for you, so hold on. In advance, let me thank the brains behind the event today. This
event wouldn't have happened without Gordy Davidson, Chairman of Fenwick and West and his support; David
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Bell, a partner at UC-Davis, 1997 alum; Robert Host, partner at UC-Davis, 2000 alum; Michael Schuster of Fenwick and
West helped plan the event today; Professors Keith Aoki, Peter E. Lee. Lisa Ikemoto of UC-Davis School of Law also
helped plan the event. Let me introduce David Bell. David's practice at Fenwick and West includes startup financing,
public offerings, securities, compliance, mergers & acquisitions, and he'll introduce our first speaker.
Introduction to Personalized Medicine
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David Bell: As a leading provider of legal services to technologies and life science companies, Fenwick sits as a
confluence of corporate law, intellectual property and other fields as they merge with entrepreneurship, technology, and
development of companies of national and international economies. Working with UC-Davis, we created the TES Law
series – Technology, Entrepreneurship, Science and the law – symposium series to build a forum for providing
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Knowledge base required to successfully address challenges of the ever growing and changing office [ph?] of the 21st
century economy – life sciences, biotechnology, computing, digital communication, social media, and clean technology.
Furthermore, the series strives to define these contemporary legal talent in terms of societal, governmental, and business
context. We hope that armed with this important knowledge, participants in the TES Law
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series will gain a competitive advantage in certain organizations that deal with these markets – venture capitalists,
technology, and life sciences companies, social entrepreneurship, government agencies and public interest groups. We at
Fenwick have a great deal of respect for UC-Davis, its faculty and various programs – law, business, management, life
sciences, medicine, and many others – and look forward to beginning work with the school in coming years to
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address a variety of topics in the TES Law series. In addition to thanking all of the other folks that Kevin Johnson
mentioned before, it's also worth mentioning Jean Korinke, who's the assistant dean here at the UC-Davis School of Law
also is incredibly instrumental and worked very hard through the process of finding this symposium, which I can tell you
was a lot of hours, all those people that Dean Johnson mentioned for about 10 months. So really, I appreciate all the work
of all those people, including Jean. So let
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me introduce our topic today. Personalized medicine is an emerging field that's still in its early stages of development.
Consequently, we thought it would be beneficial to start the day with an introduction of the subject by a leading participant
who will provide an overview of personalized medicine, some of the important issues confronting the field in society as a
result of development and perhaps a little bit of a view of the road ahead. Joining us today is Dr. George Shriener, who is
chairman of the board of the PROOF
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Center of Excellence. The PROOF center is a multi-sectoral not for profit collaboration of industry, academia, healthcare,
government, patients, and the public focused on discovering, developing, commercializing and implementing biomarkers
for heart, lung, and kidney failure. The PROOF center has discovered an internally validated blood-based proteonic and
genomic biomarker test to diagnose and predict allograph immune rejection in heart and kidney
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transplant patients. George is also CEO of Cordero Therapeutics, a startup biotech company focusing on heart and
kidney disease. Before Cardero, George was CEO of Raven Biotechnologies, which has become a part of Macrogenics,
and was president of research and development at Scios Inc. which is now a Johnson & Johnson company. Prior to
working in industry, Dr. Shriener held faculty positions at leading U.S. Medical academic institutions, including as
Assistant Professor of Medicine and Pathology at Harvard Medical
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School, Associate Professor of Medicine and Pathology at Washington University School of Medicine, where he received
tenure. Dr. Shriener has published extensively and is experienced in all phases of drug and biomarker development, from
discovery through clinical development to commercial launch. We greatly appreciate George for joining us today and
<inaudible>.<applause>
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George Shriener: So what was left out of that introduction is also the fact that two of my four sisters – God help me – are
lawyers. As they remind me every Thanksgiving, I approach a group of lawyers with appropriate humility and gratitude for
your very existence as I feel for their existence. So I was asked to give a broad overview of personalized medicine and for
many of you, you're going to think “Well, isn't it already pretty personal?” There's your doctor and there's you, and you're
sitting in your office with that little gown that is open at the back. Nothing more personal than that. But the news that we
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have to bring you today is that underneath your gown, you're about to be joined by the budget administrator for your
healthcare program, the technology acquisition officer for your hospital, the director of budget for Medicare, a
pharmaceutical representative, and, of course, inevitably, given the conflicts inherent in that group of people sharing your
hospital gown, a lawyer as well. And it's actually the de+++ 0:07:29.8 +++
personalization of medicine to date that has led to a scientific and economic and I think legal imperative to really transform
the practice of medicine and the development of drugs and diagnostics to support therapy of medicines. So many of you
have been told over and over again, particularly in I think the somewhat extraordinarily impoverished debates about
healthcare in this country, “Hey, what's the problem?
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Greatest healthcare system in the world.” Actually, it isn't. We spend 5% of our gross domestic product on healthcare,
much more than any other country in the world, and in 20 years, that will be 10%, thought by many economists to be nonsustainable. The leading cause of personal bankruptcy in this country is illness, because 40- to 45% of our population is
not covered by insurance. In fact, until recently, we were
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the only civilized country in the world to not allow people who are sick into insurance programs. It's kind of odd, but some
people make the distinction between life, liberty, and the pursuit of happiness in actually whether or not one is healthy.
Others don't. That's a subject that's going to actually become very impactful in discussion of personalized medicine. We
have a system that, despite the fact that we pay more per
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head, at least two fold and often three to four fold, than compared to other nations on healthcare. We currently rank 38th in
the world in terms of the health of our citizens. So what's the problem? We have the best medicines in the world right now.
The United States produces 90% of the new drugs and they work great. So what's not to like about the system? Well,
actually, they don't work great. Twenty-five percent
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of the people who are taking anti-hypertensives, which use a biomarker, blood pressure, which is simplicity itself, do not
respond to their anti-hypertensives. Fifty percent of patients on statins to lower their cholesterol are having no beneficial
reaction to that, either with respect to their ability to have lower cholesterol or to the protection against heart disease,
which is known to be a complication of high cholesterol – but not always because lots of people with high cholesterol
never have heart attacks and
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more than half of people who have heart attacks have normal cholesterol. But we have tens of millions of people on
statins because everyone knows that cholesterol is bad. Heart failure – only 60% of our population are on the right drugs
for heart failure but 40% of the patients who are on drugs for heart failure are actually not responding to them. Heart
failure is a complex disorder that has multiple toxic
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pathways impinging on it. We have drugs that inhibit each one of those pathways and one of those pathways –
aldosterone – is shown to contribute to mortality. So we have prescription drugs for blocking aldosterone, and it decreases
mortality by 30% over a five-year period of time. That's great. But what do you say to the 70% of people who are paying
for this drug, often very expensive, who are experiencing side effects from this drug who are not getting any benefit from
it. We
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have a system that says “Well, everyone who has the same diagnosis can have the same treatment.” But, in fact, we're
giving a lot of drugs to a lot of people who are not getting the benefit, even when we're doing everything correctly. Oh, and
by the way, admission for heart failure in this country is 21% of the hospital budget for Medicare. Recurrent admission for
heart failure – it's the single largest expenditure in the federal budget for hospitalizations. Average
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patient is on nine medicines. Chief cause of readmission to the hospital – these patients are often admitted with fluid in
their lungs several times a year; noncompliance because they're on nine medicines. If we could actually identify the three
or four that they really need, not only does the system save money and save human misery by avoiding side effects-- By
the way, 20% of everybody on statins get severe complications of muscle injury and weakness because
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statins also attack the mitochondria of the muscles in your arms and legs. So there are penalties for these drugs, as well
as great goods, and we have no idea until we start these drugs, whether the benefit is going to be worth the cost. We
can't actually pay anymore so we've got to learn how to make the drugs we have more useful. And to do that, we've got to
improve
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the rate of efficacy we've got to decrease the rate of side effects. Well, but, we've just spent billions of dollars sequencing
the human genome. Now all kinds of medicines are flooding into the system. So yeah, we have a problem because-We've been pretty good at treating acute illnesses. Very few people die of heart attacks anymore. We're not so good at
treating chronic diseases. Heart disease has replaced infectious
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disease as the number one curable. Why? There's an epidemic of diabetes. In this country, 40 million people have chronic
obstructive pulmonary disease, aggressive scarring in the lungs associated with heavy smoking. It's also associated with
polluted air. Ten million people are known to have COPD; 30 million are not known to have it because the only test we
have is symptoms that appear when your lungs are so far gone you can't exhale a breath of air in a reasonable time
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frame. So really not until you're through toward almost the end of your disease can you be diagnosed with an illness that
actually affects one in seven people in this country. And in cultures where smoking is much more common, like China and
India, it's a catastrophic explosion of lung disease. In all of our knowledge about new molecular targets, our
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understanding of diseases has never been better. Why isn't there a cornucopia of drugs coming to address these new
issues? So yeah, Old drugs not as effective as they need to be but they're old. New is better. Well, the number of drug
submissions to the FDA has plummeted, down one-third in the last three years. We are now at the level of 1883 in terms
of submissions for new drug approval for the FDA. And unfortunately,
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most of you don't remember 1983, but I remember it because it's when Michael Jackson's “Thriller” was released and the
top selling album of all time. But you know what? We've made a lot of progress since “Thriller” in most areas. But we're
not making the kind of progress we need in drug development. And so what can we ascribe that to? Well, when I left
academia to start a biotech company, for between 50- and 75 million dollars, you could take a drug from the bench into
commercial launch. Right now, the average
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cost of developing a new drug and getting it launched commercially for a pharmaceutical company is about $750 million;
three to four hundred million for a more efficient specialty pharma startups than biotech companies. Of course, in the
current climate where they're not being funded, 300 million is as bad as 750 million. No company gets $350 million from
the market these days in the startup healthcare. So then the new paradigm is to get as much data as you can and sell to
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a large pharmaceutical company because the little companies have given up their thoughts of ever launching drugs on
their own and growing themselves to be larger. So the fact is, we are not getting new drugs. They're too expensive and
they're too expensive in part because of safety issues. Safety issues – the celebrated Vioxx case, .5% of people
developed complications of Vioxx. Now, that was too high for the
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FDA legitimately because it was a pain treatment and the theory, if the FDA is correct, is serious side effects are only
tolerated for serious diseases, and pain relief was not serious enough to tolerate cardiovascular complications. But to pick
up a 0.5% complication rate means you have to test thousands of patients. So part of the cost, if I’m contemplating
developing a cardiovascular drug – which I’m doing right now – I will expect phase I drugs are tested in
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a large group of normal patients for safety; phase II drugs, larger patient for safety and some efficacy because you're
looking at your drug for the first time in a disease setting that you hope to target with your drug. Phase III, which is the
stage of testing that you have to submit to the FDA to get approval, has to be large enough to pick up most expected side
effects statistically and long enough to allow the development
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of late-stage complications, as well as statistically confirm efficacy against whatever target you're going after. The
consequences of that is at the average phase III trial for cardiovascular disease – you have to do two by the way for
submission – is eight to 15 thousand patients for six months of therapy, and then another year of follow-on therapy at a
rough cost of
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$40,000 a patient. You know what? It's easier to go into social network software. But it's not helping the problem. So what
has emerged is a way of dealing with what is in fact a crisis right now in healthcare and what has emerged is something
called personalized medicine. The use of biomarkers that instead of you
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being treated as one of 40 million patients with COPD, you're you. You are you as a unique constellation of genes and
proteins and dietary and environmental influences and you are going to have your own profile that should predict whether
your brain can be responsive to therapies or unresponsive to therapies. Are you going to be prone to injury or not prone to
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injury? And these biomarkers can be very simple. Blood pressure, waist circumference, basic metabolic index all are
biomarkers. That's a biomarker. From a molecular standpoint however, it's attracting new interest because obviously,
those kinds of biomarkers are low tech and have been around long enough so that most of them have, in fact, been
discovered and
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described, are the actual physical biomarkers of your genes, the proteins encoded by those genes which, by the way, are
not the same. We have 25,000 genes. We have between 100 and 125,000 proteins. That was the big discovery of the
human genome sequencing, is that it's not one gene, one protein, which was the dogma when I was in medical school. It's
one gene that could be reshuffled as it's converted into RNA, into a variety of proteins. So people's proteins can be very
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different. They can have the same genes but can have actually different proteins depending upon regulating elements that
are elsewhere in their body that dictate the kind of splicing and reconfiguring of RNA that occurs after a gene is
transcribed. So there's genes, there's proteins, and then there is metabolites. Metabolites are small molecules that are
neither DNA nor amino acids, that are the products of proteins. A classic example is cholesterol. Cholesterol is a
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metabolite and it's a biomarker, and the only reason we ever got statins as a biomarker was that there was so much data
that high cholesterol produced atherosclerotic disease, that the FDA, in the 1980s, allowed Merck to get their first statin in
history on the market with the endpoint of lowering cholesterol, not with providing any cardiovascular benefits. They had to
promise to show that, but it was so expensive even for a company like Merck. Remember, we're moving
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into an era of chronic diseases. So those are huge, long trials. So it wasn't until six years after the introduction of Mevacor
that Merck was able to take the profits from the sale of Mevacor for lowering cholesterol to show that this translated into a
lowering of incidents of heart attacks and death. Not great though. You have to treat 50 patients to save one
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heart attack over a five-year period of time. It's there and it's real, not a very efficient way of treating or preventing heart
disease. But it was a biomarker and it was validated as a harbinger of potentially bad things over a five- to ten-year period
in a situation where you can't actually do trials that last that long, unless you have a lot more money than everybody else.
And that's a very small number of companies indeed. So people have started to look at
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genes, proteins in the blood or in the tissues circulating metabolites in the blood or in the urine or other fluids, and say
“Can we put together a composite understanding that would allow us to say this particular person is going to respond to
this particular drug. Oh, and by the way, we can predict toxicity,” because – and we'll get into this in a
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second as we get into drug development – but this is the only possible way that people foresee of bringing the cost of new
drug development down to attainable levels. So what are some examples of recent biomarkers? One is the use of
Coumadin, a drug that is present in two places in your environment. It's in five million of your fellow Americans. It's a blood
thinner. It's also in rat poison, so you can buy it at Walgreen's to kill rodents in your kitchen. It's very
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effective. So this thins blood and is used to treat people who are forming clots because they have an irregular rhythm in
one of the chambers in their heart. It's called atrial fibrillation. And when you have this irregular rhythm, blood isn't moving
smoothly. It kind of sloshes and there are little eddies. And in those eddies, clots form and patients with atrial fibrillation
have a very high incidence untreated of stroke. So Coumadin was the first blood thinner that prevents clot formation. But
as the rats
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have shown us, too much can kill you. There is a hundred-fold range in the dosage of Coumadin. And when patients are
started on Coumadin for atrial fibrillation, 22% of them are hospitalized in the first year for two reasons. They either form
their clot anyway because they were under treated, or they bleed into their heads because their blood is too thin. It's not
clotting enough or they have a major
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bleeding into their intestines. Finding the right degree of blood thinning and the right dosage is an exasperating process.
Insight into this only emerged with the discovery in the last several years of an enzyme variant of class of enzymes called
Cytochrome P450. These are things in your liver and other tissues that metabolize and break down drugs. It turns out that
one variant of the Cytochrome 50 is unusually
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efficient at breaking down Coumadin. So now we have three populations because you have two genes, right, one from
your mother and one from your father for this. If you have one variant, if one of your genes is a variant of this, you hyper
metabolize Coumadin. So you actually need to start at a much higher dose than someone who doesn't have this variant at
all in their genes. Okay. So if you have no variant, you can come
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in at a low dose of Coumadin in advance cautiously. If you have one, your Coumadin lasts for a very short time and if you
underdose that patient, they're going to form a clot and stroke. If you have both, you're going to really destroy Coumadin
and you have to give very high doses, but you can give it knowing that it will be safer than what you see when you go on
the internet and you look up your drug dosing, that patients are suggested that they take 10, 20, or 40
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milligrams per day, according to some parameter – weight or severity of disease, what have you. This is a completely
different paradigm. It says that patients metabolize drugs differently. We can keep these patients out of the hospital if we
do the test on them. Do they have those bad genes? By the way, it's not bad <inaudible> metabolize a toxin faster. It's a
good <inaudible>. Right. But it's a bad gene for this setting. And really, just in the last two years, a
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diagnostic kit has been established to allow doctors to plan the dosing appropriately to minimize the consequences of the
disease, which is the clot in the brain, or the consequences of drug overdose, which is bleeding into the brain. So that's an
example of how you can use a biomarker to control the management of a disorder. Proteins – a protein marker that's
gotten a
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lot of attention is something made by immune cells, called C-reactive proteins, CRP. It's been around for 25 years, wellknown, elevated in patients with autoimmune disease like rheumatoid arthritis, or lupus erythematosus, diseases where
people attack their own tissues – high levels of CRP. It was discovered some years ago, about 10, that actually, if you had
elevations in CRP, that you were within a year of rupturing a clot at a very high probability, if you
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did not have an autoimmune disease, and that is because atherosclerosis is an inflammatory disease. The cholesterol
deposits into plaque that's in your coronary artery, but that is then attacked by immune cells. And it's actually the biology
of immune cells that causes the plaque to rupture and a clot to form and have a heart attack. The CRP is released by
those inflamed cells and it's a prognostic marker for how
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quickly you're going to get in trouble. We talked about statins and how not as effective as they might be, and we also
talked about the fact that more than half of heart attacks are people who had normal cholesterol. So it turns out that once
cardiologists understood that this protein biomarker was a harbinger of impending catastrophe, and the discovery that
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statins not only lowered cholesterol but also inhibited immune cells, the same enzyme that's using immune cells not to
make cholesterol but to make lipids based on cholesterol that had an inflammatory component to them, these lipids that
were released by these cells. So a study just stopped, called Jupiter, in which a very powerful still prescription-based
statin called Crestor, was actually given to patients
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that were known to have atherosclerosis, had normal cholesterol. They were giving a cholesterol lowering drug to patients
with normal cholesterol in a high CRP. The study was stopped prematurely because the death rate was so much lower in
the group given the statin, the cholesterol lowering drug, that ethically they could not continue with the drug. Hey, this is
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beginning to make sense because now the next step is, well, if only one out of 50 or one out of 45 patients with high
cholesterol are benefiting from statins, let's now look at the subset that have high cholesterol and have a high CRP
because we've just shown that you don't need a high cholesterol but statins are effective with the high inflammation
profile. And that is how incrementally we're refining
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our ability so that we don't have to give statins to patients who are not going to benefit from them or are going to have side
effects. But we do know that there are additional populations of patients that will benefit who never would have been given
access to statins because somebody would have said “Well, you don't have high cholesterol. Can't give you this drug.” It's
bad enough. Why should I waste it on someone who's not going to benefit? Actually, the CRP patients are the ones who
actually benefit from it most, and that's an example of how biomarkers are
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opening up the utility of the drugs and refining our ability to apply them to the right person with the right constellation of
side effects. The diagnostic purpose of biomarkers is very relevant for the chronic diseases that are dominating our
society and the developing societies in the world. So remember, I
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mentioned to you that one of the biggest, most widespread diseases is COPD, chronic obstructive pulmonary disease.
The only diagnostic we have for that is if you breathe into what's called a spirometer and you can't breathe very forcefully,
you've got the disease. By the way, you're in now the final 20% of your disease progression. A whole variety of causes
cause chronic lung scarring, which is what this is, and we have no drug that it treats mechanism. It only
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treats the symptoms. So you can make someone breathe better but the disease still progresses to the point where they're
on oxygen and then they die from complications of low oxygen, or they're lucky enough to qualify for a lung transplant.
That's it. So what you look for for a biomarker, you need to understand the mechanism of the disease. That's the only
thing you have to have in order to be able to develop a
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drug. So one of the things that PROOF is doing is it's collecting an experimented nature, which is that heavy smokers,
only 30% of them progress to COPD; 70% of them, like Winston Churchill, buried several doctors while smoking four or
five cigars a day and lived into their 90s. We don't understand the difference between those two things. So one of the
things that PROOF is doing is gathering large cohorts of genes, RNA, proteins, and metabolites in heavy smokers and
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charting which subset that is showing progression of their disorder. And once they identify that, they'll have two sets of
information. They're going to have an understanding of the factors that seem to be using the smokers at their own
controls. Only those who are showing some change in their markers in their blood that are declining in function, those are
the relevant markers. Everything else, whether it's background
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genes, ethnicity, or changes due to smoking, they're not toxic, are subtracted out. And by collecting these algorithms,
collecting these proteins, they hope to be able to make an early diagnosis of are you on the track toward in-stage lung
disease. And at the same time, give that information to drug companies so a drug company can say “Oh, this enzyme, this
protease, is now present only in those patients that are progressing. Therefore, we will make an antagonist for
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this because it's chewing up the tissue of the lung and by blocking that protease, or whatever other factor, a new factor or
an oxidized metabolite, they will come up with a strategy. And, instead of having to do a clinical trial that takes 10 years.
They can do all the early work following that same biomarker. So now Glaxo, which has sponsored a huge independent
gathering of information along the same lines, has
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pledged that once it starts to get these biomarkers, it will now start to make specific drugs targeting factors that are
appearing as leading to progression of heart disease. They can then use those biomarkers to look for dosing. If I’m trying
to block an enzyme, can I look at the effectiveness of blocking that enzyme as a way of understanding how to dose the
drug? And I then use that to predict efficacy so that when I finally do have my big trial, I can be guaranteed some
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plausibility of success. Eighty percent, by the way, of drugs that go into phase II fail because people do not have enough
evidence of efficacy until they put it into a real-life situation, and that's a huge part of the burden of drug development. As
you may have gathered, there are different ways of approaching biomarkers. One is to find one gene or one protein, and
one of the companies that found a myriad has been
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the leader in identifying single genes that are prognostic for diseases. And that, by the way, is an interesting legal
controversy right now because a federal court has ruled that single proteins or single genes that are not altered by the
inventor are not patentable. That isn't a settled issue. It's actually a very legitimate ongoing issue because the inventors
say “If we can't patent this, no one's going to do it because we have to make money by selling the
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diagnostic test.” Other approaches are using patterns of markers. So PROOF looks at mixtures of genes, proteins, and
metabolites and they're finding that roughly six to eight markers give you 95% sensitivity and specificity; that is, they
detect the disease and they don't give you false positive. So now, this is another area of interesting patent discussion,
which is how do you patent a set of markers. Now here, the
+++ 0:36:08.8 +++
inventorship is less controversial because you put together a series of unexpected combinations. But legally, what is
different if a competitor comes up with another set if you have eight molecules that now is your set for diagnosing chronic
lung disease? And someone has a molecule set that has four of your molecules and five of another. Is that different or is
that a violation of your rights as an inventor? Very,
+++ 0:36:39.9 +++
very interesting subject because what constitutes difference is critical for patent law, and the evolution of diagnostics is
evolving toward these multi-factorial diagnostic kits is what I’m calling [ph?] the disease. I’ll give you a real-life example of
something-- Biomarkers can even apply to devices. This is something that our society is prone to. We love expensive
devices. They're short-term fixes. We
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do medical technology the way we invade countries. We come in and we think it's all going to be over in four months, and
then we can get out. And the result is that we have extraordinarily effective medical devices at high cost and sometimes a
dubious value to either the patient or the hospital. Classic example – intervascular cyst device. These are devices that are
used in end-stage heart failure that are balloons that sit inside your aorta, the big vessel that comes out of your heart, that
assists the pumping efficacy of
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the heart by creating a vacuum when the heart is pumping out, so it makes it easier for the heart to pump forward, and
then by continuing to push the blood around it because the heart's pumping mechanism is weak. They were initially
established as a way of bridging a patient who could not pump on his own to a heart transplant. Otherwise, they were
going to die. And these devices sit temporarily in the blood vessel for two to four weeks at a cost of 15-, 20 thousand
+++ 0:38:30.1 +++
dollars for the device. So now, we have permanent implantable IVEDS [ph?], $80,000. That thing can sit inside your blood
vessel and really assist the heart in pumping, for 30% of the patients. Seventy percent of them die the way they had been
ordained to die with their underlying disease. Thirty percents of patients with IVeds [ph?] actually show some prolongation
of their natural history, to get to the transplant or to
+++ 0:39:01.1 +++
get home if you have a permanent implantable one. Now, Canada has an interest because they're strapped for funds like
everybody else. Their solution is not to buy the devices. Don't have them in the hospital, don't have to use them. Right.
Our solution is “Oh, no. We'll have the devices because hey, we're America. We put people on the moon, but only people
who can pay for it will get it. So if you're in the wrong socioeconomic bracket, you don't get the device.” And
+++ 0:39:29.7 +++
the hospital administrator says “Why am I putting $80,000 of equipment into people when I have no idea, are they going to
be the 30% whose life is prolonged and can go home? Or am I just wasting surgical effort, enormous resources that are
constrained, when I could be using this bed and these doctors for patients that are salvageable?” So one of the things that
PROOF is
+++ 0:39:56.3 +++
doing, which I think is a very clever idea, is that they're gathering biomarkers of heart failure patients who have a
transplant. Heart failure – your heart is not pumping very well. There are signals, factors, proteins, metabolites that are
being released from organs all over your body – heart, kidney, brain – to try and stimulate the pumping. Those are all
biomarkers of heart failure and they're trying to-- It's the tissues that are being under served. They're
+++ 0:40:24.4 +++
poorly characterized. The heart itself is releasing molecules that are signals to the other organs to try to help them adapt
to the poor blood flow the heart is only able to muster by collecting all the things that change within the first two weeks of a
new heart. So you fix the heart. You don't have the underlying diseased heart, and now you're profusing your brain, your
life, and your kidneys. So you can actually use each patient as their own control and believe it or
+++ 0:40:55.7 +++
not, describe about 400 factors that change instantly with a surgical cure. Now, supposing we set up a paradigm where
we take 10 of those that is absolutely predictive and we say “We're going to put you on a temporary intra-vascular cyst
device, which we have, and we're going to see if it helps you. And if you don't show any response on these markers of a
surgical cure, of a transplant cure, you're not responding and
+++ 0:41:29.4 +++
we can't justify an $80,000 implantation. But if we put you on this temporary device, which everybody has in the hospital,
and of those 400 markers, you change 200 of them or instead of 10, all of them change dramatically in the right direction,”
you can propose that patient is really going to respond to that expensive device. And there is no power on earth that
justifies withholding that lifesaving intervention
+++ 0:41:58.3 +++
from that patient. No hospital administrator can cite cost or uncertainty of outcome. Now, this is just a hypothesis. We're
testing it. But that's an example of how biomarkers and personalized medicine is being brought to bear on fundamental
issues. We have a system that can't afford to do better than it is doing right now, unless it decreases the cost of
developing drugs and unless it focuses on getting the right drug
+++ 0:42:31.4 +++
to the right person in the right dose with a minimum amount of toxicity. That is the only way in which we are going to be
able to guarantee a minimally competent healthcare system for our citizens. That's the only way. So it is an imperative
economically, scientifically, and ethically in terms of the right way of treating sick people. But these were all
+++ 0:42:57.1 +++
constituencies with potential conflicts and quite frankly, as a physician, I can't be leading that charge. This is actually why
God invented lawyers because this is the sort of thing that you are trained to do and to think about, how to resolve
conflicts in society in which both sides may be perfectly correct. What are some of the legal issues? And I’m mapping up
now. Sorry, we started a little bit late and also, I’m an ex-professor so I always run over. If someone says
+++ 0:43:33.3 +++
you cannot patent an unaltered gene of protein, you've got to own that as a diagnostic test. It undercuts companies that
invested millions to develop that kit and deliver it to patients and their physicians for legitimate use. Okay. But can that
outcome be sufficient to-- is that enough to override a legal definition of inventorship? If you say “Okay, it's too
+++ 0:44:02.9 +++
hard but it's going to be really easy if we do eight markers as a cassette. That'll be our test. We're going to own eight
markers.” And as I mentioned to you, what happens if someone has another test that has four of them? What's different?
How do you define that legally that is invented, that has taken things that are not obvious and putting them together and
finding a social utility? From a drug development standpoint, the FDA is telling companies “We expect you to develop
biomarkers because we want short phase ones, we want short phase twos, and we want short phase threes. We
+++ 0:44:37.2 +++
will accept surrogate markers if you demonstrate to us scientifically that this is a plausible outcome.” So the drug
developing is pushing forward on this but what do you do when you know something that someone else does and it's for
the greater good. Now, the big pharmaceutical companies are in consortia of shared biomarker data. There's an NIH
consortia, but all started developing biomarkers on their own because they see a marketing advantage to a single test for
+++ 0:45:04.7 +++
their single drug. And if no one else's drug has that test linked to it – because the FDA will approve a test for use in
conjunction with a particular drug – there is the potential for proprietary ownership that is actually detrimental to the
greater good. And that's an uneven balance. What do you do if you're in a system that provides your drugs or your
devices that requires you to be tested? What are your rights if you
+++ 0:45:33.2 +++
don't want to be tested? What if you don't want to be tested because one of the genes that affects the metabolism of this
expensive new drug also predicts your susceptibility to Alzheimer's? And once that gets anywhere in the system, since no
one believes that this data will be kept ultimately truly confidential, how do you-- And given the intended rollback of
protection to people with preexisting conditions being
+++ 0:46:00.7 +++
able to get insurance with our new congress, how on earth do you protect yourself from being penalized by cooperating
with the system? And if you don't get tested, can you force them to give you your drug anyway? And if they don't want to
give you your drug, can they be forced to give you the drug, especially if it's expensive or it's an intervention that if it
doesn't work for you, it diverts resources from somewhere else in the system that's already breaking
+++ 0:46:31.7 +++
down? What is the liability of a doctor who does not use a test that predicts toxicity for a particular drug and you get sick
from that drug, especially when those tests are tests of probability, not absolute mosaic fact? Okay. What is the liability of
the physician? What is the responsibility of the patient
+++ 0:47:00.9 +++
in this setting to understand where biomarkers are appropriate for their particular case? What they can demand is their
right and what they can refuse is their privilege. This is really at the heart of entrepreneurship, personal ethics, healthcare
issues, confidentiality, the rights of the system that's paying for this. And all of these things can come into potential conflict
as well as harmony, and it really can only be bridged by people schooled in law and
+++ 0:47:35.5 +++
ethical obligations who are trying to reconcile often competing priorities. So this is a very timely symposium. It's a very
topical subject. I can assure you this will be dominating healthcare itself and how to improve our healthcare will be
dominating societal dialog for the next two decades, and the law is going to be right in the middle of this, as it should be.
+++ 0:48:03.4 +++
And that's hard for me to say as a doctor, but I’m conceding that. So enjoy the rest of the symposium, and I guess we
don't have time for questions because I’ve run over. Can I take five minutes to answer any questions that people may
have before we move on to the meat of the afternoon? Okay. Well, I’ll be around for the rest of the morning if. People who
do have any
+++ 0:48:28.8 +++
questions are welcome to approach me. Thank you very much for your attention.<applause> End of Welcome and
Intro.mov
Panel I: From the Lab to the Patient: Intellectual Property in Personalized Medicine
+++ 0:00:27.0 +++
David Bell: I think we’re going to go ahead and get started with our first panel. Our first panel today is titled “From the
Lab to the Patient: Intellectual Properties in Personalized Medicine.” It’s being moderated by Professor Peter Lee. Peter
received his undergraduate degree from Harvard University, where he studied the History of Computer Science, and is a
graduate of Yale Law School, where he was a member of the Yale Law Journal. He joined the King Hall faculty after
working for Judge Philip Silverman in the 9th Circuit Court of Appeals. Peter has continued to examine the intersession of
science in society in his
+++ 0:01:04.3 +++
legal research, where he’s impacted intellectual property on scientific and technological progress, addressing the broader
question of how intellectual property affects the creation and dissemination of ideas. With that, I will let Peter introduce the
panel. All right, thank you.
+++ 0:01:24.9 +++
Peter Lee: All right, welcome everybody! It’s a pleasure to moderate this first panel dealing with intellectual property
inventions of personalized medicine. We have a great lineup of speakers, including, I’ve mentioned this, litigants to the
most closely watched patent case in the country. So I’m very excited for our discussion. Each of these speakers is a true
expert in his or her field. I think you’ll want to know all about them, in the interest of time, and maximizing our opportunity
for discussion, I will keep introductions relatively brief. All right.
+++ 0:01:54.6 +++
So first we have Michael Shuster from Fenwick & West. He’s a partner in the Intellectual Property Group. He’s Co-Chair of
Life Sciences Group. He’s practicing law in biotechnology, patent prosecution and litigation, strategic ID counseling,
portfolio analysis and due diligence. Next we have Barbara Brenner, Executive Director of Breast Cancer Action. An
National Education Activist Organization that’s based in San Francisco. Barbara is a leading voice in the breast cancer
movement, and has been featured in several national media outlets, including The New York
+++ 0:02:27.6 +++
Times, USA Today and The Washington Post. Before joining Breast Cancer Action, she was partner in a San Francisco
law firm, where she focused on public policy and political litigation. Next we have Mark Capone, who is President of
Myriad Genetic Laboratories. He previously served as Chief Operating Officer and Senior Vice President of Sales. He
currently serves on the board of Rules-Based Medicine, and a board member of the American Clinical Laboratory
Association. Prior
+++ 0:02:59.0 +++
to joining Myriad he served for 17 years with Eli Lilly and Company. And finally, Clinton Neagley, Associate Director of
Technology Transfer Services right here at UC Davis. He’s responsible for patenting and licensing inventions in the
agriculture, biotechnology, chemistry and physical science areas. Before joining UC Davis, Clinton was Chief Patent
Counsel, and Director of Licensing for DNA Plant
+++ 0:03:25.0 +++
Technology Corporation. And prior to that he spent ten years at a New York-based intellectual property law firm. All right,
as we mentioned, it’s great to have everyone here. I very much look forward to our discussion. All right, so our broad topic
is personalized medicine. It refers to tailoring medical inventions to patient’s particular genomes. So one important
component of personalized medicine is genetic diagnostic testing that may reveal the patient’s susceptibility to a particular
disease, or a
+++ 0:03:56.4 +++
likely response to a particular medical treatment. As is the ability to exploit and exercise control over genes is quite an
important issue. One central mode of exercising control over genes involves patents, which are 20-year terms of exclusive
rights on new technologies. This of course raises a host of questions: How are genes patentable, and should they be
patentable? What about processes in analyzing genes to detect mutations? Now these questions are at the
+++ 0:04:28.7 +++
heart of a closely watched case, AMP versus USPTO, which involves both Breast Cancer Action and Myriad Genetics. All
right, so to begin to address these questions, I’d like to first turn to Michael to provide some context. All right, so out of law
school, some doctoring, he’s a reporter [ph?], so I ask Michael, “What’s the current legal framework for gene patents as
they relate to personalized medicine?”
+++ 0:04:55.1 +++
Michael Shuster: Well, for a very long time, it’s been true that the government has issued patents that cover isolated
compositions of matter. The nucleic acids that have the same makeup as genes in the body. Same mutational content. It’s
been true for about 20-some-odd years. And recently with the case that BCA and Myriad have been involved in that
position has been into question. And it’s been called into question on the basis of the statute called 35 USE [ph?] Section
101. Which defines the hurdles for patentable
+++ 0:05:29.5 +++
subject matter. The way the patent laws are organized, there’s a series of hurdles that have to be met, if your invention
gives rise to patentable claims. And _______ specifically you just mentioned. Traditionally, it’s been thought of that the
lows in these hurdles is the patentable subject matter hurdle for Section 101. And then afterwards, if that’s been passed,
you’ve got Section 102, which is novelty, it has to be new. Section 103, it has to be non-obvious. And from the time that I
started practicing, 101 was
+++ 0:06:02.9 +++
like tripping over a stick. You never saw rejections that were based upon 101. And more recently, as there have been
outcries that the patent system is failing now to fulfill its constitutional mandate of advancing technology, there have been
more-- there’s been more and more case law on the basis of Section 101.
+++ 0:06:28.2 +++
Peter Lee: All right, so Barbara, let me turn to you then. So genes have been considered admirable subject matter
historically. That’s a little bit open to debate now. My question for you, what’s the impact of gene patents on patients?
+++ 0:06:43.5 +++
Barbara Brenner: I’m going to speak a little longer than Michael did. I have an AD [ph?] I’m not here to talk about law.
I’m here to talk about patients-- I’m having trouble articulating words, so bear with me. There are very few areas in law
that have as much impact on people as gene patents. We see this most clearly in the field of breast cancer. Myriad
Genetics
+++ 0:07:16.1 +++
come from patents on the breast cancer genes BRCA 1&2 in 1995. Is that right? And quickly began marketing a test for
these mutations on these genes. Keep in mind we all have these genes, men and women. BRCA 1&2 are in everyone.
The risk of cancer comes from inheriting a mutation of one of these genes from one of our parents. Women born with
these genetic mutations, have a very high risk of developing breast or ovarian
+++ 0:07:54.1 +++
cancer sometime in their lives. I want you to meet a couple of these women. I would show pictures, but that’s
inappropriate. Wendy Lamar [ph?] is Asian-American in her early 30s, diagnosed at 28 with breast cancer. That’s quite
young. Her doctor encouraged her to get the genetic test, that Myriad markets, to determine her risk of developing either a
second breast cancer or ovarian cancer, which is much more deadly. She got the Myriad test, the only one
+++ 0:08:28.4 +++
available, but the results were, as they often are, ambiguous in her case. And they are most often ambiguous in people of
color. She’s Asian-American. Because Myriad controls the gene patent, there is very little, if any, research underway that
might help Wendy understand her genetic risk and make important decisions that she needs to with that information.
Those decisions include whether to have her ovaries removed in her 30s. Elizabeth Siriani [ph?] is a
+++ 0:09:04.6 +++
single mom with an eight-year-old daughter, who was diagnosed with breast cancer in both breasts at the age of 42. She
had a strong family history, her doctor suggested she get a Myriad test. But it costs $3,200+ dollars, and she can’t afford
it. Jean Duvard [ph?] was diagnosed with breast cancer at 36, at which point she had both breasts removed, double
mastectomy. She had the BRCA test offered by Myriad, but wanted to
+++ 0:09:36.3 +++
confirm the results, because it’s not always accurate before making more decisions about her health. But there is no
second test, because of this patent. These women are three of the claims in AMP versus USPTO, a case in which Breast
Cancer Action is also a claimant. But they represent thousands of women who may carry an inherited risk of breast
cancer or ovarian cancer. There are nearly 200,000 women
+++ 0:10:05.7 +++
diagnosed every year in this country with breast cancer. The estimate is that five to ten percent of those women carry a
mutation of one of these genes. For all of these women gene patents have serious consequences for their health and their
pocketbooks. The patents on the breast cancer genes have inhibited patient access to important information about their
health. They have also restricted research in their understanding the meaning of ambiguous mutations,
+++ 0:10:36.3 +++
which are quite common. These are very large genes. The adverse effect on patients fall most heavily on poor women
and women of color. I’m not suggesting Myriad should not make a profit. But it is a very different thing to profit from
owning a gene than to profit from owning a test. And what they own is a gene. And it’s not just breast cancer genes. Each
of us is made up, as we heard, of many genes. Each of
+++ 0:11:06.3 +++
these genes may be implicated in some disease we’re all going to get sooner or later, folks. I know you might not think so,
but we will. And these genes may interact to affect our risk of disease, and which science is just beginning to understand.
If each gene is patented, and you can only be tested for it by paying for the test for each gene, then cost of gene testing
will be exorbitant, if the cost for breast cancer gene testing is any indication. And research is
+++ 0:11:37.0 +++
seeking licenses to some patent genes. They’ll have to buy a lot of licenses if they hope to understand that combination
of DNA and proteins that will help us understand everything from breast cancer to lung cancer to asthma and on and on.
When the US patents on BRCA 1&2 were issue to Myriad, and we had no experience with the impacts of these kinds of
patents on the lives of patients, or on the research being done to understand breast cancer. More than a decade later,
now we know. We need to learn from that experience, to make sure the law that protects patents
+++ 0:12:17.3 +++
does not harm patients, or people who will become patients. For all these reasons, Breast Cancer Action became a
plaintiff of AMP versus USPTO. We’re an educated in an effort to do whatever it takes. And education is a watchdog of
the breast cancer movement. We take no money from pharma. We don’t take Myriad money. So we can say out loud
what many people have been concerned about for years. Unfortunately, the
+++ 0:12:46.9 +++
kind of new information we provide to patients is inhibited by these patents, because we can’t get the information we’ve
paid to see. I think the absence of other breast cancer organizations in this litigation is a commentary on where we are in
this culture. I’m happy to talk about that at some point, if that’s appropriate. The number of issues raised by the issue of
patents on human genes expands the more you think about it. But it’s important to always remember that
+++ 0:13:18.0 +++
at the end of the day, it’s people’s lives that are affected.
+++ 0:13:22.6 +++
Peter Lee: Thank you. There’s obviously a very strong human dimension to our topic today, and Mark, I want to give you
a chance to respond. Perhaps speak more bluntly about what you see as the role of intellectual property rights in bringing
your products to personalization.
+++ 0:13:35.5 +++
Mark Capone: Sure, I’d be happy to. And thank you, Barbara. I think Barbara makes a number of points. That-- and so
I’m happy to address each of those individually. Obviously, there are two sides to any of these discussions, and I’m happy
to do that. I think my opening comments are about a topic a little broader than that. So we heard some great examples
earlier about cardiovascular. The area that I know most about his cancer. And I think we see in cancer the same sorts of
opportunities in personalized medicine that
+++ 0:14:08.6 +++
we do throughout medicine. As we talked earlier, our healthcare system is probably one of the most inefficient, and
probably the best opportunity we have as a healthcare system to change the cost structure in our inefficient system is
through advances in personalized medicine. Our experience is-- and in fact, in cancer right now the average response to
chemotherapy is about 25 percent. And many of those
+++ 0:14:34.9 +++
drugs may be $60, $70, $80,000. If there was only a 25 percent response rate to those chemotherapy drugs, in addition to
the side effects, which in some cases can be life-threatening. And so you have this incredible need in this patient group,
but you have these chemotherapy drugs that in general don’t work. Now in our lifetime, I am certain in my professional
career, and I’m planning on doing this as long as Joe Paterno
+++ 0:15:03.2 +++
[ph?], so sometime in the next ten years or so, you will be able to do a DNA fingerprint on a tumor tissue and identify the
drug that is most likely to treat that. And it won’t be a 25 percent response rate-- hopefully it will be a 60 or 70 percent
response rate. But as you hear all those words, what’s important to understand is that the investment that was required to
make that happen is extraordinary. We heard $750 million to bring a new drug to market. Here’s what Myriad’s experience
has been, and I don’t think many
+++ 0:15:35.4 +++
actually noticed. It took Myriad $500 million of investment and 13 years before we actually broke even. The company did
not break even until 2008, and we were founded in 1991. So that is the level of investment that was required in order to
bring to light some of these new medicines. Without intellectual property protection, we would have never been able to
make that happen. The good news is the United States is the most
+++ 0:16:08.5 +++
advanced in identifying _______ breast and ovarian cancer patients anywhere in the world. But it really was an enormous
investment to make that happen. Now the problem is there are three environmental forces that are actually making that
equation [ph?] worse. First of all, regulatory requirements appear to be increasing, which will increase the number of
product studies that need to be done. Reimbursement rates are going to come under pressure as we bring 32 million
+++ 0:16:35.0 +++
people into our healthcare system. And then when you couple that with the fact that there was uncertainty around
intellectual property rights, that is going to affect the equation to bring personalized medicine products to the market. And
let me end with a real example. This just happened this past weekend. If you were a patient diagnosed with lung cancer in
its early stage, there’s good and bad with that diagnosis. One, is it’s in the early stage. But the other problem is
+++ 0:17:03.4 +++
that it does not appear that chemotherapy actually works with an early stage lung cancer diagnosis. Now that being the
case, physicians then will choose not to give chemotherapy to early lung cancer patients. However, we know that about
30 percent of those early stage lung cancer patients actually will benefit from chemotherapy, but we have no way of
knowing which is in each category. There was a company who had established a genetic signature that they believed
could dictate which patient fell into which category.
+++ 0:17:36.5 +++
This product looked very good, but it needs significant initial investment before it went to market. It engaged in
discussions with venture capitalists to make that happen. Over a weekend, the venture capitalists pulled out of any
consideration, and it was partly due to the fact of the uncertainty around intellectual property protection for those products.
That company now, in all likelihood is headed towards bankruptcy. And in all likelihood, that signature may not make it to
market, unless somebody
+++ 0:18:05.9 +++
will rescue that at the last stage. Now if you’re a lung cancer patient, an early-stage lung cancer patient, you may never
know that that test could have been on the market, but that test could have added precious lives, precious months to a
lung cancer patient. And that’s important. So when you, as lawyers, write those briefs on these positions, recognize, as
Barbara said, there are patients at the end of this, and these are very important decisions that are being made. And
intellectual property is
+++ 0:18:35.8 +++
going to be very important for us to get some of these personalized medicine products ultimately to the marketplace.
+++ 0:18:42.4 +++
Peter Lee: So along those lines, before we turn to you, universities actually play a very important role in biomedical
research. And in fact, as I understand it, some of the work that actually led to some of Myriad’s patents was performed at
the University of Utah. So let me turn to Clinton now and ask: What do you see as the role of patents, specifically in trying
to bring technology from the university laboratories to the private sector?
+++ 0:19:07.1 +++
Clinton Neagley: So this is a presentation that I give fairly often. It’s usually about an hour in length. <laughter> Peter’s
asked me to do it in five minutes. So I will do my best in that regard. I have seen this from different perspectives in my
career. From the long-term perspective, from the past corporate perspective. But I’m very much a university guy now,
when that wasn’t always the case. So that would be my perspective today. My comments will be general, but they will also
apply to personalized
+++ 0:19:39.8 +++
medicine as a subset of the general. So from the university perspective, there is more than one way to transfer
technology. There are various ways. We don’t patent everything; we don’t license everything. But patenting and licensing
is a very important part of how technology is transferred from the university. So a couple notes at the outset. One, it’s
obvious, but university does not commercialize directly; companies
+++ 0:20:08.2 +++
do. We’re not set up that way. We commercialize indirectly. We need partners. We need licensing arrangements. That’s
how we do tech transfer. So for us, it’s not about patenting, it’s about patenting and licensing. Patenting without licensing
doesn’t further the cause of technology transfer. Secondly, by way of background, there’s a framework in which we
operate at the university. It’s a more complex framework than
+++ 0:20:36.4 +++
certainly I had with the startup company that I was with previously. There’s a matrix of mission and policies and legislative
and regulatory oversight. Each of those is a topic unto itself, probably for another day. But I can tell you the mission that
we operate under, the mission statement, it’s research, education and public benefit that guides us in our patenting and
licensing, it guides us in what we do. Policies? Yes, we have policies. Anybody who’s worked
+++ 0:21:08.6 +++
with the corp against the university knows we have layers and layers of policies. And that’s very much true in the
patenting and licensing area. We have a legislative structure. Most of the funding that comes in for research at UC Davis
is federal funding. So the so-called Bayh-Dole Act federal legislation, whose ____________ you won’t hear, is now three
decades old. By all accounts, it’s been quite successful. It’s the last piece of legislation signed into law by Jimmy
+++ 0:21:34.4 +++
Carter before he stepped down. And it provides us with a basis and a framework, and encourages us to move things to
the marketplace for patenting and licensing when it’s appropriate. There are also regulatory guidelines, including NIH,
which is very much relevant to what we do here in general, and to our discussion today. Guidelines on patenting and
licensing for research tools, for genomic inventions, for genetic tests. So as you say, those are all separate topics,
+++ 0:22:03.9 +++
but if I am so bold as to try to put them all together, I think there’s a common theme here, some commonality guides us in
what we’re encouraged to do and what we try to do, and that is on a case-by-case basis. We patent and we license as
appropriate, as necessary to the extent appropriate. The extent necessary in order to move products, in order to move
research results from the university to the marketplace. To bridge this gap which is also often very extensive, between
earnest stage research and
+++ 0:22:38.8 +++
final products, flowing through research and development and some of these other themes that we’ve touched on. And so
we try to do all that for the public benefit. So how do patents and licensing, being specifically to your question, Peter, how
do patents and licensing further this cause? Again, this is part of a much longer presentation, but if I try to distill it down, I
think of the various ways in which this can happen. There are, perhaps, a couple bundles or categories of ways that all
play. First is to
+++ 0:23:11.0 +++
incentivize. So that’s the basic theme or rationale, the goal and purpose of the patent system, to incentivize inventors and
researchers to invent, of course. And also, and very importantly for university licensing to incentivize companies to take
university research and to move it through what’s sometimes called this “Valley of Death,” to get out to ultimate
+++ 0:23:34.6 +++
commercialization. And very importantly to incentivize investors and funders to allow companies to take the big step to
move the things they can. So this incentive is created through competitive advantage. And that’s what we try to provide
through our licensing program. Second major category of ways in which tech transfer is moved through patenting and
licensing out to the marketplace is it’s more general-- it’s related, but it’s more general, and that’s what we try to do. We
try to create relationships. We try
+++ 0:24:05.4 +++
to connect the university with industry. And we do this through our inventions, which industry is interested in. It leads to a
whole series of types of connections, communication flow, direct referrals, find material flows, collaborations. All of these
are forms and tech transfer as we see it, where technology and information can flow from the university to industry. It can
also be for startup companies, a big part of our mission. And best of all, when it happens, it leads to more funding. The
outside company that
+++ 0:24:39.4 +++
take the license, they track the technology, they fund the work, on an ongoing basis in the professor’s lab. That leads to
more good things. Research results, inventions patents and licensing, and for that and tech transfer, that is what we think
of as “the cycle of life.” So those are some of the ways which patenting and licensing can help.
+++ 0:25:02.7 +++
Peter Lee: All right, so we’ve been talking indirectly about AMP versus USPTO. I think we can’t avoid talking about that
case on this panel. Just to bring some context, I think rather than actually ask either of the litigants, Michael, we’re going
to turn to you, as not part of the litigation, you’re going to set the table. So just very briefly, what are the facts? And
actually, perhaps you can comment on the US Department of Justice most recent brief on that case.
+++ 0:25:27.9 +++
Michael Shuster: Sure, I’d be happy to. Is this on? My cell phone is in here. Let me turn this off. Hello, hello? Yes no?
Good, better? So I’d be happy to speak to those points. I thought what would be also useful was to give a very brief
overview of the case law that’s led up to it in my view. And to that end, I
+++ 0:26:00.1 +++
wanted to talk just about a few number of cases that have wended their way through, because Myriad is in many regards
a second shoe dropping. The first shoe having dropped in a case that came up a number of years ago that is referred to
as Lab Corp versus Metabolite. And Lab Corp broached the question of whether or not if I had a single biomarker, could
that be patentable? The type of claim that Lab Corp concerned was something that we call an assay correlate claim. Lab
Corp was about the discovery. Because the inverse correlation between the level of
+++ 0:26:36.9 +++
amino acid in the body called homocysteine and a Vitamin B12 deficiency. An inverse correlation. So if homocysteine is
high, Vitamin B12 is low. And Vitamin B deficiencies can lead to heart disease and other problems. There were technical
challenges indirectly measuring the vitamin deficiency. And the use of homocysteine as a surrogate for that measurement
proved to be very valuable. The claims that were drafted to cover that, covered both the specific tests
+++ 0:27:06.4 +++
that were done, and in addition there was a generic claim that broadly covered a method diagnosing based upon the
correlation. Two steps, assay and correlate. And that claim was held to be valid and infringed at the trial court level. And
similarly, validated and infringed at the federal circuit, the appellate level. The case went on up on the circuit to the
Supreme Court, and it went up on an issue that had not be briefed below. And that was the 101 issue. And so what the
Supremes did in their infinite wisdom is they took
+++ 0:27:41.0 +++
the case, heard a lot of briefing, and then they dismissed the petition for service that ____________ granted, because
guess what? The 101 issue had not been fully briefed below. But not before Justice Breyer issued a blistering dissent
railing against the proliferation of patents and their adverse impact, in his view, on escalating healthcare costs, and
reducing access. And the concern that he raised was that this really a “law of nature.” Which is a theme that’s been
+++ 0:28:08.8 +++
re-echoed in the Myriad case. And that the basic correlation between homocysteine and Vitamin B is not an invention. It’s
not something that a man or woman made, it was just a discovery. And a physician would necessarily infringe that claim
once they became aware of a basic scientific fact of correlation. So that case wound up in limbo. Because the serve
petition was ultimately dismissed. So let’s fast forward a couple of years to the next 101 case, a case called Bilski.
+++ 0:28:41.3 +++
Bilski also went out to the Supreme Court. Bilski is also a 101 case. Bilski didn’t concern biology. Bilski concerned
hedging. And the question there was whether or not the claim for Bilski, which was also very, very broad, not limited to
any particular method of hedging, was an improper attempt to patent, this time, an “abstract idea,” not a “law of nature,” as
was the case with Lab Corp. The Federal Circuit-- so that
+++ 0:29:12.8 +++
claim didn’t make it out of the patent office. It was appealed and went out ultimately to the Supreme Court, but first
stopped by the Federal Circuit, which held that in order to be patent eligible subject matter, a process has to meet one of
two conditions. It either has to involve a machine, or it has to involve a physical transformation. And it went up to the
Supreme Court, and the Supreme Court said that’s a sufficient, but not necessary, task for patent eligible subject
+++ 0:29:41.7 +++
matter. And one of the things-- there were a couple of different concurrences that came out of the Supreme Court, which
tipped their hat to personalized medicine. And said that the patent laws need to be flexible to take into account developing
technologies which really have a potential to advance technology. So we were left in limbo with regards to the assay
correlate type of claim of Lab Corp; some indication that personalized medicine should be given some sort
+++ 0:30:11.4 +++
of protection; and then there were two life science cases that followed Bilski. I’ll speak very, very briefly, in order to get to
the question regarding Myriad. One was Prometheus [ph?] and the other is Classen [ph?]. These are both now on remand
after the Supreme Court decision. But very briefly, what happened was Classen was a claim that was directed to, very
broadly, determining the incidence of side effects based upon the immunization schedule. Unrestricted with regards to the
type of immunogen,
+++ 0:30:41.7 +++
unrestricted to the type of side effect, unrestricted to the type of schedule. That claim was held to be invalid, because it
didn’t involve a machine or transformation. It’s now back on remand post Bilski’s Supreme Court decision. But you can
think about that claim in terms of document called Preemption. Is that claim so broad that it covers a basic scientific
method? So any time you’re trying to figure out side effect profile as a result of immunization, you’re going to bump into
this claim. And under that document, the claim isn’t valid; my prediction is that
+++ 0:31:14.2 +++
post-Bilski on remand will be held to be valid again. Prometheus, slightly different facts, but it’s interesting because it
highlights a little bit of disingenuous mental gymnastics that’s going on as you try to draw the lines, which admittedly are
very hard to draw. So Prometheus was a claim that was directed to a specific drug, and a way of monitoring toxicity and
adjusting dose, based upon the appearance of the level of the metabolite. So administer the drug, measure the
metabolite, and if the metabolite is too
+++ 0:31:48.2 +++
high, get the adjusted dose down. And again, that was felt to be a transformation, both because of the administration of
the drug. And also because of the administration of the sample, and assaying the sample, for the metabolite. I would
argue if that’s a transformation, so must be injection of an immunogen. The body is transformed by the process. There’s
not a lot of, I think, bright line clear thinking here. So let’s fast forward now to Myriad. Myriad had a couple of different
types of claims. I’ll speak very briefly. One was for the composition claim. Some of those
+++ 0:32:23.3 +++
claims were broad enough to cover isolated genomic DNA that the information content is identical to the gene that occurs
in ____________. And then there were claims, and those claims have been invalidated by Judge Sweda [ph?] in the
Southern District of New York on the basis of the unpatent subject matter, because you’re patenting a product of nature.
And the isolation doesn’t produce a suffi-- it’s a linguistic
+++ 0:32:51.5 +++
trick is the argument-- to make it patentable, doesn’t produce enough substantial difference in the nature of that molecule
by the isolation. There’s not a sufficient difference to render it patentable. And then there are claims that threaten to
____________ risk, which like the Lab Corp claims, they’re assaying and correlating. And those claims have been
rejected as improper, can’t patent the law of nature. So I’ve spoken for a while, but I want to throw out just two things for
us to think about. We’ve heard about the
+++ 0:33:26.1 +++
need for incentivizing investment in order to create technology and get it out of the university and across this “Valley of
Death,” which is a funding gap between the basic science of discovery, and the translational research that’s necessary to
bring it to market. And the question that I pose is Myriad present a wholesale change, an about-face in patent policy. It
has the potential to invalidate and wipe out many,
+++ 0:33:57.5 +++
many patents that reflect probably hundreds of billions of dollars in testing. And the question is: Is this the right way to
address that problem? The problems that Barbara has eluded to are very real. The question, I think, I’ve woven around
the thought is, is it a payer problem, is it an insurance problem, or is it a patent problem? And to the point that Barbara
made earlier with respect to the exorbitant costs that will accrue if people are having to pay test by test
+++ 0:34:26.9 +++
by test. Is there not another solution which doesn’t involve invalidating? Such as creating patent pools, as have been done
in other industries, where you have a thicket of patents that you have to navigate through in order to get a product to
market. With that I’ll turn it over.
+++ 0:34:43.3 +++
Peter Lee: All right, substantially anticipated my next question for Barbara. So obviously, AMP versus USPTO is very
important. Finally, it would be relatively remarkable and chronological to invalidate hosts and hosts of gene patents.
Barbara, we’re going to turn to you. There’re obviously a lot of policy implications as well. So, we’ve heard earlier from a
number of speakers today, it takes X-hundreds of millions of dollars to bring a new product to market. How do you
espouse those concerns? You had mentioned
+++ 0:35:13.7 +++
earlier the distinction between owning a gene and owning the test. And perhaps you can elaborate on that.
+++ 0:35:17.7 +++
Barbara Brenner: Well, I’m not a lawyer anymore. Really. I’m surrendering my BAR card. I think these issues of money
are very real. I also think that if patents are the only way to protect that return, we’re in trouble. Because just everything I
said before, I think patents are going to inhibit-- they have the potential to inhibit research in ways that’s really bad for
patients. So the question of how you get to a
+++ 0:35:54.9 +++
place where the investment is protected-- and I mean, Mark and I could actually argue about the factors that led to taking
13 years to get the turn where you’re profitable. I have some views, too, that maybe balance his. But I think there’s
always investment. It’s way too expensive. Way too expensive. I mean, the speaker you heard before, you heard this
morning was talking about what it takes to get a drug to market. It’s only
+++ 0:36:28.5 +++
when we put drugs in the marketplace that we know both the benefits and the risks. Which is why we’re now seeing drugs
come off the market. So it’s too expensive. We need better ways. Biomarkers may be it, if they’re validated. But I do think
we have to think seriously about how we fund scientific research. And that’s a real problem.
+++ 0:36:56.1 +++
Peter Lee: Thanks, so Mark, I’m going to turn to you, and actually pass you kind of the flip side of the question. It does,
obviously take hundreds of millions of dollars to bring a new drug to market. But what do you actually say to those who
respond by saying, “We want wide access to these patent health technologies, we want consumer access, and we want
patient access. How can one facilitate that given the current economic realities?”
+++ 0:37:21.9 +++
Mark Capone: Yeah, I think a couple comments. One of the things, there’s actually been only two academic studies on
this particular issue, is does patents in some way harm access to these? One of these studies was done by the Health
and Human Services, Secretary’s Advisory committee. The other one was published by Dr. Robert Cardinian [ph?], In
fact, a bullet in the current lawsuit that we’ve referenced. Both of those studies have come to the identical conclusion, a)
that
+++ 0:37:55.4 +++
pricing for exclusive genetic tests versus non-exclusive, there’s no difference. I can give you references both of those
papers. So there was no price difference whether or not there were patents involved or not. Secondly, that there was no
difference in access to those whether or not there were patents or not. In fact, what Robert Cardinian said was that the
fact that there was exclusivity with breast cancer genes in the United States probably actually increased access to those
products. The reason he came to those
+++ 0:38:29.6 +++
conclusions are that it takes an enormous amount of investment to get reimbursement. We literally spent hundreds of
millions on that. And right now over 90 percent of patients have access. In fact, the average out-of-pocket cost per patient
is less than $100. And so all of that has been because of an enormous amount of effort. But exclusivity allowed that effort
to go into reimbursement. Now, in the new healthcare system that’s actually going to evolve, I think the most
+++ 0:39:01.2 +++
important thing to ensuring access for patients will be carefully done clinical studies, and economic studies. Which is
actually what we see happening in Europe. So first, we need to show that the diagnostic test works, then we need to show
that the test has a price that lends value to the health economic system. That second piece has not been part of the US
lexicon. We will be will be. So we’re funding health economics and research studies that we think will become a
+++ 0:39:32.9 +++
critical part of the decision making process ultimately in the United States. And I think once you demonstrate that this
diagnostic technology will, in fact, save the healthcare system money, which all the studies on BRCA analysis have
demonstrated, we think it will ultimately provide rather large access for patients in the future. And our belief is that more
and more patients are going to be in a government run program. And so that health economics research will be clear.
+++ 0:40:00.7 +++
Peter Lee: Right, so when get the universities perspective on this-- I was actually very surprised by your comment. So it
seems like the conventional wisdom is that exclusive licenses lead to higher prices. Non-exclusive licensing may actually
lead to more competition, both markets-- it appears the market’s going the other way. And I’m wondering how universities
think about the distinction between exclusive versus non-exclusive licensing.
+++ 0:40:27.4 +++
Mark Capone: Right, it’s a good question. It’s an ongoing question. As I said, we do operate under a framework. The
Bayh-Dole framework, the Regulatory Agency Guideline framework. We look to the specifics, case by case. We look at
the technology. We look at the invention. We look at the market. We look at the gap that has to be bridged, and how best
to do that. We try to tailor things specific to the situation. So no general rules, but some things, some inventions certainly
take much more investment to protect. Yeah,
+++ 0:41:04.6 +++
so drugs, therapeutics. The sort of very large numbers that we’re hearing, that we know about. That’s where exclusivity
can really play an important role. And without it many times things aren’t going to happen. In other areas: testing,
diagnostics, depending on that hurdle that has to be crossed there to actually get to the marketplace, it’s not as high of a
hurdle. And so non-exclusivity is often the way to do it. We can create competitive advantage through non-exclusivity.
There are ways in which we can position
+++ 0:41:41.2 +++
licensees, and we can create those relationships that I was talking about that position the licensees to move things ahead.
So we look at each case. Our default for diagnostics and for testing is non-exclusive. Non-exclusive, unless there’s a
reason that is clear to move things into that exclusive arena. But we’d rather not tie things up unless there’s a need. We’d
rather not contribute to a thicket of patents that could hinder. So it really turns on the nature of
+++ 0:42:13.9 +++
the invention. The nature of the marketplace, the nature of regulatory approval. I think you have those two broad
categories of the extremes of a drug that has to go through the system. Diagnostic, which maybe doesn’t need so much
regulatory approval. And we tend to err in our thinking, and our practice on the side of non-exclusivity for testing and for
diagnostics, and exclusivity when there are genes.
+++ 0:42:41.5 +++
Peter Lee: So I want to end by asking, of course, the big question: What’s the solution? And so Michael, let me start with
you. So on one hand, you have this very important principle that we want companies to be able to earn return investment,
because they do bring these wonderful products to market. On the other hand, of course, there are concerns about patient
access, affordability, to these new medicines in the personalized medicine era. So Michael, you’d actually mentioned that
perhaps there are other elements of patent law which may be important to kind of maneuver
+++ 0:43:11.7 +++
here. What’s your sense of, you know, whether or not patent _______ really is the right leverage for addressing this issue,
or is there some other leverage you can point to?
+++ 0:43:21.1 +++
Michael Shuster: Well, I think it’s just one of the tools that I think that point that George [ph?] made during the opening
is a really important valid one, which is the uncertainty that is being created by the kind, one-on-one communication, has
the very real potential to undermine investment in investment in industry. And that’s a point that I think we can think
seriously about, is seeing their potential for personalized medicine to make tremendous advances, both in quality of care,
and reducing its costs is
+++ 0:43:56.2 +++
very real. My personal view is that it’s problematic to engineer a wholesale change in a law, because very far-reaching
consequences and upsets settled expectations which have been the law of the land for two decades. That said, there are
very well problems that have been pointed out in the Myriad suit. My bottom line view is that I don’t think it’s a patent law
issue. I think it’s a payer issue. I think that
+++ 0:44:36.7 +++
there are other solutions other than engineering a pretty dramatic change in the patent law. We’re dealing with a very valid
concern that has been raised in the past.
Peter Lee: All right, so Barbara, same question to you: How do we actually resolve this question?
+++ 0:44:49.9 +++
Barbara Brenner: Well, I want to go back to a question you’d asked before. Patenting. If you patents, patent tests, then
you return to the inventor, he gives access to the public, and the genes stay in the public realm. I think that’s a little step. I
can’t address the patent law issues, and I’m not gonna. But I do think we can think about this differently. In, I think it was
August of this year, Myriad in Australia has been sued, again for their
+++ 0:45:25.9 +++
patents on breast cancer genes. And has offered to the people of Australia to surrender their rights in the gene patent. So
if it can be done in Australia, it can be done here. Protect the patents on the tests, not on the genes.
Peter Lee: Mark, any final thoughts?
+++ 0:45:48.0 +++
Michael Shuster: Sure, that was a faction for Australia. Actually, it was one of four patents. And it looks like they actually
didn’t want that patent back, so we may be litigating that as well. You can read about that as it goes. I think honestly what
it comes down to is-- there’s a health economics story that has to be told on these tests. I think certainly the issues that
we can discuss that Barbara has are more legislative issues. They’re not patent law. We absolutely agree that it’s far too
clumsy of an
+++ 0:46:16.9 +++
instrument to use. And that the content and consequences of trying to use patent law in trying to address this are going to
potentially squelch what is an incredibly important advance in the healthcare system. Now, what healthcare system can
afford? I think it’s very appropriate for the healthcare system to begin to look at how they’re going they’re going to have
approaches to that. And that will sort this out
+++ 0:46:38.5 +++
if you have a diagnostic test that it’s priced inappropriately for the benefits, it will never get reimbursed, and it will never
be used. And I think there are many, many mechanisms that already exist that will come to bare in the future that will
ensure only things that will give our healthcare system a return on investment, we’d get reimbursed. I think that would be
taken care of. And I would do not that with a patent law! I think the unattended consequences would be severe.
Peter Lee: Thank you. We’ll ask Clinton.
+++ 0:47:08.5 +++
Clinton Neagley: Thank you. So I agree that patent law is not a regulatory tool. I’ve always felt that way. There are other
ways to regulate. Congress, and regulatory agencies. And so I think there should be a distinction between the two.
Secondly, looking ahead to the technology and its advance, it seems to be exploding. But I think over time, some of these
issues, such as isolated DNA and how important will that be, and patent claims for isolated DNA. As we
+++ 0:47:39.3 +++
move forward into whole genome sequencing and computational analysis, and bioinformatics-- and others on the panel
can address this better than I-- but we may move away from the focus right now, which is isolated DNA. And it may not
become so much whether these advances are patent eligible, but as the information is out there more and more in the
public
+++ 0:48:08.9 +++
domain through whole genomes being accessible to everybody, there may be reasons that some of these advances are
not patentable. Not based on basic eligibility, but based on novelty and non-obviousness. Some of these issues may be
focused and perhaps limited as time goes on, is my opinion.
+++ 0:48:28.5 +++
Peter Lee: All right, so I wanted to reserve a lot of time for audience Q & A. We have true experts in the field here. I think
we’ve got about 25 minutes. Any questions from the audience? Yes, sir.
+++ 0:48:38.8 +++
Man 1: It’s an interesting discussion and I enjoyed it. It seemed like someone like the HIV diagnostic genome, that I’m not
here to argue that you own what we claim being the virus is ours, and so when any test that is developed on that virus is
infringing our patent. How do you contrast owning a gene versus owning a patent, as it relates to diagnostic testing?
+++ 0:49:06.6 +++
Michael Shuster: Well, I’ll take that one. I’m more familiar with the HTB [ph?] area with Tyrone [ph?]. And Tyrone did a
bang-up job of patenting very broadly the HTB genome. And those claims were so broad as to reach end-to-end
diagnostic that you could conceive of for doing blood screening or _______ competition diagnosis. And you can find time
has significantly shifted since that time. And what we’ve seen is a gradual contraction of the scope of patent law using
+++ 0:49:50.5 +++
tools other than 101 to try to bring reduced scope to these claims. So that the claims more closely mirror what’s going to
actually reduce the patents. So you know, there’ve been multiple attempts to try to bring the patent system into what some
people believe is better balance that rewards appropriately fundamental
+++ 0:50:20.5 +++
discoveries without providing too much of a roadblock. And obviously, too much is a very loaded phrase. Who knows how
much is too much? But there are attempts other than using 101. Usually through 112, scope issues. Does the scope of my
claim match the scope of my solution? So you know, early on there was less of a
+++ 0:50:48.9 +++
distinction, I think, today, there’s more of a distinction.
Man 1: So as a follow-up, you can count on owning the patent from the ____________ by joining the testing? Or how
would you frame that explanation <inaudible>?
+++ 0:51:06.8 +++
Michael Shuster: So I don’t know factually whether or not that’s correct. I’m not aware of any study. What I do know is
that prior to the time that Tyrone succeeded in solving a very difficult problem, which was isolating and sequencing the
genome the HTB, the blood supply was really unsafe with regards to HTB. And now it’s safe, and those patents are now
expired. It’s a self-mending problem over the long haul, I mean, on a patient-by-patient basis, that are in best work.
Peter Lee: Yes, Camille?
+++ 0:51:47.5 +++
Camille: I think they kind of addressed this a little bit, but it seems like the gene patents are hanging on this verification
thread <inaudible>. And it seems like with new technologies that thread can become thinner and thinner. We had a hard
case to make, and you need the verification board to better apply and isolate these genes. Do you see that that can be a
problem for using-- for being able to claim who has
+++ 0:52:21.9 +++
the genome, and <inaudible>. It sounded like it wasn’t very limited in distributing <inaudible>.
+++ 0:52:33.9 +++
Mark Capone: I’ll take a shot to answer that. There are so many innovations that are having this. Brand new clinic. And I
think it will still be patent in general issues in five years, but I think they’ll look very different than what they look like today.
I mean, George mentioned variations of that theme, which are, what’s a biomarker, depending on when do you stretch
too far. Specifically to what’s going on in the DNA sequencing world. What we’re moving toward is a
+++ 0:53:06.9 +++
situation where the entire genome can be sequenced relatively inexpensively. So let’s put that in context, if you stretch the
entire genome out, it’s six feet long. If you looked at what’s contained in each cell, the DNA is six feet long. If you were to
get what Myriad currently analyzes the BRCA genes, a 100 of those would fit on a single grain of salt. So you’re willing to
technology that can do this for the same price as something we can currently do here. As you go to whole genome
sequencing, there isn’t even an
+++ 0:53:44.8 +++
isolation step involved. And you’ll be reading directly off of DNA that now exists actually in the human body; as opposed to
now, what we analyzed is not the-- the chemical we analyzed does not exist anywhere in nature. It’s fundamentally very
different from what does. And so I think it would be evident in whole genome sequencing, you will see evolutions in patent
+++ 0:54:13.1 +++
law, and patent protection. But I still think there’ll be an ongoing series of challenges like George discussed her earlier. I
think we’re trying to get done with this, but I think it will change.
Peter Lee: Yes?
Man 2: On the health sciences, companies like yours, no doubt-- they wouldn’t contribute a patent, or _______ so tell me
exactly when your findings to <inaudible> costs?
+++ 0:54:45.8 +++
Mark Capone: Yeah, I think it’s obviously very expensive to do one of these clinical studies. Not only the discovery work
in the laboratory, the genetic side of things, but in clinical studies, which is where things are going to get increasingly more
expensive. And ultimately you do that with the hope that at the end of that, you will be able to obtain sufficient
reimbursement to cover all those developing costs. And that’s a risky problem. You don’t know that in advance, and you’re
not sure of the outcome of those clinical studies and laboratory work. But that’s ultimately what you’re hoping is that you
can get
+++ 0:55:19.1 +++
reimbursement, and you will ultimately generate test volume to pay for that. To the extent that that reimbursement is in
question, to the extent that the intellectual property is in question that would allow you to generate sufficient volume to
recover that, that’s when as an investor, you begin to look at that situation and say, “There are better places to put my
money.” And so those are the factors that any investor would consider as they contemplate this. And certainly we do as
well.
Peter Lee: Yes, ____________?
+++ 0:55:59.1 +++
Woman 2: Ms. Brenner, you mentioned the need to rethink the way that we’re funding research. What kind of changes
would you like to see, and do you see them happening any time soon?
+++ 0:56:08.3 +++
Barbara Brenner: The answer to the second question is “No.” <laughter> Breast cancer is my field. There is so much
money in this disease, we don’t know where it went! Why we don’t have answers in 2010, when we’ve poured billions of
dollars into this is a troubling fact. So many of us are thinking about if you look at how-- this doesn’t really address Myriad,
although it may some of its researchers-- if you’ve got somebody
+++ 0:56:45.2 +++
with a good idea, or something that may be a good idea, they have to apply for funding to so many sources, they then
spend all their time applying for money. So if you look at, and you can now-- October’s over. Thank god! Breast Cancer
month, did you notice? We had a campaign called “Think Before You Pink,” I encourage you to think about. But people
publish lists of all the people they’re funding, right? The lists are the same. Everybody’s funding the same people. But the
people doing the applying for money, are spending
+++ 0:57:25.6 +++
too much time looking for money. We fund grants for three years, then they take ten years to develop. We need to rethink.
It’s a bigger discussion. But really we could do it differently.
+++ 0:57:41.8 +++
Peter Lee: <inaudible> Barbara brought in a few ____________ question. So, Clinton, the general topic is funding. As I
mentioned, a lot of NIH funding, a lot of federal funding goes through developing university inventions. You mentioned
_______ a bit earlier. There is a provision for march-in rights. And I’m wonder if you might be able to speak a little bit
about ____________, and march-in rights. And what potential role they might play in this topic.
+++ 0:58:06.7 +++
Clinton Neagley: “Potential” is perhaps the key word there. So yes, my goal creates a framework that didn’t exist before
1980. Before 1980, very few university inventions made their way to the marketplace. So my goal allows the universities
to take title to inventions, to take title to patents, to license those patents. But it does it within a structure and a
+++ 0:58:32.6 +++
framework that tries to make sure that good things happen, and doesn’t sit there. That the university does not elect title, or
does not move ahead with patenting, then trying to revert back into the government. The government has certain
requirements in terms of small businesses and manufacturer in the US. But there also is this one position, which is for
marching in __________. My understanding-- Peter’s an
+++ 0:58:59.1 +++
expert on this-- but my understanding is this provision has never been invoked, or at least not successfully invoked. It’s a
provision that says if the technology that’s gone through the federal funding and is owned by subcontractors, university or
non-profit, if it’s not yet commercialized, then the government can march in and take over that invention and ensure that it
does get commercialized. So, I’m just not aware that it has happened. So it’s a potential, and that’s a way in which
congress and the regulatory agencies could try to get more involved.
+++ 0:59:31.9 +++
But for now, it’s a framework that encourages the fundees to move ahead with collaborations and with the
commercializations and startup companies. All these things we try to do. But I think the government, in fact, has been
pretty hands-off on this. And even when rights are referred back to the government, I don’t know how active, in general,
the government agencies have been in taking the lead on licensing themselves. They’re not positioned to do that.
Peter Lee: Just for some additional context. There have been three positions that have march-in rights at NIH, and
they’ve all been denied?
Michael Shuster: I was involved with both those.
Peter Lee: Oh! Yeah. <laughter> So in the back, please.
+++ 1:00:17.2 +++
Man 4: Mark, you mentioned two studies, which, I guess in one interpretation. First of all, were those your funded
studies? So you mentioned there was presentation access, which you found were not enclosed by working orders
<inaudible>, because when I heard Barbara, you speaking, you’re talking about research or access?
Barbara Brenner: End patient.
+++ 1:00:44.4 +++
Man 4: End patient, that’s right, okay. So one of the issues was the researcher access and the research questions that
were being asked. I wonder whether you would addressed that issue?
+++ 1:00:54.1 +++
Mark Capone: Sure, I would be happy to. In particular, as it relates to BRCA 1&2, there have been over 18,000 scientists
that published over 8,500 papers on BRCA 1&2 genes. They are some who study genes in the history of man. There has
been an enormous amount of research, and in fact, Myriad has contracted with the NCI to do discounted pricing to enable
some of that research. Keep in mind, as a company, to have adoption, it is always in our best
+++ 1:01:26.7 +++
interest to make sure that these are highly researched and highly publicized. And so that’s exactly what we want to make
sure happens. So research on these genes has been extraordinary. I think what’s also interesting is even the plaintiffs on
this on this particular case, have jointly published over 50 papers on BRCA 1 and BRCA 2 genes. And so again, very
highly researched. Myriad has never hindered research. It would not be in our best interest to hinder research.
+++ 1:01:58.6 +++
And we’ve facilitated it, in fact, and collaborated with a number of investigators as well. So I think that’s as least I can
speak with BRCA 1&2.
+++ 1:02:13.3 +++
Barbara Brenner: Can I just say that I think there are people in the research field who-- <inaudible aside to Mark>-- who
will try to get licenses to do particular work for Myriad, unable to do it. It’s not that there isn’t research. Lord knows there
is! Tons of published studies on BRCA 1&2. But there’s still a great deal we do not know.
Peter Lee: Yes?
+++ 1:02:37.1 +++
Man 5: You mentioned the Bayh-Dole Act. And I’m not terribly familiar with the case, but this will be for Mr. Shuster or Mr.
Neagley, the Supreme Court recently granted service for Sanford B. Roche. And I’m just wondering, I guess, how you
think that will affect any of the university’s ability to bring these licenses or
+++ 1:03:03.9 +++
technologies to market. I know you mentioned that sometimes the government, they do claim the inventorship, or I guess,
the assignee that they are avid about going after that. If this will affect the cost overall or...
+++ 1:03:23.9 +++
Clinton Neagley: Sure. If I know Peter Lee, he has a manuscript on this very topic that he’s working on. But let me start
out. So this is a case that concerns ownership of inventions, and ownership of patents. And so there’s a general rule in
the corporate world and the university world that employees assign their rights to their employer. And there’s true with the
university as well. But at the university when there’s federal funding, then the other consideration is that
+++ 1:03:58.0 +++
the university has to elect title from the agencies, from the federal agency. So if the university ends up with title by virtue
that employee agreement, with the employee, the inventor, who initially just for a microsecond has ownership rights,
assigns to the employ of the university. And the university elects title from the federal agency. And that’s an act. I mean,
that’s a step that is actually taken electronically to elect the title. So this is the case
+++ 1:04:30.2 +++
which I did not re-read before this presentation today. But it concerns, as I recall, the very specific wording of the
assignment. It actually gets down to contract language as whether something is granted, or will be granted, and hereby
granted. And there was a conflict between two different provisions, where there was an assignment to an outside
company by the inventor in the best possible hereby language, and the assignment to the university was perhaps and not
+++ 1:05:04.0 +++
totally clear language as to whether it was at that point in time or later. So I think the court had to decide which prevailed.
Which assignment prevailed. Because there was a clear conflict. Usually that is not the case. I can tell you parenthetically
that a lot of universities, including UC, are taking another look, a closer look at the assigning language they have from
their employees to make sure that it’s the optimum language that will allow the university to
+++ 1:05:32.9 +++
hold onto the title. So it’s interesting to me that the Supreme Court is taking this one. In many ways it’s a contract case,
and we’ll see what comes out of it. But I think it’s also the rare situation where you have a conflict between assignment
costs and systems. Does anyone want to suggest whether I’ve gotten that one fairly correct?
Michael Shuster: <inaudible>
Peter Lee: Yes?
+++ 1:05:58.5 +++
Man 6: One of the things that was mentioned is the possibility of forming patent pools. And I know that these are fairly
common, like the electronic parts. What are some of the challenges that are faced in forming patent pools in the
licensing? Or as a big topic.
+++ 1:06:16.1 +++
Michael Shuster: Yeah, I’ll be happy to deal with that. Action associaters is the first one. The distribution of royalties is
the second. And the fact that it’s not mandatory that you hop in, that’s the third. And I think those are sort of the three big
issues that need to be brought, but if that approach is more important. I think it’s an approach whose time has come. In
life science I think you wind up with there’s tragedy at the end that comes, unless that happens. So I don’t see my way
clear to another
+++ 1:06:56.6 +++
solution other than the fact that only 20 percent of the genes are patented. The rest, you’re probably aren’t going to get
any patents, or the remainder are going to expire. So in some ____________ that kind of problem is self-limiting, but
undoubtedly there are other problems that are going to crop up in which those can be a very effective solutions.
+++ 1:07:16.2 +++
Clinton Neagley: And I’ve seen firsthand one of the aspects of the challenges there, and that is the reactivation energy
to get everybody onboard to work out what can be a series of agreements. When I was with my law firm in New York, I
was involved in a project for the federal government for USAID and their contract with AID, and so they were funding the
development of a malaria vaccine at multiple centers. So whoever is the malaria expert here could explain
+++ 1:07:45.9 +++
that there are several stages to this parasite, and to have an effective vaccine, it would have to be effective against each
of those stages, so it needed to be a cocktail. And so there was work to put in place a pool where these different entities
with their different patent rights to the different stages of the malaria parasite would work together in pool. And it’s just-it’s an ideal gas theory. Three balls never
+++ 1:08:14.9 +++
intersect simultaneously. Three gas atoms. And it’s very hard to complete agreements with two parties. With three parties,
it’s really a challenge. And if you get up to multiplex parties, that’s very difficult. So the second example is the Pifer [ph?]
program at UC Davis that some of you know about. A great program and a great mission. And part of it in applying
molecular biology area where there’s so many
+++ 1:08:38.6 +++
patents, is to somehow come up with an arrangement where these rights can be pooled in some fashion and made
available. Contractually, it’s just really a challenge to get all these parties to agree on the same set of language. Terms
that before you know it a key player has left from that entity, and you have to start over. So that’s a real practical problem
that I saw in pooling.
+++ 1:08:59.9 +++
Barbara Brenner: And let me add, don’t worry, there’s work. So the gene patents expire. There’ll be proteins. After the
proteins, it’ll be snips. We’re always hoping for the next thing. And your work will matter!
Peter Lee: Any more questions? Yeah, Camille?
+++ 1:09:20.8 +++
Camille: So back to the Myriad case, it sounds like it was about the <inaudible> to confirms, and the Supreme Court was
concerned with ____________ patent genes as far as the <inaudible> that sort of upturned the whole biotech industry,
and is gonna be <inaudible>. I’m not clear whether it’s really whether the gene has an assembly completely
____________. They
+++ 1:09:50.6 +++
might not be some of the foundation of the biotech industry. So what kind of effect on the ground can it really have on
biotech, if biotech confirms?
Michael Shuster: Not good.
Camille: Not good?
Michael Shuster: Not good.
Camille: So what percentage of <inaudible> based on the gene patents for?
+++ 1:10:13.3 +++
Michael Shuster: I think the question is broader than that. It may well be the case that upsetting the apple cart, we can
go at it too specific links on gene patents as a <inaudible> reminder, your ____________ that. But it’s the notion of
wholesale shifts, dramatic shifts in the direction of patent law and the potential with that uncertainty, post-law investment
where I think is the real future.
Barbara Brenner: So you’re talking about the <inaudible>.
Michael Shuster: The parade of marbles based on <inaudible>.
Barbara Brenner: Yeah, but keep investors [ph?].
Michael Shuster: Yes, exactly.
+++ 1:10:57.4 +++
Peter Lee: Any last questions? Okay, well, we thank our panel for a very <inaudible>.<applause>End of Panel1.mov
Panel II: Issues for Entrepreneurs in the Nascent Industry
+++ 0:00:28.3 +++
David Bell: All right, we better go ahead and get started so we don’t get too far behind on the clock. So I hope you were
all able to enjoy Kathleen Rolls [ph?] keynote speech. Our second panel today is issues for entrepreneurs in the nascent
interest [ph?] industry. Unfortunately Steve Graham [ph?], one of my partners, was meant to moderate the panel but I will
be playing the role of Steve Graham. I hope I can pull that off well. So rather than introducing myself, yet
+++ 0:00:58.7 +++
again, why don’t I go ahead and introduce the panel. First to my right here is Garrett Vygantas who is a healthcare
entrepreneur and investor with adverse experience based across a number of roles. He’s currently an entrepreneur-inresidence in the life science venture capital group at Burrill and Company where he is involved in the personalized
medicine opportunity investment decisions and portfolio company boards. Garrett founded and leads the business
+++ 0:01:31.9 +++
development and strategy for NewBridge Pharmaceuticals, a specialty pharma, med tech and diagnostics company which
is based on Dubai, focused on personalizing innovative therapies across the emerging markets of the Middle East, Africa
and Turkey. Previously Garrett worked at Genentech and Cowen and Company. He received a WA and MD degrees
from Georgetown University and completed his residency training at the University of Pennsylvania.
+++ 0:01:59.9 +++
Immediately to his right is Marc Hellerstein. Marc is the co-founder and director and chairman of the scientific advisory
board of KineMed, a translational medicine and personalized medicine company which was founded in 2001. His major
research interest has been in the regulation of metabolic pathway fluxes and the control of disease modifying metabolic
networks in vivo. He joined UC Berkeley in 1987 and now occupies
+++ 0:02:34.6 +++
the role of co-founder and chairman of the scientific advisory board. Marc maintains joint appointments at the University
of California San Francisco, San Francisco General Hospital and in nutritional sciences at the University of California
Berkeley. He has advised numerous pharmaceutical companies including Abbott Laboratories, Entelos, Agouron
Pharmaceuticals, Bayer, Genentech, Parke Davis, Pfizer and Warner
+++ 0:03:00.0 +++
Lambert. Those are certainly some of the biggest names in medicine. Marc completed medical training at Yale Medical
School and a Ph.D. in nutritional biochemistry from MIT. And certainly not least, the last to my right is Rowan Chapman.
Rowan joined Mohr Davidow, she’s a venture capitalist. For those of you that don’t know Mohr Davidow one of the
premier venture capital firms in Silicon Valley, in the Bay Area. She
+++ 0:03:32.7 +++
joined Mohr Davidow in 2001. Was the first dedicated member of the life science investment team. Now serves as a
partner. Her particular interest lies in the translation of complex data and the technology innovator products that impact
drug and biofuel discovery, personalized medicine and healthcare decision-making. Rowan is a board member of
VitaPath Genetics and a board observer of Artemis Health, Pacific Biosciences, Adamas Pharmaceuticals, CardioDx and
Tethys Medicines. Prior to joining Mohr Davidow,
+++ 0:04:06.8 +++
Rowan was an early employee at Rosetta Inpharmatics where she held the position of director of business development.
Previously, Rowan held the position of marketing manager of Incyte Genomics. Rowan also holds a Ph.D. in cellular and
molecular biology for the MRC laboratory, molecular biology at Cambridge University where she also earned a Bachelor’s
degree with first honors in biochemistry. So now that I’ve introduced
+++ 0:04:35.8 +++
the panel, I’ll start with Marc Hellerstein. Marc, if you could tell us a little bit about the background of KineMed, how it got
started, what was the market need or initiative you saw that you were trying to fill? And did you see any competitors or
comparable entities when you were getting started?
Marc Hellerstein: Sure. Is there <inaudible>?
David Bell: I don’t know. The mikes are on. Can anybody hear me?
Marc Hellerstein: <inaudible>.
David Bell: The acoustics are reasonably good.
+++ 0:05:09.2 +++
Marc Hellerstein: So I’ve been academics for <inaudible> almost 25 years. And it always struck me that we are so-- that
there’s a paradox in contemporary biomedicine. We’re so good at understanding all of the components of the complex
living systems are so bad [ph?], and so inadequately that they are effectively controlling their behavior. This is the
paradox <inaudible> as well <inaudible>. It’s also true <inaudible> doing well in the last 20
+++ 0:05:42.2 +++
years in the diseases that people get. For all its complex <inaudible>. And <inaudible> and common for a reason
<inaudible> to it. So genetics <inaudible>. I came from MIT, CSF and Yale and everybody was molecular biologist. And
yet when I would be in the intensive care unit really were good. We keep [ph?] people alive way too long because we
have a lot dials
+++ 0:06:15.2 +++
to turn, Blood pressure, <inaudible> pressure, cardiogram, TO2 and their X-ray and their blood cultures and <inaudible>.
You can dial everything just so to keep people going. And yet we have all of this fundamental knowledge <inaudible> we
don't have those dials, we don’t have those tools for actually getting from here to there <inaudible>. And so that was
prediction, and really over the last 15 years in which it’s sad but true how that this is the worst
+++ 0:06:50.1 +++
time, it’s not a good time for health. It’s the slowest time in pharmaceuticals in actually since the 1940s, really. So that’s
the background and context. It’s a slow time in pharmaceuticals. <inaudible> understanding all of these pieces. And so
what I started doing about 15 years ago was thinking about ways to actually navigate molecules to diseases. So
+++ 0:07:21.9 +++
it’s like they don’t drive blind. If you think about anything you actually do in life you watch what you do, and you do it in
good time and you never get the result. And you always have little metrics on how to get there. You don’t close your
eyes. I live in Berkeley but I work in San Francisco and I’m driving down the street and close my eyes and hope I don’t hit
the tree and then try again. You actually have a car
+++ 0:07:46.9 +++
to drive through the city of San Francisco and a computer can’t <inaudible> what does she have that the computer ain't
got, and that’s the vision. She can see where she’s going. She can buy [ph?] simple feedback steering, brakes, etc. And
so that’s what we don’t have and the thing we care about most, the most complicated and important thing we do most of
the time which is stay alive treating disease. And so that’s all of the background. And so that was the need we
+++ 0:08:16.5 +++
were trying to fill, we started this company about nine years ago. Develop tests that are actually causal [ph?] and predict
tell you information you can actually use for chronic uses for the use of development of medicines, not chemicals, but
medicines <inaudible>, not just <inaudible> probably what most drug companies, it's all they're working on. So we
+++ 0:08:45.2 +++
tried to give ways of advancing medicine and understanding diseases in a really functional common [ph?] way. And
develop a series of-- a platform for doing that <inaudible>. So that was the need, was there another question?
+++ 0:09:01.6 +++
David Bell: So I guess you talked a bit about marketing, maybe you could tell us a little bit about what is the set of tools
that you guys have developed and where they came from and the history of that.
+++ 0:09:15.6 +++
Marc Hellerstein: So I don't know if you care about the idea of our discovery <inaudible>. So my uncle was with a
cardiologist and he told me this story of the early years in Cleveland when people like this guy named Soames [ph?] put a
barometer in his heart, a catheter <inaudible> his heart and injected dye <inaudible> and by coincidence-- that’s how
people did research in 1952. And by coincidence <inaudible> lit up the whole heart and he said oh we can do
+++ 0:09:49.1 +++
angiography, we can see whether people have vessels. But no one did that for 10 years. He just did it in dogs. Because
who would be crazy enough to put a catheter in the heart. So suddenly some people in the early ‘60s said wait a minute,
let’s do that. There’s not a research tool for dogs, you could do it in people. And within five years there was a cardio, a
_______ suite, and a whole subspecialty <inaudible>. And so that’s the analogy. And in my field with metabolic regulation
and technology and nutrition
+++ 0:10:20.2 +++
people were measuring the same thing 100 times albumin synthesis, glucose use. Everybody <inaudible>. I mean
because there’s research they’re using <inaudible>. And that thing I heard about this guy back in the 1950s kind of was in
my head. I was thinking we need the dials [ph?] for chronic disease just so that we have the medicine. And it struck me
that the research, fancy <inaudible> applied to diseases that
+++ 0:10:53.1 +++
people get which is not <inaudible> which is cancer, obesity, and cirrhosis of the liver and Parkinson’s disease and
Alzheimer’s. So with that in mind of <inaudible> developed in a laboratory and then <inaudible> a series of tests and it
was a very, very powerful <inaudible> using non-radioactive tags. And
+++ 0:11:20.2 +++
actually, measuring that the processes that drive illness, that drive diseases <inaudible>.
+++ 0:11:28.5 +++
David Bell: So you had that idea and you realized you could actually build that into a business. So how did KineMed get
started? Where did the money come from? How much money was needed to get something?
Marc Hellerstein: That’s a great question. An analogy might be I don’t know half a matrix or other tools that companies
that are used by most drug companies for the development of drugs. <inaudible> in raising money. So we did raise money
from angel investors <inaudible> largely from _______. And <inaudible>.
+++ 0:12:18.8 +++
David Bell: And what was the process by which you did that? And what were the challenges you found in raising
money? You mentioned <inaudible> was the big one.
+++ 0:12:27.1 +++
Marc Hellerstein: Yeah, I think the biggest challenge is explaining <inaudible>. And if you really have something good-I mean if you watch this move about “The Social Network” when you really have something good you don’t want to share
too much. And, I think, that’s the biggest challenge I found. Is that we’ve got many opportunities to see <inaudible> the
tool and then <inaudible> but that’s not what the whole <inaudible>. And so, I think, the basic issue for us is not selling
yourself short.
David Bell: So you view it as the tools are what’s valuable, not the drugs that you happen to be developing to
<inaudible>.
+++ 0:13:06.3 +++
Marc Hellerstein: Exactly right. The drugs are what most people are used to valuing. And, so I think, from a system’s
perspective, there’s chemist’s [ph?] roles and then there’s chemistry and biology. Modern drug companies have focused
almost all of their innovation on new chemistry high throughput assays, <inaudible> chemistry screening techniques. But
the problem with <inaudible> is not. It’s way too
+++ 0:13:34.4 +++
<inaudible>. The problem is attrition, almost all of these targets fail. There’s way worse attrition in health now than there
was 30 years ago. People use <inaudible> because these targets don’t predict outcomes. It’s a very complex network
and highly unpredictable. So I see that the next generation of technology is going to take all of these multiple targets that
are a dime a dozen. The important thing to <inaudible> but there’s so many of them and to
+++ 0:14:07.8 +++
find, to filter each one will actually work. So I see that just as much in technology for a drug development as a <inaudible>.
But when people pay, companies pay $500 million dollars worth of chemistry but they’re just not used to paying money
thinking about <inaudible>.
+++ 0:14:25.8 +++
David Bell: So maybe picking up from there, maybe you could talk a little bit generally about funding starter companies in
this area and the kinds of money that are needed, especially <inaudible> company or things along those lines. And then
maybe talk a little bit about how you make investment decisions and what are the factors you’d take into consideration
when you think about becoming an investor.
+++ 0:14:56.4 +++
Rowan Chapman: Certainly. Before I answer that precise question I just want to lay out a framework so that when I talk
about a particular kind of company I can <inaudible> for people. So I think the purpose of today is really to talk about from
data to decision. So you start off by pulling data together which is many different technologies which have absolutely
tremendous amount of innovation over the last 15 years. There’s data so we invest in certain companies just in producing
[ph?] data. And that data
+++ 0:15:26.9 +++
comes to information which is really the opposite of data and you can just think of it as a set of ones and zeroes, digital
ones and zeroes in a computer some place. Imagine that data has gone from megabytes to exabytes just in the last 10
years. You have data which then leads you to knowledge. We have data. How do you get knowledge from data and
information? That’s a whole other question which, I think, is part of what you were talking about is introducing data and
+++ 0:15:53.6 +++
trying to get the knowledge from that. So there’s a whole set of companies <inaudible> that kind of area. And these are
all very different business model with different amounts of money required to turn these into companies. Which actually
gets then to decision which is what does the individual or what does the doctor do with that information and that
knowledge to make the decision which is, I think, what Kathleen was talking about it at lunch time is how are people going
to make decisions to move this data to knowledge? So in terms
+++ 0:16:23.0 +++
of talking about the kinds of companies and how we think about investing just on the data production there’s a whole set
of tools and technologies. Is it something that’s going to allow all of our genome in this room to get sequenced for $1,000
each? And then give you a-- this makes me feel old but when I got my Ph.D. I sequenced things by hand. Even yeast
wasn’t sequenced. I was pipetttting [ph?] away doing the sequencing by hand and Ph.D. thesis was sequencing one
+++ 0:16:53.0 +++
gene. Now, that’s something my child could do it in five minutes, just to give you an example. And we have machines
which are producing unimaginable quantities of data right now. Right now, you have a human genome can be sequenced
in a matter of days versus the first successful map took 10 or 15 years to sequence. To invest in that kind of company and
so when somebody comes and asks us to invest and we obviously go through the process of saying, what is it about the
+++ 0:17:27.9 +++
technology? Is it just faster or better? Or is it allowing people to do something they could never do before? And we ask
about the intellectual property and trying to figure out how much money is it going to take to get this to market. Some
companies require a small amount of money, some companies require a large amount of money. But there are
tremendous opportunities. One company that we invested in when it was just three people out of the University of Cornell
and it actually went public last week, Pacific BioSciences and now has a $500 million [ph?] market
+++ 0:17:58.6 +++
cap. So we invested very early on but that’s some place where we can make money. We move to the middle part which
is really so you have all of these floating technologies and DNA sequencing or protein and R&A. But what about the
companies that are trying to get information and knowledge out of that? We’ve invested in a whole series of companies
which are I would call them personalized medicine groups. It’s classic personalized medicine companies. They’re taking
some kind of technology and producing some kind of data and
+++ 0:18:29.5 +++
trying to turn it into knowledge using molecular diagnostics. It’s a bit like the Genomic Health which Kathleen mentioned
at lunch time. I’ll give you an example. So Artemis Health is taking <inaudible> DNA in the blood of a pregnant woman at
eight weeks of pregnancy and be able to tell you about that fetus of that woman which is tremendous. You can take that
data and turn it into knowledge. Another example is Crescendo BioSciences. They’ll take the blood of a
+++ 0:18:59.9 +++
person who has rheumatoid arthritis which is a devastating and expensive disease and say, oh yes, this person is about
to have a flare. You better change the treatment and make sure the person doesn’t have a flare because I don’t know if
any of you know someone who has rheumatoid arthritis but a flare is completely debilitating. And each flare, it’s a chronic
conditions, so each flare makes you worse and worse. And another example is Tethys Biosciences. So you’ve probably
all heard about the obesity epidemic
+++ 0:19:31.7 +++
that’s happening in America. Well, if you have a BMI of 25 or above, you have a six percent chance of developing
diabetes in your life. But none of us can tell by looking at the myriad of people with a BMI of 25 and say well, I think that
person is going to develop diabetes. The same is true for a doctor. They don’t know what to do with that. This blood test
tells them which one of those folks has got a ten-fold
+++ 0:19:57.7 +++
increased risk of developing diabetes. The doctor can focus and say, you know, you can prevent diabetes, you can
change your diet, you can change your exercise. You don’t have to have diabetes which leads to terrible complications.
These are examples of personalized medicine. But then it moves down to decision making. All of these personalized
medicine companies are designed to inform a decision. We only invest in companies that can inform a decision. So
+++ 0:20:22.6 +++
there’s plenty of companies that come to us and say we can develop that data and that knowledge and I always say to
them what decision are you informing, why does the doctor care, why does that payer care and why does the individual
care? Hopefully, that answers your questions.
+++ 0:20:38.5 +++
David Bell: Sure. So maybe you could give a sense of the scale of the kind of <inaudible> some of the first group of
companies that were sort of information gathering type companies, some of those could probably be pretty capital
intensive if they’re doing things like building a chip or doing something like that. As opposed to some of the others might
just be more a limited research and development project to develop-- to give you some sense of what
+++ 0:21:11.5 +++
information you can get in an algorithm you ran. Not as perhaps <inaudible> capital intensive. So maybe you could tell us
a little about the characteristics of those. And a little bit about the lifecycles of those kinds of companies and how you think
about it. We heard a little earlier about sort of the valley of death between sort of an idea in early funding and getting to
commercialization or some kind of liquidity
+++ 0:21:35.3 +++
that really matters to investors because they think you’re investing to get a return at some point.
+++ 0:21:41.6 +++
Rowan Chapman: I’m going to start with the classic personalized medicine companies that I talked about. They normally
come to us to say well this is what we’re trying to do. This is the question we are trying to answer. And as I say we’ll only
really spend much time talking to them if we believe there’s a decision and an action will be taken. And they come to us
at many different stages. Let’s say this is a really early stage one, straight out of the university, like there’s somebody out
of the University of Davis biology department who says I think I found a pattern based on my microchip [ph?] that’s going
to let’s say
+++ 0:22:13.7 +++
inform a cardiologist whether this person is likely to have a heart attack. I’m just making this up. I’m just making this up.
The first thing we’ll say to him is okay where are you and what data do you? And do you have any IP filed? And then we’ll
say what you need to do next? The first thing you need to do is take that research project and really make sure that first
we have it by platform. That might take a million, two million dollars to really QA, QC and
+++ 0:22:46.3 +++
standardize and just make sure that they say it includes a very useful test, just in the lab, just on the technology. That’s
important because the next stage is really getting them to use human samples. And one thing that-- and Kathleen’s lunch
was great because she set it all up for this afternoon, but she talked a little bit about being able to use human samples
and restrospective samples. Quite often you’re going to with a heart attack, you don’t know if it’s going to come in one
year or two years. And you can’t just start and wait for all
+++ 0:23:16.3 +++
of the heart attacks to happen. So you have to make sure that you have thousands of samples stored in a bank that’s
often being collected in some kind of university environment. Do you have to license those samples in? And make sure
you have enough of those samples and then run your very reproducible test across thousands and thousands of samples.
But depending on the decisions that needs to get made this can be of widely varying costs. So if it’s a cancer decision, it
might be a very small number of samples. It may only be 100 samples, 50
+++ 0:23:47.5 +++
cases and 50 controls. In the case of heart disease this might be tens of thousands of samples to figure out because it all
depends on how prevalent that disease is in the population. And how easily defined the phenotype or the characteristic of
that disease is. So to get things statistically significant you really have to plan all this out, plan out those studies. So
thousands of samples is way more expensive to get [ph?] than hundreds of samples. That’s step one. <inaudible>
fantastic you have a test that has a sensitivity and specificity of
+++ 0:24:24.6 +++
80 percent which means they’re right about 80 percent of the time. That’s pretty good for a test. These two guys are
MDs. They know about funding to do this. Well, what if that population was all Caucasian? All let’s say male, 50,
Caucasian. Who do you think that can test can only be done on now, male, 50, Caucasian. If you want it to be a broader
test then you have to get a other set of samples and take the answer you are
+++ 0:24:57.5 +++
<inaudible> and run again a whole other set of samples and a whole other set of samples. So it all depends on what your
value position is on how many of these different sets of clinical samples you have to <inaudible>. So that may be close to
$20 million to $30 million by the time all is said and done. It may cost $5 million dollars but it all depends on the statistics.
David Bell: And that’s before commercialization.
+++ 0:25:20.9 +++
Rowan Chapman: This is all before commercialization. Oh yes, this is all before commercialization. And then let’s say
you’ve done fantastically and you’ve done three or four clinical studies hopefully retrospectively collected so that it’s just
the time and money of running the test and doing the analysis and doing the statistics. It’s not the case of going out and
collecting new samples which some people have to do. So you have that set of data. Then you’ve got the whole set of
money that needs to get spent. Some
+++ 0:25:46.6 +++
of it overlapping, you don’t want to spend too much at the same time because you’re a startup. So really in terms of
figuring out the regulatory [ph?] side, the publication side, are you publishing right things? Are you filing the right IP? Are
you working with the appropriate regulating agencies to make sure that when you sell this test it’s going to fit with the laws
<inaudible>? That’s a whole other set of money. Then you have marketing. So these are the kind
+++ 0:26:14.8 +++
of things. This is my job. This is what I do every day I ask these companies, so how are you going to sell the test in your
space? Two different kinds of tests, let’s say you have a test that is for women seeking fertility help. Three hundred fifty
clinics in the U.S. Okay. A sales force with 350 customers. That’s quite imaginable. I can imagine how you can build a
sales force for that. Compared to family care physicians. How many family care physicians are there in the U.S.? A lot. A
lot. And when you’re
+++ 0:26:51.1 +++
paying a salesperson hundreds of thousands of dollars a year, because that’s what a salesperson makes, that’s a lot of
people. So you better be able to have a test that sells to price [ph?], that you can actually have the effective sales
channel. Maybe in that case you don’t need a sales force. Maybe in the case you actually work <inaudible>. This is a
business model question which, again, is a whole other set of money. And then hopefully you launch your test and are
going to be successful but you still have the support. So the answer, sorry, that was
+++ 0:27:19.6 +++
fairly long-winded, the answer can be anywhere from 50 million in some of these companies to 150 million.
David Bell: And over what kind of period of time?
Rowan Chapman: Well, the fastest company that I’ve seen in this space is a company that came to us with an idea a
year-and-a-half ago and they’re launching a test in March. So that’s <inaudible> and that’s pretty good. And I’ve also seen
companies that take 10 years.
+++ 0:27:49.7 +++
David Bell: And each of those companies <inaudible>. It’s a good investment decision probably at each of those stages
because you’re making a decision based on the information gathered in the prior stage and those companies may not
make it through each of those phases because of what's coming next.
+++ 0:28:09.6 +++
Rowan Chapman: So what you’re teasing at is when do you get what venture capitalist and how much money do they
invest at any stage? I think once a venture capitalist has supported a company and is on the board of a company, they
have a fiduciary responsibility to that company to raise money. That’s the responsibility as a board member. So what you
really want to do is
+++ 0:28:34.1 +++
make sure that the company sets the right milestones to enable further investment. And that’s our job is to make sure they
get further investment. And some of that investment comes from us and some of it comes from other venture capital
companies or partners. So there’s a whole set of strategic partners that also invest into it.
+++ 0:28:54.5 +++
David Bell: So Garrett, maybe you can tell us, you know, it’s clear that third generation sequencing technologies
obviously generate incredibly greater <inaudible> than is currently available. Where is the customer need the greatest? Is
it in bioinformatics products that can manager all of this data or is it the development of products that can apply the
<inaudible> data? Or is it somebody else, a combination, where do you see a lot of this going?
+++ 0:29:28.8 +++
Garrett Vygantas: Well, that’s a very specific question and before we can get into that specific platform third generation
sequencing, I want to say, how pleased I am that was able to drag Dr. Chapman here. She presented that very
eloquently and articulated basically the life of a VC that invests in the personalized medicine space. One word since
we’re on the law school campus U.C. Davis I learned one word
+++ 0:29:55.1 +++
today from Kathleen’s speech which was botology [ph?]? What was the word?<overlapping conversation>
Rowan Chapman: Ontology.
+++ 0:30:03.6 +++
Garrett Vygantas: Ontology. Right. But one word I want to leave with you is validation and that’s a big part of what Dr.
Chapman was describing. There’s technical validation which is what the third generation sequencing companies are all
focused on right now. There is clinical validation. Does your biomarker set, does your data apply to the biology as we
know it or systems biology as we know it. There is a commercial validation, both on the regulatory side
+++ 0:30:34.4 +++
and your reimbursement side. Will Aetna [ph?], will whoever was listed on the partnership on the PHIT, that consortium
and will they pay for the actual test itself? And then last but not least, how does that test or product play to the physicians
who might adopt it and the patients who are the ultimate beneficiaries of it? Does it all make sense? So there’s validation
along all of those pathways and varying degrees of
+++ 0:31:06.9 +++
investment that goes in that. And there’s varying degrees of skill sets that are required to get from one end to another. So
I’m currently an entrepreneur but I was sitting on the venture capital side of the table for four years kind of managing the
same questions that Dr. Chapman just described here. And actually Dr. Hellerstein also described in kind of his vision for
KineMed and the issue, the tension that entrepreneurs had is understanding how to at the same
+++ 0:31:34.5 +++
time think big and then think now in terms of what are the very next things I have to do for the board to understand my
value-build proposition. And, I think, that’s where really the challenge is for the entrepreneur. You know, have a really
large vision for the company but at the same time get to those de-risking milestones that create value for everyone around
the table. So, I think, the third generation sequencing is part of that whole ecosystem right now. It’s better, quicker, faster,
cheaper. How do you get enough-- and even third generation sequencing has had
+++ 0:32:16.2 +++
some successes from an investment point of view. Ion Torrent was recently acquired by Life Technologies for a whopping
700 million after less than 30 million was invested in the company. A phenomenal success there. Really Life
Technologies is a big player in the space, recognizing that they have to try to leapfrog some of these existing
technologies. And really maintain their position in the product offering space that they are able to do. So yeah, that’s
basically my statement there.
+++ 0:32:53.7 +++
David Bell: So going back to my original question, when you think of the third generation technologies or other
technologies that are in sort of a <inaudible> where do you think-- what do you think are the big problems that are still
being solved? And what do you think are the biggest challenges to governing [ph?] that space as they’re trying to move
forward?
+++ 0:33:19.7 +++
Garrett Vygantas: I think one of the biggest problems is in integrating all of the data so from a systems biology point of
view. I have a hard time imagining how a company that kind of too broadly looks at their product offering is able to really
move one or two focal points along. So Dr. Lee Hood [ph?] up in Seattle has established an entire Institute for Systems
Biology. And from that institute he’s able to work on kind of side projects. And one company that was quite interesting is
called Indirect Diagnostics [ph?], ND [ph?]. That was a company that had a
+++ 0:33:58.3 +++
specific task of looking at blood proteins to predict outcome patterns [ph?]. And so you can use-- I think the challenge is in
integrating all of that data in a medically relevant way, keeping in mind the long development path that any particular
question has to get to the market.
+++ 0:34:18.4 +++
Rowan Chapman: Can I make a comment just as an analogy? So early on when people were doing human sequencing
they didn’t know how many genes there were in the human genome. So when I was working at Incyte, I think Incyte came
out with a number there’s 100,000 genes in the human genome. Nobody had any idea. Nobody had any idea. And that’s
because the information was lots of little pieces of information scattered across this room and that’s because there
+++ 0:34:47.1 +++
was no way to really stitch all of the information together. When the information got stitched together in one piece, the
data analysts could really kind of say oh yeah, the position one <inaudible> that’s one gene. And now we know its
position we can give it name. And in this position there’s another gene and now we can give that a name. There’s about
30,000 genes in the human genome as far as we know. What’s key is that we have a map so we can actually name the
position and that’s enabled data standardization which
+++ 0:35:15.6 +++
didn’t exist even 15 years ago. So that’s enabled that. What Garrett is talking about now is standardizing a lot of the
medical terminology and standardizing a lot of the pathways in the same way. I think we’re not there yet. It’s the same
way you got there with really the atlas 15 years ago. But what’s going to happen in the next five to ten years is that will be
standardized which will enable a lot more information, knowledge from information because right now it’s disparate pieces
of information.
+++ 0:35:46.39 +++
Garrett Vygantas: And, I think, that’s what I was asking Kathleen earlier too. What is the platform, the standard way that
everyone is going to communicate? And that actually is so important for the electronic medical record to have that type of
user interface that a lot of people can look at it and understand right away. It doesn’t have all of that information
embedded in terms of the interface part of it. But
+++ 0:36:10.6 +++
what’s a significant engine in the background has to be there to really kind of crunch all of the pieces that come in. Google
hasn’t done it yet and they have the most powerful engine right now in the world to search data. So it’s really a challenge.
And that will no doubt be one of the more exciting challenges of the next three to four years.
+++ 0:36:37.8 +++
David Bell: So we talked on the panel earlier, we had a related discussion with some folks familiar [ph?] with breast
cancer action here and some other efforts in patent law. How concerned <inaudible> how concerned are you as
investors, as entrepreneurs about the ongoing lawsuits and the challenging patentability, patents and subject matter. And
+++ 0:37:07.6 +++
you’re patenting genes, you know, isolated genes or patenting molecular diagnostic assays. <inaudible> are an example.
How do you guys think about that? How does it impact your thinking of investments going forward? Well, why don’t we
start with you, Garrett?
+++ 0:37:30.8 +++
Garrett Vygantas: Sure. I think it’s definitely yet another risk, another level of validation that has to be understood for the
investors to move forward in a specific area. I think as a physician I’m torn. I want that data to be out in the open. But on
the other end of it I understand how much time and money goes into trying to kind of figure out a question. So there is that
tension there, as well. I think there’s got to be a creative solution at the end of the day. And, I
+++ 0:38:01.5 +++
think, that’s kind of the task of you all here at the law school is to figure out a way to continually drive innovation forward.
But at the same time balance it out with the public good.
+++ 0:38:15.7 +++
Marc Hellerstein: Well, you don’t invent the gene, but you do discover a relationship between the genes <inaudible>. I
think that is probably also <inaudible>. Actually, I’d like to step back and maybe be a little provocative. Since this is about
personalized medicine conference [ph?] so I’m assuming everybody is talking about genes and the presumption [ph?] that
a person with a type of genes <inaudible> tremendous <inaudible> by the end of the <inaudible> genetic information. I
mean <inaudible> based on like
+++ 0:38:50.5 +++
<inaudible>. Because if it’s going to be a sterile <inaudible>. People are not a collection of genes. Indeed, if you look for
the <inaudible> type 2 diabetes you’ll spend hundreds of millions of dollars <inaudible> genomic next to nothing, and
they’re coming up with next to nothing because there might be 100, 500 genes or 1,000 <inaudible> type 2
+++ 0:39:17.5 +++
diabetes. And so I think that we’re going to use informatics to try to get at thesereally is the fundamental mistake
<inaudible>. One of the things that I think we should <inaudible> more than just speculation is that people who really
control genes and need to get it right are metabolic indicators. Take the simplest organism<inaudible> and they control
every gene as much as they want, the expression of every gene. And they try and get it to
+++ 0:39:43.4 +++
make a lysine or and antibody or lactose [ph?]. And they can’t do it because the organism has a mind of its own. It has it's
own architecture which is interactive and connects to these relationships among the <inaudible> which is not predicable
from gene sequencing. There is no way, there is in fact potentially no way of predicting. It is up. It is a level of control
that is above the <inaudible> gene and protein.
+++ 0:40:09.8 +++
And so, I think, the idea that genetics is the key to personal medicine <inaudible> very, very misleading.
+++ 0:40:19.9 +++
David Bell: That is a shame. You’re right, we shouldn’t <inaudible> we talked in the earlier panel, the introductory
keynote speaker about the fact that proteomics are a part of it and genetics is certainly going to be a part of it, metabolic
state [ph?], all kinds of, different kinds of biomarkers, genes that are an example of the biomarker, all different kinds of
different markers are important. You’re right, we shouldn’t focus so much on genes. There’s a lot of technologies that are
being
+++ 0:40:45.5 +++
developed. They’re all over those different kind of biomarkers and figuring that out is and how to gain knowledge, first
we’ve got to test for them, how they relate to disease or some kind of process. And what is going to be done to make
knowledge from that information and act on at all and the question on how you get there. You’re right, we shouldn’t be
focusing on <inaudible>.
Marc Hellerstein: I think most people would agree with what you ssid. In fact, people in the field continually rely on
genes because they are the simplest and solidest things a person has. The genetic code is there but it doesn’t mean
<inaudible>.
+++ 0:41:26.3 +++
David Bell: To me that sounded a little bit of a question for Rowan. Maybe we’ll start with my question about the risk
aspects of how you think about investment and <inaudible> profit potentially going forward. And so maybe talk a little bit
about what you think of the things that are coming. I think a little bit of the focus and emphasis on genes right now is
+++ 0:41:49.7 +++
because potentially it’s a little bit of low hanging fruit in a way. There are technologies, Moore’s Law is helping us, get to a
place where we can test for getting information a lot more simply and <inaudible> trying to make some sense of it.
+++ 0:42:05.5 +++
Rowan Chapman: Okay. So a two-part question. The first one on IP and second one on genes. First of all, on
intellectual property we are early stage investors so it’s very rare that a company we invest in upfront has actually been
issued IP. Quite frequently they file for IP. So we have to make a call on a set of things, the business case, the people,
the intellectual property, the capital efficiency, the market. We do a whole set of diligence in all of those areas. Regarding
IP there’s many flavors of IP.
+++ 0:42:38.4 +++
There’s IP about the variant in that gene, to take something that somebody's doing something genetic variant in the gene
and association. There’s IP about business processes. There’s IP about the actual technique people are using. Maybe
there’s know-how. Maybe there’s trade secrets. There’s not actually intellectual property in the same waknow-how
<inaudible> trade secrets is
+++ 0:43:03.1 +++
important. So we just put up our has a venture capitalist and say what’s in the mix and how are going to balance them? Or
the probability of each <inaudible> of these things? And then, where do we come out? So it’s a complex answer. And we
are very unlikely to invest in a company where we believe as soon as they have spent some number of millions of dollars
to get to market that somebody else can spend $100,000 and immediately compete with them. we’re
+++ 0:43:31.7 +++
very unlikely to invest in that. IP is only one part of it. So let’s get down to your provocative comments about genes. I
agree with you in many ways. I’ve just spent the last two days at the American Society of Human Genetics out in D.C.
and I <inaudible> a lot scientific sessions and as an ex-scientist I sat down and I went wow, this is so cool. And then I
came out going we’ve got a long away before
+++ 0:44:00.6 +++
we understand human genetics. We are not there, yet, in particular, between different populations owning the genetics of
Caucasians is entirely different from the genetics of Africans which, again, is entirely different from the genetics of Latinos
which is different from Native Americans. So we’re moving there. This is a march in human knowledge. But we’re not
there in terms of understanding exactly what your genetics means. I think we-- when I look at this I
+++ 0:44:31.2 +++
take one step away. I say what’s the phenotype? So the phenotype which is so I’ve got blondish hair and I’m 5’7” and
I’ve got blue eyes that’s my phenotype. And there’s my disease phenotype and as a doctor somebody-- a doctor might
say oh you’ve got really low blood pressure. They might say oh you’re about to die or you just have low blood pressure.
They don’t really know what to do with that. So what we’re
+++ 0:44:53.3 +++
doing is just taking all of the different surrogates [ph?], and trying to map it to the end things that is important for the doctor
and important for the patient. And that surrogate can be something to do with your physique, your weight, it can be
something to do with your blood lipids. It could be something to do with your blood proteins. It could be something to do
with your breath. You know if you breathe [ph?] out more acetone it means you’re burning fat. You don’t need to know the
gene about that. You don’t need to know the pathway. It’s just all different pieces of information
+++ 0:45:23.8 +++
that’s to Garrett’s point we’re just trying to connect to get to the model. How many of you have seen pictures of social
networks? Think about Facebook. How many of you have seen those kind of line diagrams where you have the dots of
humans and how they’re all interconnected together? Think about that as biology. And think about each of those dots not
as a gene but as a piece of information. And that’s really
+++ 0:45:50.7 +++
where biology is going and where the advances we’re getting-- computation are key. And those are very complicated to
build because not only is there a connection from my blue eyes to a gene to my weight to the fact that, I don’t know what
disease have I had lately? Okay I had flu. There you go. So how are those things connected? You have got a probability
factor. I’m not saying because I have blue eyes I’m going to get flu. You have to be able to put
+++ 0:46:21.2 +++
probability and association based on real data. And this involves a different kind of map as well. So, I think, we’re really
pulling componentswhere you’re pulling those mathematicians and those astrophysicists who study the stars and you’re
pulling them in to understand biology.
+++ 0:46:37.7 +++
Marc Hellerstein: I'd like to build on that for a sec. So, I think, Rowan mentioned the diabetes <inaudible> the most
important metric you can have for biology is the whole view of <inaudible> one gene, one protein, one <inaudible> is
completely incorrect <inaudible>. It’s enormously complex networks within networks, interactive <inaudible> relationship,
activity relationship. That determines phenotype. So what is phenotype?
+++ 0:47:08.9 +++
<inaudible> it’s not just blond hair or whatever. It would be something like in modern <inaudible> now that I have insulin
resistance then I’m the guy who one out of five people is going to get diabetes and that is not necessarily, as you said,
you don’t need to know which genes are involved because there are so many ways you can get into that roadmap. You
need to know that your pancreas is failing, and that’s the cause, the pathophysiology that’s
+++ 0:47:40.9 +++
driving disease, the cause of disease. And I do think that there is not as inevitably complicated as just the <inaudible>
informatics. And, I think, in fact, if you go back to 1890, 1880 <inaudible>. The most effective disease control we’ve ever
had is a <inaudible> bacterial <inaudible> vaccination <inaudible> based on. Those are causal agents <inaudible>. They
are necessary. They are <inaudible> disease. And they are a sufficient <inaudible>.
+++ 0:48:16.1 +++
They have some other features as well. So that, in my view, is a way for doctors, physicians, do well with <inaudible>.
That’s how they think about. They say blood pressure is high, that’s causal in your development of cardiovascular
disease, <inaudible>, therefore I’m going to lower it and then <inaudible>. I think when we identify those pathways a lot of
it is really easy.
+++ 0:48:42.0 +++
David Bell: So Marc, <inaudible> a second, going back to sort of being on a panel related to entrepreneurship, maybe
you could tell us what have been your greatest challenges from a business point of view? I mean what are the signs along
the way. Tell us a little bit about <inaudible> science and business and that you originally came at this from a science
perspective what problems did that creation, and maybe a little bit about the lessons you’ve learned along the way.
+++ 0:49:11.0 +++
Marc Hellerstein: That’s a lot of questions <inaudible>. So, I think, the interplay with the sciences <inaudible> and
actually that’s <inaudible> my favorite <inaudible>. And I don’t find a big difference. I think if you have a good product, it’s
going to be good science. And business people will recognize that. The only thing that’s part of the challenge <inaudible>
sometimes on the business side will try to simplify or dumb down make it ready before it is.
+++ 0:49:45.7 +++
And that is when companies in my experience get into trouble when they try to short circuit <inaudible> before
they’reready. Great science and <inaudible> better science <inaudible>.
+++ 0:50:09.1 +++
David Bell: So what are the tensions, what are the pressures that cause companies to make the wrong choice, the
wrong <inaudible>? Obviously, I’m assuming it’s because that they didn’t [ph?] get the money or they have to get it some
place because they have a constraint on resources. And so the short cut matters. But maybe you can talk a little bit about
that.
+++ 0:50:29.3 +++
Marc Hellerstein: Yeah, I see that. <inaudible>. Since we have part of our business models in the tools <inaudible> the
other side of the model. If you look at the interaction with big pharma every big pharma, talking to leaders and section
heads and so on. And I’m always shocked but how there’s so much money in the economy that nobody has any money
to spend because it’s all allocated. And the reason it’s allocated everybody is
+++ 0:50:59.5 +++
working on a quarter by quarter or year by year model. And yet, when I talk to bankers they say, I wish these guys would
take a big picture and step back for a second because they're justputting all their money and <inaudible>, do something
larger. So I think the answer to your question is sort of short-sided view, the <inaudible> pressure tomorrow <inaudible>.
+++ 0:51:24.3 +++
David Bell: So maybe Garrett, you could tell us something about the kinds of lessons you’ve learned both as an investor
and entrepreneur, you know, in that process of trying to bring a product or a company, ensureing the product from sort of
the fully development stage to a real success. Or, you know, Pacific Bio Systems is getting <inaudible> more funding to
move forward, things along those lines just to <inaudible>.
+++ 0:51:55.3 +++
Garrett Vygantas: I’ll just talk a little bit about one story that I actually wasn’t involved with but I still find quite fascinating
and that’s the very recent first approval of the Dendreon’s Provenge which is a cancer vaccine. This product has been in
development for a long time. It’s a personalized medicine product in the sense that it uses the patient’s own prostate
cancer cells to produce a therapeutic that prolongs the cancer patient’s life by about four or five months. The company
went through an
+++ 0:52:30.5 +++
enormous amount of money to validate the technology, validate the product, get the clinical data. And in 2007, the FDA
said that it wasn’t good enough. So you can imagine all of the hopes and dreams of everyone, all of the stakeholders, all
of the investors, the patients, and the company at the very least about getting the product to the market and they got
turned down at the gates there, but they didn’t give up. So,
+++ 0:52:59.7 +++
again, the vision and the drive and kind of the company and the investors backed with a product that they all believed in,
they pushed forward for three more years and got all of their tent [ph?] boxes covered both from a manufacturing point of
view as well as a clinical point of view and then they launched the product earlier this year. So, I think, that’s a great story
in how if you are able to surmount some of the obstacles that are seemingly
+++ 0:53:33.7 +++
insurmountable you can get the product to the market. A company right now has a market capitalization of about five
billion, six billion and is kind of the leader in the oncological vaccine space much the same way that Genomic Health was
the leader in the cancer genetic space.
+++ 0:53:52.7 +++
Rowan Chapman: So I want to use one word here which is prioritization. So whenever you are building a company or in
our case helping build a company by investing in the company because we don’t pretend we’re the people actually
building the company. <inaudible> company that’s doing that. We’re just there to help. So it’s prioritization. Every stage of
finance you need to think about what are the key risks and let’s prioritize how we deal with those risks. I
+++ 0:54:21.5 +++
gave you an idea about how we look at this. So within the company, once you’ve invested in all of these things on the
table and you’ve dealt with <inaudible> put that aside. And then you get together and say, okay, what do we need to
prove on this money so that first of all we can get our product to market as capitally efficient as possible and be able to
raise the next round. So constant prioritization. Every three months in a board meeting, you really look and
+++ 0:54:47.5 +++
say how are you doing on that set of risks, any new risks, you reprioritize. And every company changes their business
model. Every company changes their risks. In fact, it’s always a little bit of a red flag to me if everything stays exactly the
same because I’m like well, I hope they’re thinking about it because I don't know of any other type when everything stays
the same. So it’s all about risk and prioritization which comes back to Marc’s point about people in the company. So quite
often <inaudible> about people.
+++ 0:55:14.7 +++
First of all, have you invested in the right person? Even more important, does that person recognize what other expertise
they don’t have that they need to bring in? The entrepreneurs that I admire the most are the guys that can take a step
back and say “I don’t know enough about this. I need to get somebody who’s more experienced than me in this particular
field and pull him into the company as an employee or as an advisor.” And who has, I guess, the maturity to
+++ 0:55:44.5 +++
be able to do that, to step aside. You need a certain personality and a certain healthy ego to go out and raise money and
believe that you’re going to do it. We love that. We also like the entrepreneur to be able to step back and say I really need
help in these set of things. And that is something that I would say is key to building a company. And the places where it’s
worked most successfully is when the entrepreneur recognizes that.
+++ 0:56:11.3 +++
David Bell: All of the things you said are true across all industries not just the personal medicine industry.
Rowan Chapman: No. But we are in terms of risk <inaudible>.
David Bell: Yeah, no I appreciate it.
+++ 0:56:20.5 +++
Marc Hellerstein: <inaudible> a lot like having faith in something and not giving up and having faith. If you ask a
<inaudible> one of the biggest challenges is knowing when to keep pushing forward on an idea. <inaudible> what seems
to be a good idea into a usable product. It’s obviously a big challenge <inaudible>. But the whole idea of knowing when
you should really stick with your idea because it’s daunting. And so <inaudible>. We had an idea
+++ 0:56:55.7 +++
<inaudible> brain chemistry <inaudible> how long it takes for <inaudible> to transport the cargo to the brain this is a
critical part of Nero degenerative diseases it turns out. It’s a great <inaudible> transporting <inaudible> and all of that
stuff. And so <inaudible> how long it takes <inaudible> synthesis <inaudible>. And <inaudible> Lou
+++ 0:57:24.9 +++
Gehrig’s disease <inaudible>. And then we started <inaudible>. And <inaudible> which is <inaudible>. And we’re finding- first we were finding it wasn’t fitting anywhere in the model. It wasn’t <inaudible>. We weren’t sure it was analytic. We
weren’t sure <inaudible>. In that case, we felt it was just such a good idea that in some sense <inaudible> access to
<inaudible>. <inaudible> spend a lot of money and now
+++ 0:57:59.2 +++
it’s working beautifully. We’ve just to go to <inaudible> for them to just sit there <inaudible> Alzheimer’s disease
<inaudible>. So that <inaudible> really good scientist. I liked <inaudible>. And we stuck with it and it paid off. Other times
we started we stuck with it and <inaudible>.
+++ 0:58:22.4 +++
David Bell: <inaudible>. So before we go to questions from the audience, I just wanted to ask one last question for the
entire panel. There’s been discussion all ready about the regulatory environment, although we’re waiting for, you know, IP
and things along those lines <inaudible> environment <inaudible> some of the things that Kathleen mentioned at lunch.
You know, I want to get a sense from you, how do you as operators and investors think about regulatory environment?
And do you have an idea of the things that can be done to help accelerate the industry’s development, assuming
+++ 0:58:54.5 +++
we have a sort of positive <inaudible> developing an industry that is a positive for society? What can we do on a
regulatory side to help move us along? Why don’t I start with Rowan just <inaudible> pick on here and <inaudible>.
+++ 0:59:14.5 +++
Rowan Chapman: I think the key here is for the regulatory groups to make their mind up. Because for the last three or
four years we’ve had one declaration and then another declaration. And then a tentative these are the guidelines, then
yes the guidelines are the law but the guidelines aren’t the law. So it’s extremely confusing. And so that’s what I would
argue.
+++ 0:59:41.7 +++
The key thing would be for the regulatory groups to make their mind up. In the meantime, every single company that I’ve
worked with has assumed that the industry will be regulated and has spent the money and set up the science and the
clinical studies appropriately to make sure that it’s good science, that it’s statistically significant. What the regulators want
to do is make sure that that is the
+++ 1:00:10.5 +++
case. They want to make sure that the companies that are not doing it properly, that are really selling snake oil are not
allowed to sell snake oil and that is good.
+++ 1:00:20.8 +++
Garrett Vygantas: I think that’s a great point. The industry wants to regulate itself, wants to be regulated for that very
reason to keep the quality high. From the investor point of view it makes the path understandable. You know how many
patients you need to enroll in this trial. You know whether you use retrospective data or positive data going forward across
a variety of patient segments. So everything becomes much more clear. I think the public, private partnership piece has a
big role in kind of linking
+++ 1:00:51.8 +++
industry with the government and the regulators as well. And, again, the task force has a big-- I don’t know how this all
comes together, but that’s kind of a demonstration on how knowledge can be acquired [ph?] under a public setting. And
lessons gleaned from there can be reflected on by the regulators. But clearly, you know, how this industry has evolved
thus far is some companies used to go to the FDA, others used to develop products on their own and wait for the FDA to
+++ 1:01:23.5 +++
come to them. And, I think, that that has caused certain additional challenges to the investors to say that should we go
down and why? So it’s still evolving with really no magic bullet other than continue to try to understand from a systems
biology point of view how everything works and that just takes time.
David Bell: <inaudible>.
+++ 1:01:51.2 +++
Marc Hellerstein: Yeah, I think when you talk about regulators, FDA, Medicare <inaudible>. And <inaudible> I think in
the end it comes down to two things. first of all, you have to have the goods, your product whether it’s a drug or a
diagnostic it has to help people. And if that works then you can do a <inaudible>. Go over to the head of Congress
<inaudible>. You can go over the head of regulators and go to the people. And I think a great example of this is
<inaudible> example <inaudible> a lot of HIV/AIDS research. And the AIDS demographic and their
+++ 1:02:25.4 +++
<inaudible> style in many ways <inaudible> future of medicine. They were very not passive. They were aggressive. They
were <inaudible>. There was nothing that was going to save their life <inaudible> access to. And the same thing
<inaudible> with breast cancer. So <inaudible> people who get <inaudible>. If something really works it’s hard for them
not to <inaudible> that you not die there’s an <inaudible>. So I think in the end is that these products <inaudible>.
+++ 1:03:02.5 +++
David Bell: Great. On that note <inaudible> questions.
M1: <inaudible> saying that we should acknowledge <inaudible> place where we <inaudible>. I agree. I think we’re
doing something wrong <inaudible>. <inaudible> diseases <inaudible>.
+++ 1:03:38.0 +++
Marc Hellerstein: <inaudible> I’ll tell you <inaudible> behavior of the brain <inaudible>. <inaudible> if you look at the
history of psychiatric research has changed from talking and institutionalization to chemistry. And the <inaudible>. But in
the end there’s a chemistry that underlies most of these conditions <inaudible> Alzheimer’s, schizophrenia, depression.
And if we
+++ 1:04:08.4 +++
could understand the <inaudible> in the brain and measure that, and measure those risks <inaudible> activity then you
don’t have to do <inaudible>. <inaudible> in addition to <inaudible>.
M1: <inaudible> physicians <inaudible> psychiatric <inaudible> patients. They don’t even know-- they don’t have a
<inaudible>. So we’re not <inaudible>. And so what are we doing in the meantime?
+++ 1:04:49.8 +++
Marc Hellerstein: Well, in the meantime <inaudible>. In the meantime, <inaudible> that’s true. They may become
<inaudible>. We do need to have <inaudible>. <inaudible>. I mean that’s <inaudible>.
M1: <inaudible> nothing like that. <inaudible>.
Marc Hellerstein: Well, you can…
M1: <inaudible> disease, this is the cost, this is the treatment pathway [ph?], <inaudible>.
+++ 1:05:21.1 +++
Marc Hellerstein: Well, if you take cardiovascular disease which is…
M1: Cardiovascular disease <inaudible>.
<overlapping conversation>
Marc Hellerstein: It’s been pretty effective in <inaudible>. <inaudible> metrics the biggest drug ever. It’s not
<inaudible> cholesterol in the 1940s, it wasn’t a disease. Cholesterol you don’t even know you have it. It’s not a condition.
But it’s a target <inaudible>. And I think that’s <inaudible>.
+++ 1:05:50.1 +++
David Bell: I think it’s fair to say, as investors in an industry <inaudible> nobody expects an immediate panacea by any
of the things that are being done. And so, you know, personalized medicine is going to evolve over a long period of time.
<inaudible> problems. But I don’t think anybody thinks that the companies are investing in now or that companies are
starting now <inaudible> each and everyone of the possible problems that could exist in medicine.
+++ 1:06:17.2 +++
Garrett Vygantas: But I will say there might be some areas of competition internationally. So if some countries collect
data on all of their constituents and are able to amalgamate that in a more understandable way they might be able to
leapfrog a little bit the developments that happen where the regulatory bodies are somewhat hampering the greater
knowledge belt.
David Bell: Yeah, it’s like Iceland.
Garrett Vygantas: <inaudible>.
Marc Hellerstein: Framingham.
+++ 1:06:51.5 +++
Rowan Chapman: Well, yes. Yes, so Framingham is a great example in the U.S. In the U.K., for example, they have
national health service so they have the phenotype information and they collect from the genotype of tens of thousands of
people. So they’re going to have a pretty defined data set. So it just depends on the regulators.
+++ 1:07:11.3 +++
Garrett Vygantas: We don’t even know what’s happening in China from that point of view. But clearly, in other
industries, the top down approach, the top down mandate where there’s kind of a standardization of technologies advance
quicker.
Marc Hellerstein: <inaudible>.
Garrett Vygantas: There’s pools there. It’s just not top down here.
+++ 1:07:34.3 +++
Rowan Chapman: So can I use an example of something I actually heard yesterday which I thought was quite
interesting about genetics and how it got defeated [ph?]. So the presenter turned around and <inaudible> the audience
so is Obama black or white which is kind of an entertaining question in itself because I’ve answered, where people say
why <inaudible> and why <inaudible> he? But the point being that when he goes
+++ 1:08:02.9 +++
into a doctor’s office like it or not-- if you didn’t know who he was like or not the doctor will look at him and <inaudible>
cardiovascular disease with a set of assumptions based on what color they think he is. A set of assumptions about what
his risks are and how they’re going to treat him because they do risks depending on your ethnicity, your cardiovascular
disease. It’s quite possible that his genetics for cardiovascular disease come from his mother’s side, not necessarily his
father’s side. So this is where
+++ 1:08:33.0 +++
having all of the different pieces of information is key because just by looking at somebody or looking at somebody’s color
or their sex or their body mass index, the doctor’s doing the best they can but they haven’t got the complete picture.
M2: I had a question for Rowan, based upon what you learned over the last how many days you were at the American
Society for Human Genomics meeting. Given the differences that exist among people of different genetic backgrounds
and their responses to drugs, what do you think the opportunities are for the <inaudible> diagnostics. I know it’s harder to
<inaudible> right drugs to the right people.
+++ 1:09:13.3 +++
Rowan Chapman: I think there’s a tremendous opportunity for developing this. I think right to the very beginning you
have to make a decision about what tests are developing, what the label of that test will say. Who is the test for? What
does the test do? And then you can make the decision on whether that test is something that’s possible to develop or not.
And how <inaudible> decision is that. So a company that I’m on
+++ 1:09:40.1 +++
the board of VitaPath Genetics has a test that will tell you whether you have a very high possibility of having a child with
spina bifida before you’re even pregnant. Spina bifida actually it’s got a prevalence of about one in a thousand.
<inaudible> very rarely see people with spina bifida <inaudible>. But it’s a prevalence of one in a thousand. If you’ve had
a prior spina bifida birth you have a one in twenty-five
+++ 1:10:07.4 +++
chance of having another spina bifida baby. However, if you take not just the regular prenatal vitamin, if you take a ten
times dose your risk goes down to one in five thousand. So that’s a case of something you can take. There’s a vitamin
you can take it and it can prevent you from having another spina bifida child. So, I think, in that case is very low because
it’s a vitamin you’re taking. So it all depends if you’re
+++ 1:10:35.1 +++
going to ask me to invest in a company that’s going to give people a toxic drug there better be pretty good data.
+++ 1:10:45.0 +++
Marc Hellerstein: Well, let me advance that because that’s a great example of spina bifida and folates <inaudible>. But
let’s talk about the really big diseases, Alzheimer’s disease, diabetes, osteoarthritis things that people get <inaudible>
prostate, breast cancer. Those actually take decades <inaudible> these are prostate <inaudible> cancers. And we
understand them as steps in the process. And if you think the question back there was <inaudible> and we know
<inaudible> is
+++ 1:11:17.2 +++
probably central in Alzheimer's. If you could reduce that, if you could measure them, which you can, and reduce that and
then you were the person who was overproducing or accumulating plaque and maybe your father or grandfather had it or
maybe not, that person would be an excellent candidate for <inaudible>, behavior or whatever. That’s the kind of
intervention that makes sense. That to me is really <inaudible>. You are actually doing <inaudible>. That’s not a big
stretch.
+++ 1:11:56.0 +++
Garrett Vygantas: <inaudible> Just a quick point on the companion diagnostics where it’s proving more successful, so
far, has been the oncological side. And the question I still try to understand is which came first Herceptin or the Hercep
test. I almost feel as those these companies hit it with the drug and then go back and figure out exactly why does it work
in the group that it works. So from that point of view, that makes sense, at least, in terms of paying for those tests.
+++ 1:12:27.4 +++
That’s a no brainer there. I think the bigger diseases, the ones that we know less about really it’s a little more tricky.
+++ 1:12:37.4 +++
M3: So just to get back to patents, I’m wondering how thorough the VCs are in the beginning with the patent
assessments in terms of how much to spend and what to spend and if you don’t have an issue patent, how much you
spend to find that out. Like <inaudible> something that <inaudible>. And a separate but related question freedom to
operate. Are you going to be able to practice that? And do you continue to assess it because both of those answers can
change over time?
+++ 1:13:00.8 +++
Garrett Vygantas: We just negotiate with Michael as hard as we can. Get as much work out of him as we can. That’s
pretty much what we do.
M3: That was my <inaudible>.
Garrett Vygantas: Yeah. I don’t know if you guys do it any different. <overlapping conversation>
Rowan Chapman: So if <inaudible> lawyer, we spend about $1,000, give or take. <overlapping conversation>
+++ 1:13:27.9 +++
Rowan Chapman: I’ll give you a serious answer to that question. So as many of you will know, obviously, the VC’s
spend a fair amount of money on doing IP diligence. The point in time when we do the IP diligence is not until we’re pretty
sure that we’re going to do a deal with the company. We do our own IP diligence before we start recruiting people like
Michael to really help us nail down what we think the risks are. And that’s really just before we close the financing with
the company. And what tends to happen
+++ 1:14:00.8 +++
is you spend tens of thousands of dollars on IP diligence to invest in the company. And it depends how complex the field
is. I think the lowest we got away is in the tens and the highs we’ve gotten away with in the multiple of tens of thousands
of dollars for IP diligence>. And what happens is you then get a baseline and every quarter or so you get an update on
that. And the company presumably has good counsel and you get an update on really where the IP
+++ 1:14:30.4 +++
is and the most change in the risk profile because like all things the risk profile in the IP changes. And you build a
knowledge base that’s really divided into two categories. Where are we on the variant of other people, where are we on
the freedom to operate? And in the next financing you do the whole thing again from that base to get to the next set of
information. So pretty much in every financing there’s a lot of money on IP diligence in between companies <inaudible>.
I hope that answered your question.
+++ 1:15:01.9 +++
Marc Hellerstein: On the other side <inaudible> we spend on a lot of money on patent <inaudible> especially in
international. So I always feel that we’re way ahead of <inaudible> due diligence. We’re way smarter than they are. We
care. There are people who <inaudible> <inaudible>. So sometimes it’s very <inaudible>.
+++ 1:15:25.8 +++
Garrett Vygantas: But to that point, you guys as the investor it’s the last thing to do, so momentum is on your side.
Please don’t find any red flags, please don’t find any issues. And that takes a lot of discipline. I’ve only seen one deal that
actually got pulled off of our top priority list because HP had some asset that the company would have the license down
the line, something would have to happen. So we didn’t invest. Two years later Warburg Pincus led a
+++ 1:15:54.6 +++
$50 million investment in the company. So something happened there in those two years. They went to HP, got that
license, and they’re off and running now. But either way, it’s kind of almost viewed as a business risk at the end of the day
because if the market is there, the technology is there and the entrepreneurs are able to go make it happen it’s just
another thing that has to be done.
David Bell: So I’m going to let Katherine ask the last question here. She had her hand up a second ago.
+++ 1:16:22.2 +++
Katherine: <inaudible> especially <inaudible> that way. <inaudible> you mentioned the role of mandates and you’re just
<inaudible> partnerships. Do you have a wish to visit <inaudible> is what role would you have the government play in this
space? There’s a lot of different things you’re going to do but really what do you think <inaudible>.
+++ 1:17:01.3 +++
David Bell: You stumped the panel.
Rowan Chapman: Well, there’s so many answers to that question.
Katherine: I would say specific to state government, the federal government too, more specific to state government
because we’re here in Sacramento, how can they help you?
+++ 1:17:19.2 +++
Marc Hellerstein: <inaudible> obviously the more the FDA <inaudible> too. It would be a really fair and progressive
arbiter <inaudible>. So, for example, with viral load in HIV revolutionized <inaudible> treat today. And within two years
mortality rates fell by 50 percent astonishingly after the viral load tests were used <inaudible>. So it would be very
reactionary if we just <inaudible> Americans or even <inaudible>. To not use that test.
+++ 1:17:49.3 +++
So <inaudible>. And yet you don’t want to pay for a tests <inaudible>. So, I think, you really have an <inaudible>
evaluation <inaudible>. <inaudible> the FDA <inaudible>.
Katherine: So can I interpret what you just said to ensure I understood the answer and then I’ll <inaudible>. So what you
said is that we should <inaudible> managed healthcare <inaudible>.
Marc Hellerstein: Somebody has to pay for the chemist <inaudible>. <inaudible>.
+++ 1:18:28.3 +++
Rowan Chapman: So I’ve got a couple of answers. The first one is very generic because it’s not specific to the first
<inaudible> making sure that the regulations continue to encourage innovation and startups in the state of California
because that’s something that California has going for it. And, as I said, the regulations which are from other states
<inaudible> startup community and venture capital community to thrive. So I think that is key, number one. The second
is around
+++ 1:18:56.9 +++
regulation and having test kits regulated. So it’s making sure that people within the federal government understand that
you can regulate an industry away. So you can regulate it so much that it becomes too expensive for venture capitalists
to invest in where you actually kill an emerging industry. So there’s a very fine balance between regulating to ensure
quality and regulating to squash a startup. So
+++ 1:19:26.5 +++
those are the two key points I have for you.
David Bell: Great. I want to thank the panel very much for coming up and sharing their insights. It was very helpful.
<inaudible>. End of Panel2.mov
Panel III: Consumers in the New Personalized Medicine Model
+++ 00:00:30 +++
David Bell: So I think we’re all assembled. To wrap up the day, we’ve asked Lisa Ikemoto a professor right here at UC
Davis and herself an alum of the law school to facilitate a panel that will discuss the subject of consumers in the new
personalized medicine model. Among other things, Professor Ikemoto is a nationally recognized scholar on the somewhat
adjacent field of ethics of stem cell research. Lisa’s interest in stem cell research as well as personalized medicine grew
naturally from her scholarship in teaching on bioethics, healthcare law and public health law. She has published
extensively
+++ 00:01:05 +++
on genetic and reproductive technology use, regulation, fertility and pregnancy and race and gender disparities in
healthcare. Addressing questions ranging from access to new technologies and treatments to ethical issues involved in
human sale [ph?] of human tissues. So Lisa, thank you very much and we're looking forward.
+++ 00:01:25 +++
Lisa Ikemoto: Thank you, David. Welcome to the afternoon session. I’m happy to be here to moderate our fine panel. I
want you to take a moment to think about the title. We switched a little in language from a focus on patients to use of the
term consumers. And, I think, there’s probably two ways to think about the use of the term consumers here, one is in the
broader sense since the 1980s it’s become clear that healthcare is being delivered in a market model. And so patients are
also consumers and access to
+++ 00:01:56 +++
healthcare is largely determined by access to the market. In the other sense, consumers are more specific to this new
model for medicine and research, personalized medicine and that is that one of the most obvious sort of products of
personalized medicine so far, I’m sure there will be many more to come, is in the direct-to-consumer market. So direct-toconsumer test kits, genetic test kits have received a great
deal of attention and that’s part of what we’ll be talking about today. So this panel is set up a little
+++ 00:02:29 +++
bit differently. We have a wide variety of experience and expertise here to highlight the wide variety of issues that arise
from our consumers slash patients with respect to personalized medicine. So I have to work a little bit less hard than the
previous moderators. I’m not going to work so hard to try to connect the dots, but to sort of pull out the right variety of
issues here. So I’m going to start by giving brief introductions of each of your speakers. And then I’ll
+++ 00:03:00 +++
ask a few questions and they’ll speak from their different points of expertise and then we’ll open it up for audience
discussion. So with respect to our speaker, I’ll start with Michael Cox, he’s on the far end over there. If you look at the
program, the name there says Ed McBean [ph?]. Ed McBean had a conflict and couldn’t make it and we were lucky
enough to have Michael Cox step in at the very last minute to speak in his place. Michael is the chief privacy officer for
Pathway Genomics, a genetic testing company with its
+++ 00:03:32 +++
own onsite CLIA certified laboratory in San Diego. For the students, CLIA certified laboratory, CLIA is an acronym that’s
used by the federal government so it’s a federally regulated and certified laboratory. He oversees customer privacy and
security to ensure the appropriate use and protection of all sensitive customer information. He has worked at Fortune 200
and entrepreneurial companies, as well as his own company, So Cal Privacy Consultants. He is a certified information
privacy professional, a member of the
+++ 00:04:03 +++
international association of privacy professionals and has a Bachelors of Science in Business Administration from Virginia
Tech. And next we have Sandra Lee. She is a medical anthropologist who studies the sociocultural processes and ethical
issues in emerging genomic technologies and their transition in biomedical practice. Her research projects include the
meaning of race in the new genetics and distributive justice in genetic variation research which is being funded by the
National Human Genome Research at NIH.
+++ 00:04:33 +++
She’s principle investigator for a recently funded grant project entitled, “Social Networking and Personal Genomics,
Implications for Health Research.” Dr. Lee’s awards include a Rockefeller Foundation Humanities Fellowship, National
Institutes of Health, National Research Service Award, and a NHGRI career development and award in research ethics.
She’s a co-editor of “Revisiting Race in a Genomic Age,” which I recommend. I have a copy in my office if you want to
borrow it. And she is currently working on a book entitled “American DNA: Race, Justice and
+++ 00:05:06 +++
the New Genetic Sciences.” Dr. Lee’s a senior research scholar at the Center for Biomedical Ethics at Stanford University
Medical School. And then we have Beatrice O’Keefe, not going in order, I guess, but this is the order I wrote done. So on
your right, left, right, sorry. Beatrice O’Keefe is chief of laboratory field services at the California Department of Health
Services. And as such she is responsible for facilitating personnel licensing of 18,000 laboratories and 60,000 personnel.
She, in fact,
+++ 00:05:37 +++
implemented the state program for registration of 8,000 physician office, hospital and clinic laboratories in California. And
as part of her quality assurance responsibility she has reviewed and actually approved 83 reports submitted for sanction
actions under the federal CLIA, the federal law I mentioned and state law. She has conducted over 500 inspections of
laboratories for compliance with the federal and state clinical laboratory regulations. Ms. O’Keefe started at the California
Department of Health
+++ 00:06:05 +++
Services as a virologist back in the 1970s. Using her training as a clinical laboratory scientist and public health
microbiologist, she now brings that expertise to her job as chief. And then Michael Wilkes is in a sense one of our own,
not the law school but at U.C. Davis. He’s a professor of medicine at the University of California Davis. He has recently
stepped down as vice dean of the school of medicine and is serving as a director of global health, a new program here.
For most of Michael’s
+++ 00:06:33 +++
career as a doctor he has lived and worked in Los Angeles at one of our sister universities. At UCLA he was a founder of
UCLA’s innovative doctoring curriculum which now serves as a model for the U.C. Davis school of medicine and many
other medical schools domestically and internationally. He’s also an active education and health services researcher
working in the areas of medical education, technology assisted learning, clinical genetics, doctor/patient communication
and conflicts of interest in medicine. He is also an award winning journalist having worked
+++ 00:07:03 +++
for the New York Times, ABC News, CBS News and L.A. Times and he’s currently a correspondent for the Sacramento
Bee and National Public Radio. All right, so we have a fine panel. The first question, I wanted to ask each of you if you
can just spend a few minutes describing your various areas of expertise and explain what your area of expertise has to do
with our panel topic consumers and the new personalized medicine model. Michael Cox, will you start?
+++ 00:07:33 +++
Michael Cox: So first of all, I should give some credit to Pathway’s CEO who identified the need for a chief privacy officer
within the early days of its life. As we know, genetic information is considered highly sensitive and so privacy and security
is really important in this business. I oversee both the privacy and the security side. I’m going to define the difference
between the two because I think there’s
+++ 00:07:59 +++
some misunderstanding generally about that. Privacy is a very broad concept compared to information security. It
includes security within its scope. But it is about the end to end information governance, principles of-- and I'm going to go
slowly here so that you can see kind of the cycle here. Notice of awareness, consent and purpose, collection, use,
retention and
+++ 00:08:34 +++
secure disposal, access and correction, sharing and options to limit sharing, often times thought of as opt-in and opt-out,
integrity and security, enforcement and redress, and onward transfer. Now, these are mine kind of set of best practices for
privacy considering a number of different frameworks including the Federal Trade Commission’s and the E.U. Union since
+++ 00:09:06 +++
we're an international company. Security, on the other hand, is a comprehensive set of administrative physical and
technical controls to safeguard and protect the confidentiality, integrity and availability of information and systems and
facilities that contain that information. So you can begin to see the difference between privacy and security. A little bit
more about that, security is a set of standards.
+++ 00:09:38 +++
And there are a number of different security standards. HIPAA is a security standard. It’s not considered, in my mind, to
be as comprehensive as ISO 27002. So, in my company, I first addressed HIPAA, and of course, there’s always an
ongoing change. As the business risk profile changes, you continually need to make sure that you’re staying current with
HIPAA. But I’m slowly integrating ISO 27002. And
+++ 00:10:10 +++
there’s even a higher kind of best practices framework called HITRUST that is beginning to get some recognition.
Privacy, as a concept, is focused on sensitive personal information that if lost or stolen could lead to financial or reputation
arm such as identity theft, fraud or discrimination. Again, another difference between privacy and
+++ 00:10:43 +++
security, privacy is continually an evolving concept. And it’s also influenced by values and morays and ethics. And has
different meaning to different generations. Some people are comfortable posting their entire genome on the Web and
other people want you to destroy their sample and their DNA extract as soon as you can after the test. And so privacy is
really a personal thing. It’s governed by laws but the reality
+++ 00:11:17 +++
is that the goal is to meet the customer on their terms and to provide choices and options. And that’s what we strive to
do. Turning to the work that they do with that understanding I am responsible for developing and providing privacy notices
and consents. And the purpose of a notice is, first of all, in California, if you were doing business over the Internet there’s
a requirement to have a privacy
+++ 00:11:52 +++
notice. The purpose of a privacy notice is to make it available and provide awareness at all times. Whereas consent is
providing closer to the delivery of the service or ordering of the genetic test in our case. Not too long ago with regard to
notice the idea was to make it as transparent as possible. For complex organizations privacy notices are growing in their
length. Which my goal is to try to achieve the balance
+++ 00:12:27 +++
as much as possible between transparency and readability. And so what I do is I’ve got two page consent which is a
summary of all of the key terms. But then I have an informational brochure that’s linked into the consent so that you can
do a deeper dive and get more information. The same thing with the privacy notice. I have a four-page privacy summary
that’s four pages and a much longer privacy statement, the full privacy statement so that
+++ 00:13:03 +++
you can get behind the scenes if you will and to get more information. There was an enforcement action not too long ago
by the Federal Trade Commission against Sears Holding Company that basically said you can’t bury icky practices in a
long privacy statement which is why I came up with the concept of the summary and the full one. Of course, the summary
makes reference to the fact that the full is what governs.
+++ 00:13:36 +++
And so I think that helps give you some context for what I have to do. The reality is I can’t develop a notice and consent in
a vacuum. And so I’m working with all of the partners in the organization that meet the component of that consent. And I
do that for a lot of reasons. One, to make sure it’s accurate in terms of what the current practice is. But also to reinforce to
them what they need to be doing and if they want to do something different or if they’re not sure what
+++ 00:14:10 +++
they’re doing is complying that they come to me to provide advice and consultation. In a mature organization they typically
review privacy consents and notices maybe annually because the business doesn’t change that much. In a dynamic
environment like the one I’m in, I’m constantly changing the consent for not only to make sure it’s reflecting current
practices, but more specially to be
+++ 00:14:43 +++
transparent, not sometimes just based on customer communications with our customer service people or genetic
counseling. We’re understanding some confusion or something we could be more clear about. And so the goal is to make
sure that we’re addressing that in our consent and in our privacy statement. So I work in that process I work with the lab
folks, marketing
+++ 00:15:15 +++
folks, product development, IT, business development and customer service and genetic counseling just to make sure
we’re all on the same page with regard to the process. So really then the next job after developing the consent and the
privacy notice is to make sure that execution is following what our notice and our consent does by involving everyone in
the development of it. That really helps ensure the
+++ 00:15:47 +++
execution itself. From a legal perspective, if you are not following generally accepted industry standards that’s considered
unfair trade practice. But if you are not following with your publishing in your privacy notice or your consent that’s an
accepted trade practice which is triple damages but even more specially has huge reputation risk. And so it’s really
+++ 00:16:20 +++
important that if you’re trying to build customer trust and loyalty based on your brand with your customers and you think
about those notices for what they are, they really are a contract with your customers. Now, my life is developing policies
and procedures doing annual and new hire training on both privacy and security. I conduct due diligence regarding the
security practices with any partner or
+++ 00:16:54 +++
any service provider that may have access to our personal information. Obviously, transparently disclosed in our privacy
notice. Insure that we properly contract with them and hold them responsible for compliance to the appropriate privacy
laws and regulations and appropriate privacy practices. And then periodically monitoring them for adherence to them. I
mentioned earlier that while we’re maintaining HIPAA compliance, I’m moving this to a more comprehensive
+++ 00:17:29 +++
model which is ISO 27002. Lastly, I spend a lot of time as the consult and advisor to the various business folks regarding
privacy and security, regarding HIPAA, regarding GINA and if you didn’t know a 39-state privacy law, about genetic
privacy laws. In fact, I built a spreadsheet that bears the requirements of each law. So I can look for the commonality and
the differences. And if you didn’t know, there are five states that consider genetic
+++ 00:18:07 +++
information to be your exclusive personal property. Additionally, I train marketing and advertising folks in advertising law
compliance. The primary principle there, of course, is to make sure that we can substantiate any claims that we make. In
fact, sometimes if you look at our PR relations you’ll see a bunch of footnotes at the bottom. I told them I don’t care if they
footnoted or not I just wanted them to be able to do that. I wear a bunch of other
+++ 00:18:40 +++
hats, obviously, in an entrepreneurial organization you do that, but those are the principal areas.
Lisa Ikemoto: Thank you. Michael Wilkes, do you mean speaking as a physician for researchers as one who trains
physicians.
+++ 00:18:54 +++
Michael Wilkes: Sure. I think what I’d like to do is that most of you have been to the doctor at some point. So I don’t want
to review with you what I do in the office but I would like to sort of look at it as a big picture. The two things or perhaps
three things that I do most actively is one, train doctors, by doctors I mean medical students and residents and practicing
doctors and others meaning physicians assistants and nurse practitioners. And, you know,
+++ 00:19:26 +++
that’s pretty clear. Somebody needs to train them. But we are entering a new paradigm and it’s an incredibly difficult job
all of a sudden. It used to be that when I went to medical school that there were exams and those exams you took that
tested primarily your knowledge, that’s not the case any more. And things are changing and then we’re looking far more at
what you do with that knowledge and how you incorporate that and how you communicate and integrate ethics and social
behaviors in anthropology, et cetera, into
+++ 00:20:00 +++
critical decision-making. We do that for some interesting testing paradigms which I’m not going to talk about now. I do
want to talk specifically about this concept of shared decision-making which is probably not familiar to you unless you’re in
the healthcare profession. It wasn’t terribly long ago that you went to your doctor or your parents went to their doctor and
the told you that something was terribly amiss and you were told what the options were
+++ 00:20:28 +++
and that the doctor had scheduled an appointment for you to meet with the surgeon. You would meet them on Friday and
you were scheduled for surgery on next Wednesday afternoon. That doesn’t happen any more for several reasons. One,
surgeons are very busy. We can’t possibly get you an appointment next Wednesday afternoon. But more importantly
we’ve entered into this paradigm where we are no longer perceived and we don’t perceive ourselves as the decisionmakers in a
+++ 00:20:57 +++
doctor/patient dyad. We are the conveyors of information and perhaps the conveners of a meeting to discuss what’s
happening. But our job is to define the problem, to define the decision that needs to get made to explain what is often
extremely complicated information often under less than ideal circumstances. And to elicit not a decision from the patient,
but a
+++ 00:21:29 +++
set of values that the patient has so that we can make a suggestion or a recommendation for a treatment or a test that is
consistent with those values. There are lots of threats to this concept of personalized medicine. Perhaps they’re all best
summarized in this concept of a consumer as opposed to the patient. I don’t and don’t teach my students that we are in a
consumer-driven environment. My job is there 100
+++ 00:22:03 +++
percent to support the patient and to support their decisions. I have no financial responsibility. I have no financial benefit.
I get paid like most of the doctors in the state of California. Seventy-two percent of them get paid salary. And my salary is
no more or no less depending on what tests or what procedures I order. So my guidance, my student’s guidance, my
resident’s guidance is to figure out what’s in the value-- what’s consistent with the
+++ 00:22:37 +++
values of my patient. There is this concept of commercialism. We’ve heard it mentioned all ready this concept of profit and
security, security being defined or privacy being defined as financial ruin. From my perspective, commercialism is the evil
that I’m constantly fighting with my students to oppose. Privacy for me doesn’t have to be commercial ruin. It can be
profound worry. It can be fear. It can be
+++ 00:23:11 +++
anxiety. It can be depression. It can be all of the those things that happen with a word or two. It need not be a major
concept. So I spend a lot of my time looking at how to change doctors’ behaviors and how to study doctors’ behaviors and
trying to understand what motivates their behaviors. So, for example, I spent a good deal of time and perhaps a good
amount of your tax resources from federally funded projects looking at the impact of direct-to-consumer advertising of
+++ 00:23:43 +++
pharmaceutical products. And while my job isn’t to push or not push a particular drug it’s to understand in this sort of triad
of the advertiser or the marketer, the doctor and the patient what’s really going on? Whose message is being conveyed
and how is it being addressed? And I spent a lot of time doing that with pharmaceutical drugs and now doing it looking at
genetic testing. Again, I think, that
+++ 00:24:18 +++
perhaps the best thing I could do for you this afternoon is to show you a quick two minute and forty second video of
something that talks about and shows how complicated this issue is and how it can’t be reduced to ordering a test online.
That you can order the test online and that my job as a doctor to order the test involves on a computer clicking the box.
That’s not the issue. The issue is the complexity
+++ 00:24:51 +++
that goes into a simple decision. So I’m about to introduce you to Amy. Amy is 32 years old. She is at slightly higher risk of
developing breast cancer because her sister who is 34 years old has just developed breast cancer. She has come to the
doctor to have this conversation and expects that she’s actually going to just have the doctor order a test. Let’s pick this
up. She’s actually brought in a document she’s handing the doctor is a family tree. <begin video>
+++ 00:25:30 +++
Doctor: Wow. <inaudible>
Amy: No. I mean that was <inaudible> and you know me, <inaudible>.
Doctor: That doesn’t surprise me. So it looks like all of the cancer is on your mother’s side. Your father has side no
cancer at all.
Amy: Yeah, both my mom and her sister Lucy died of breast cancer in their early ‘30s.
Doctor: And your maternal uncle, do you know how old he was when he died of prostate cancer?
Amy: Maybe 55.
Doctor: Oh, I’m sorry.
Amy: It was a while ago.
+++ 00:26:07 +++
Doctor: Still. Anyway, given the history, the medical history on your mother’s side, it makes sense to talk about genetic
testing. The decision to get the testing, though, is a bit complicated. There are pros and cons to it, but I want you to make
a decision that’s best for you.
Amy: You mean it’s not just a simple blood test?
+++ 00:26:24 +++
Doctor: Well, the test itself is simple enough. As far as getting the sample it involves analyzing the sample of your blood
or saliva. But there’s some things you need to know. First, the test can’t tell us whether or not you’re definitely going to
get the disease. Instead, it can tell us whether or not you’re at high risk for cancer. There’s two common genes called
BRCA 1 and 2. Now, if you have a mutation in one of those genes it would suggest that you’ve got a greater than
average lifetime risk of developing
+++ 00:26:54 +++
either breast cancer or ovarian cancer. Your chances are about 50 to 85 percent for breast cancer and a little bit less for
ovarian cancer. But either way, it’s not 100 percent certain. So, I guess, doing the test will give us a better idea of how
much more you’re at risk as opposed to any other 31-year-old woman.
Amy: And if I don’t have one of those gene mutations?
+++ 00:27:18 +++
Doctor: Well, those are the two most common causes for hereditary breast cancer but there are others, some that are
very rare and some we don’t even know about yet. So a normal test for BRCA doesn’t mean that you won’t develop
cancer, especially given your strong family history.
Amy: So if I test positive, it won’t necessarily guarantee that I’ll get the disease, but if I test negative it won’t necessarily
reassure me that I won’t?
Doctor: Yeah, pretty much.
Amy: So then there’s no point in actually getting the testing done at all, right? I mean will it change anything?
+++ 00:27:50 +++
Doctor: Those are good questions and I kind of wanted to talk to you about your preferences because people may feel
differently about whether or when they want this information. On the one hand, the test may cause you some stress and
anxiety. But on the other, if you have a better idea of your risk, even if it’s not perfect, you might make better health
choices, like more frequent breast cancer screenings or taking
+++ 00:28:12 +++
medication that reduces the risk of breast cancer or even risk reduction surgery. Some women even use the information
to determine when they’re going to have children. But regardless because of your family history, I recommend earlier and
more frequent breast cancer screenings. The decision about whether or not to get the test basically boils down to what
you value.
Amy: I mean I didn’t expect it to be so complicated.
Doctor: Sorry. <end video>
+++ 00:28:38 +++
Michael Wilkes: So what you’ve seen is a fairly complicated discussion. You know, the doctor, perhaps, could have
done much better at explaining the material and there were times when she clearly was with the program. Although, there
were times that she checked in and clearly demonstrated that she understood what he was saying. Nonetheless, the
message was from the doctor that this isn’t a clear decision. And there are
+++ 00:29:05 +++
pros and there are cons and it really depends on this woman’s values. Again, if she was to go and get this test online she
would be not able to access this complicated decision-making. The same is true with the movement that’s pushing
towards having patients just be able to order medications without having to go through a physician. Again, perhaps I’m
biased and perhaps I’m coming from the medical perspective, but this is intended to show you the complexity of a very
+++ 00:29:39 +++
simple decision. Most people think a test you get it or you don’t get it. And we can talk more about that if you’ve got
questions, but that shows you a little bit about what I spend my time doing.
+++ 00:29:52 +++
Michael Cox: I would follow-up and the same thing is true with cholesterol tests. And so it’s a matter of, again, based on
an individual’s values how much information they want to have. But there’s a lot of testing that’s being done that’s not
genetic testing that is not directly causative.
+++ 00:30:14 +++
Michael Wilkes: This example was a genetics test, but I totally agree that it can be a blood test like cholesterol. It can be
a stress test or a stress echo exam, it could be getting a PSA, it could be a number of different things or behaviors and it
all has to do with this value. It’s not unique to genetics in any way.
Lisa Ikemoto: Dr. Lee.
+++ 00:30:40 +++
Sandra Soo-Jin Lee: Yes. Well, first, I’d like to thank the organizers for inviting me. I’m actually <inaudible> today. So
thank you for that. And as Lisa mentioned I’m an anthropologist working in bioethics, so that’s an unusual marriage, I
have to say. Anthropology is really a discipline about description and bioethics is really about prescription. So it’s been
interesting navigating that. In terms of my interest here I’ve been most interested with this issue of how do we translate
+++ 00:31:08 +++
information gained from emerging genetic technologies in the sense of practice. And how do we think about the impact of
technology not just in terms of the technical aspects, but really understanding the moral, the social context in which it’s
being received. So I’m going to talk about two studies that I’m leading that, I think, addresses some of these
+++ 00:31:31 +++
questions most directly. The first is what Lisa mentioned, a recently funded NIH project that is entitled “Social Networking
and Personal Genomics: Implications for Health Research.” And this is an ethnographic study that we are conducting with
23andMe which is a personal genomics company in the Bay Area. I should say from the outset that all of the funding is
through NIH. The company is not funding the study in any way, but what they have agreed to do is help us with
+++ 00:32:01 +++
recruitment. So what we’re hoping to do is to actually talk to consumers, who I think-- it’s a stake holding group that we
don’t have a lot of empirical work on in terms of what do end users actually do with the information they receive from
these online companies in terms of behaviors that they change or how do they interpret the information that they receive
in terms of these genetic tests. So what our plan is is to conduct a series of focus groups and in depth interviews with
these end users and try to understand what-- how they interpret the information?
+++ 00:32:35 +++
What their expectations were going in in terms of ordering the tests? And who do they share the information with? How
do they understand the various agreements that they sign when they sign up for the services? Is it informed consent
form? Is the informed consent treated similarly to the privacy statement, to the sales agreement? Do they understand
they could choose to sign up for bio-banking? And did
+++ 00:33:02 +++
they remember that they chose yes or no and what are the implications of this? So it’s really an exploratory study of trying
to fill a gap in the evidence that isn’t there right now in terms of trying to understand what the policy implications are for
this nascent industry. The second study that I’ll mention is one that comes from the course that the genetics department
at Stanford offered this summer. Some of you may know of the Berkeley initiative to
+++ 00:33:35 +++
test incoming freshman. Well, about the time that that was announced in the press, Stanford was also starting an elective
course, a genetics course, offered to physicians-- I should say MD students, medical students and Ph.D. students. And
this was a course that was offered by an MD, Ph.D. student as well as a faculty member in the genetics department. And
as part of that course, students were offered the option to sign up for genotyping services, either
+++ 00:34:10 +++
through 23andMe or ________________ at a subsidized rate of $99, where the school of medicine picked up the rest of
the cost. I should say this course was debated by a panel of 27 faculty over the course of a year at Stanford trying to
work out the kinks in terms of ethical review. And what we came up with is that this course, which was an elective course,
offered students the option to sign up for services on their own. So Stanford actually never
+++ 00:34:44 +++
touched the data. They never actually analyzed any tests. If students wanted to opt for this testing service they would
sign up on their own with the various companies. And whether or not they signed up for these tests would be blind to the
instructors. The idea here was that they would have their own genetic information to use for course exercises to
understand the limitations of the tests, and to really try to use their own personal data for pedagogical reasons.
+++ 00:35:19 +++
My study is a qualitative study which included pre and
post test interviews of these students to understand what their expectations were as Ph.D. students and medical students
of the services. And then to talk with them after they’ve seen their results to understand what they did with the information
and whether their expectations can be met, if their views of these services had changed or shifted. And then we’ll also
interview them again in about six months to
+++ 00:35:50 +++
see if those sentiments, post test sentiments were saved. So those are the two studies that I’m involved in at Stanford.
But, I think, it comes out of the putative shift, if you will, that many of these companies would suggest from a more
traditional approach to genetic testing where uh.. no genetic test should be offered without a healthcare provider. That
there should be pre and post test genetic counseling.
+++ 00:36:24 +++
That you only test for actionable information. And that genetic information in the sense is special and that we should treat
it as such. To what, if I think, if you looked at some of these companies and what they are proposing, that there are-there’s a deep desire among the public for direct access for this information. That there’s really no need to prove high risk
in order to be tested. That individuals should
+++ 00:36:52 +++
have ownership over that information. And that genetic information should be in a sense treated perhaps not as special as
we have over the years. So these studies that we’re conducting at Stanford is really to test whether or not that shift is
actually occurring among a generalized public. And to understand what the implications are in terms of ethics, if indeed,
this industry is going to open up these tests to a wider public in a more _____________ way.
Start continued RED LINE here: 00:37:28
Lisa Ikemoto: And Beatrice, if you can give us the state’s perspective.
Beatrice O’Keefe: Yes, thank you. Raise your hand in the back if you can’t hear me. I am the chief of laboratory field
services in the California Department of Public Health and our goal is to ensure the safety of public health through
accurate laboratory testing and through licensure and inspection of blood banks and tissue banks. California has a long
history of regulation of laboratory testing. Back in 1928, we had voluntary certification of laboratories. Then in 1938 there
was a requirement that any independent laboratory such as Western Lab Corps [ph?] that was offering tests to the public
had to be licensed in California. And then we did have some changes, I believe, in the ‘50s or ‘60s. We required licensure
of the individuals who worked in those laboratories to ensure that they were qualified and they were properly trained and
had the proper experience. And then in 1990 we saw kind of a change. Part of that time every test that was performed
had to be ordered by a physician. But in 1990, we saw the introduction of non-diagnostic health assessment. And those
are the kinds of healthcares that you might see at a pharmacy or, you know, you might just see at a health fair being
offered somewhere. And at that time, individuals, there were five tests that any individual could order for themselves. An
example would be like a pregnancy test, a glucose test or a cholesterol test. And there were two other tests that they
could order without a physician order. And the non-diagnostic health assessment was to do like a screening test. And then
if something was found that was abnormal to then refer those persons to a physician for follow-up and treatment. We
didn’t see too much happening between 1990 and 2000 but in 2000 we saw an expansion in the tests that could be
ordered. The FDA came out and said that any test that was available over the counter could be self ordered. And so there
has been an expansion in those kinds of tests. So now there’s something like 50 to 70 tests that one can order up
themselves and that’s allowed under most states and federal law. Then in 2004 in California we saw the first of what we
determined Internet ordering. And this is where an individual goes on the Internet and orders, basically, a test on
themselves. And first we received hormonal tests being ordered over the Internet. And then these companies that were
offering those tests were often associated with the companies that were selling hormonal creams or things that someone
would use if they found that they were deficient in estrogen or testosterone or whatever. And then in 2008 we saw the first
of genetic tests being offered through the Internet. And this raised the flags of laboratory field services not only here in
California, but in New York and states in Maryland where all three of these states felt that these tests were required to be
regulated under a state law. However, CLIA, which was mentioned, which is the federal program, they had determined
that risk assessment was not subject to federal law at that time. So basically, California, New York and Maryland were out
there alone trying to decide what we needed to do about these tests. As been mentioned California licenses or registers
approximately 20,000 laboratories. These include hospitals, clinics, physician offices. We also license or certify
approximately 60,000 personnel. These include your clinical lab scientists that work in your laboratories, the unseen
person that are behind the doors that you can’t enter. We also license the directors, Ph.D. directors who direct
laboratories in California. And we also certify the phlebotomists who draw your blood. You’re probably all familiar with the
case that happened probably about 10 years now, where a phlebotomist, at that time they were not certified, had reused
needles on a variety of patients and had potentially exposed them to HIV or hepatitis. So as a result of that there was
legislation that was passed that required that phlebotomists be certified. We also licensed the blood banks that collect
your blood that’s used in transfusions or plasma collection. And we also license tissue banks that store tissue for
transplantation or tissue graphs. Our laws are covered under the health and safety code and also business and
professions code and also code of regulations. Sometimes when the public calls me and complains about a particular
regulation I sometimes feel or think they feel that I’m the one that’s creating these laws and regulations. But actually the
legislature through a variety of legislation over the years has given direction to laboratory field services as to regulation of
labs and personnel. I want to go over some of the ways that the state ensures that laboratory tests are accurate. First of
all, it starts with the licensing of the facility. We ensure that the lab director’s qualified. If it’s a medical director we ensure
there is a current medical license and that there has been no suspension or prohibition against his license. We recently
had a physician who applied who wanted to head up a clinical laboratory but he actually had a prohibition from the
medical board of California that he could not work in a medical practice by himself. And he was currently a <inaudible>
practitioner. So we would not allow him to be a director. We also ensure that the corporate entity if it’s in the laboratory
has current corporate status in California. And is enrolled with the secretary of state or a licensed laboratory or a physician
laboratory. We do an inspection prior to giving them a license. We ensure that they have a place of business, that they
have equipment appropriate for the testing that they’re going to be offering. That they have documentation of the
validation for the tests that they’re going to be performing. We also make sure that they have personnel that are qualified
under both state and federal law to perform the test. We also do biannual inspections of these laboratories once they’re
licensed. And we also ensure that they’re enrolled in proficiency testing and that’s blind testing where a laboratory is sent
specimens and they analyze those specimens and then send them back and they get a result. And they have to score a
satisfactory score of 80 percent. We also ensure that labs that aren’t subject to this kind of efficiency testing, for instance,
these lab developed tests or genetic tests that they have a way of twice a year verifying that their test results are accurate.
And we also do complaint investigations. We get about 200 to 300 complaints a year from the public regarding laboratory
testing for the personnel in the laboratories. We investigate those complaints to determine whether the allegation is
substantiated or not. So through all of those methods, we try to ensure the safety of the public.
Lisa Ikemoto: I have a question now. It’s a compound question. And if each of you could answer any one part of it or all
of it, that would be nice. So my question is how will consumer information be taken up in clinical practice, especially in the
role of direct-to-consumer genetic testing? And here’s the other part of it. What is the appropriate line between direct-toconsumer and physician-order models for genetic testing? So perhaps, Michael Wilkes, you can start.
Michael Wilkes: Sure. I’m not sure what the models are.
Lisa Ikemoto: Physician-order models. So going through the doctor to get your genetic test so the model you showed in
the video.
Michael Wilkes: Absolutely. And it’s a great question. And in many ways we can design it in any way we want. But it
isn’t necessarily going to play out that way. I think that consumers are in a mindset now where there’s an enormous
amount of distrust of everyone be it government, be it doctors, be it healthcare systems, you know, the advertisers and
promoters. And it is, I would say, in my practice of adult medicine, I’m an internist, one out of every ten or so patients asks
me for something that they have seen promoted to them. And to be honest, I have several choices. I can take the easy
route which is to give it to them. That will cause me two great advantages. One it will shorten the amount of time I need to
spend with the patient. And second of all, when they go and give out as they often do consumer satisfaction
questionnaires or whatever those patients that get those are going to be satisfied because I listened to them and I
respected them. That’s option A. Option B is I can engage them in a shared decision-making conversation where I give
them the information and allow them to make the decision for themselves. That can be very time consuming. A lot
depends on the patient and their level of education, their time, their willingness to engage with me in discussion. And the
third option is if I do not think the drug or the test is appropriate I can say no. And they could ask me why and I could ask
them how much time they have and I can explain to them why or I can just say no. Clearly, as I go down the list as
consumers you can think of what you’d like your doctor and how you’d like them to treat you as a patient. It is
occasionally, particularly with older patients that they really want me to make a decision for them and they respect that.
But as you go down in age, that from the younger patients, my patients that are in their late teens or early twenties don’t
even want engage me in discussion. They just want to order the test. So, you know, we clearly have a new paradigm and
how is that going to relate to genetic testing? We’re at the very beginning of looking at tests. And we have only a small
number of tests, genetic tests that are available. Those that are available an even smaller number result in anything that
you can do meaningfully for a patient. So there’s a condition called Huntington’s disease. There’s a wonderful test for
Huntington’s disease. Unfortunately, there’s absolutely nothing that the medical profession can do with that information.
Now, there’s a lot that a human being can do with that information with regard to changing their values and direction of
their life and decisions that they make, but many patients will want not to know that and make the decisions and live their
life without knowing that they either face that risk or have thought of that risk. Again, we can clarify that disease quite
carefully. Others will say, yes, I definitely want to know that I’ve got Huntington’s disease because I’m going to not go to
medical school. I’m going to decide that I’m going to spend my money now and I don’t need to put it in CDs and long term
things because my life expectancy is significantly reduced. So, again, we’re in a position collectively you as patients and
me as a provider where we need to navigate the waters. And there is no clear and easy answer. And it may be that
certain diseases, it may be that certain tests have different values from a perspective of what we want the doctor to get
involved with. Those are things that we all have to engage in dialogue.
Lisa Ikemoto: Sandra Lee.
Sandra Soo-Jin Lee: Well, I think, many of you may be aware of a lot of activity on the part of the FDA side all ready.
And, in particular, the GAO issued a pretty stinging investigatory report on the DTC history. And what it concluded was
that perhaps relying on companies to provide medical information or any type of counseling with regard to what you
should for your health is perhaps not a great idea. And, I think, one of the challenges is that not all tests are the same.
And so how we treat a test for Warfarin sensitivity versus a test for the avoidance of the errors, which are two tests that
one company offers may be very different. And, I think, now we have companies that are bundling these tests into one
product. And so it’s very difficult, I think, to regulate. I think one suggestion that has come out recently is to have this kind
of risk stratification system where you would rate the various tests according to the potential risk. Right now, we’re
working kind of in a vacuum because we don’t know what these consumers actually do with this information, what do they
end up actually using in terms of information about Warfarin testing versus the avoidance of errors. And so, I think, that,
you know, one of the difficulties, for example, that the FDA has is trying to do any type of pre-market approval relies on a
certain level of expertise in adjudicating these various tests. And I’m not sure that the agency actually has the bandwidth
to do that. And I’m not sure that the physicians actually are really in a position to provide helpful information either. I mean
if we really take a hard look at the genetics education of clinicians kind of coming down the pipeline, I think, there’s some
worry to be had here in terms of whether or not we have the vernacular, the genetics vernacular, if you will, among
clinicians to really give useful information to their patients who may be coming to their office with these test results. And
so, I think, it’s a very big problem.
Michael Wilkes: Can I ask you <inaudible>? I couldn’t agree more. And I would say even stronger that we don’t. You
know, we’re training a new generation of doctors with those skills and they won’t have other skills that will come along.
But, you know, the number of doctors that we train each year, the number we graduate is 16,000. You know, there are
900,000 practicing doctors. So clearly, we’re not going to make a very big dent in this quickly. You may think, well, okay
there are geneticists and there are genetic counselors, but let me tell you there are 1,200 geneticists and 27 that are
genetic counselors in the entire United States of America. So this is something that has a potentially huge implication in
terms of where patients go to get accurate information if they can’t get it from the doctor. Again, sort of trashing my own
profession herebut we do a horrible job at continuing medical education. And we have drug companies that come in and
sponsor talks on boats and distant locations and they don’t check to see if you’re there. They might ask 12 true/false
questions. You have to get 80 percent correct to get your certificate. I mean this is not the kind of system that anyone
should feel comfortable that their doctors are being updated in the knowledge. Now, it isn’t to say that doctors don’t take
this seriously on their own, but the majority, I’m afraid don’t. So we have a huge knowledge gap.
Beatrice O’Keefe: It’s interesting, I had a physician friend who once told me that on his elderly patients he would order
panels, hand [ph?] panel, blood panel, whatever. And then he would find a slight abnormality in the results. And if you
know clinical lab tests there’s a wide range and it depends on where your controls are running that day. So slightly
abnormal result may not really mean anything clinically. But because he got a slightly abnormal result he was forced to
order a lot of other tests to either confirm or rule out that there really was something wrong with this patient. So, I think,
genetic tests can offer the same problem for physicians today. If somebody gets this genetic test and comes to the doctor
and says, I have a risk for cardiovascular, I think the current understanding of what I would think the physician would do is
he would weigh the person. He would take their blood pressure. He might order a cholesterol test. And he might order a
glucose test. So he really hasn’t been able to immediately utilize that genetic test in coming up with the treatment or a
diagnosis. So, I think, in genetic testing, as far as I can see, we’re likely the first generation. In order to really move
forward and to be clinically relevant to the physician they have to be easy to use. They have to make economic sense.
And the final result has to be useful. And there has to be clinical relevance. So, I think, this first phase that we’re getting
at, you know, these risk analysis, but we need to be able to move to the second phase and say, okay, we’ve got the risk
analysis. Now, we can immediately translate this into a use for the patient. And, I think, where we see the most relevant
use right now is the use from eugenics [ph?] where you actually can show whether a patient is going to be able to
metabolize a particular drug level [ph?] or not. And, I think, the other problem that we have is that like our general
population in California we have an aging population. We probably have an aging physician population. They’re used to
standards of genetic tests where you take a person’s cells, you grow it out, you get it in mitosis and then you stain the cell
and break it apart and you take pictures. And you break apart the chromosomes and based on the chromosomes you can
say whether there’s a particular abnormality. They’re also very familiar with tests for, for instance, cystic fibrosis where the
gene mutations that might result in the child having cystic fibrosis are fairly well-known and the risks are fairly well-known.
So, I think, physicians are used to those traditional models. And, I think, these genetic tests, you know, just have a whole
host of questions that perhaps they’re not able to deal with right now. So, I think, you know, as we move forward, the new
generation of physicians that have to be trained, those who are older and still practicing are going to have to be trained in
this new arena.
Michael Cox: So regarding where the line is, Pathway’s been described as a D-to-C company but really never
considered itself a D-to-C company. And the reason is because we had our own onsite licensed physician ordering tests,
reviewing the results and determining whether the results were accurate to release the information. And we had
established certain criteria or red flags, as we call them that-- where we would not release a report without reaching out to
the consumer to try to have consultation with them prior to the consumer getting some results. It could be concerning to
them. So we’ve been classified as a D-to-C but we have sort of a hybrid model using your own physician. Now, since the
FDA activity in the summer, we decided to suspend that model and we are now using-- allowing consumers to use their
personal physicians to order tests. And we did that really to demonstrate good faith with the FDA and show them that we
wanted to work through the process with them. We really do think that different types of tests based on risk as we’ve
talked about. And also if you can establish certain controls like controls that we’ve established. If you’re collecting that
information, are they taking the drug that your drug response is potentially going to tell them whether it’s efficacious for
them or whether they need to change their doses? Maybe the physician needs to be involved in the ordering and release
of that. If they’re not, maybe it’s not important. The same thing with carrier status. If the person is pregnant then,
obviously, you want to make sure there’s a consultation. I don’t think there’s a one-size fits all regulatory model. I think it
really is different by the type of tests. And you may be able to reveal [ph?] some types of information and build some
controls around them like Pathway is doing to deliver that information responsibly.
Lisa Ikemoto: Thank you. I’m going to ask one more question and then we’ll open it up for discussion. And this is a
regulatory question, all of you have mentioned the FDA, a very significant regulatory body in this area. Bea was giving a
little bit of a history of California’s role in testing. She mentioned that in 2008 when genetic testing first went direct-toconsumer, CLIA, the federal government through CLIA had initially decided that that was not subject to its jurisdiction
under its regulatory power. But as Sandra mentioned, as of June 16 of this year, so this summer the FDA has now said it
is seriously considering expanding its own authority into regulating direct-to-consumer, actually, medical LDTs, laboratory
developed tests which by the way include direct-to-consumer test kits. So my question, I guess, for each of you or any of
who want to answer this, is what is the appropriate rational of the FDA <inaudible> right to do so or not to do so? And
what are the implications of the FDA stepping up to regulate these?
Beatrice O’Keefe: Well, let me clarify first, the way these genetic tests are done they can be split up. One, you can,
have a laboratory that’s only doing genetic analysis. You can have a laboratory such as Pathway that’s doing the genetic
analysis plus applying a software algorithm together with the risk. Or you can have a laboratory that’s only doing the risk
analysis. And CLIA had said the laboratory that’s only doing the risk analysis is not subject to the CLIA federal law.
However, again, as I said, states California, New York and Maryland have said that risk analysis is part of the whole test.
And without the genetic analysis by itself it’s meaningless to the physician. He needs to have that risk analysis placed on
their so that he has some meaning. When these tests first kind of came out, I as a state regulator, would have welcomed
the FDA stepping in and giving us some guidance and direction because basically we were out there on our own and
looking at these tests and trying to evaluate whether they were really accurate. And in California, unfortunately, our law
only-- we only look at the technical aspects of the tests. We really don’t have any authority to look at the clinical relevance
of the test. So I really was looking to the FDA to move forward. And I think they’ve been very slow. This whole issue of the
risk analysis was their original direction and their concern. But now, they’ve expanded it into all laboratory developed tests
and there’s several thousand out there. So in talking to people, you know, it’s almost like they’ve taken on an albatross
that’s almost more than they could possibly handle. And so they may have to come up with a way of separating these out.
And, I think, the first project is perhaps to get a registry, to find out, how many lab developed tests are out there first of all.
And then to classify them into risk, is this test high risk, moderate risk or low. And then we’ll look at only a segment of
those tests.
Lisa Ikemoto: Can I ask a follow-up question? It’s actually California, New York and Maryland are the states that have
stepped into regulate. And are New York and Maryland using a different approach than California? If so, what is it?
Beatrice O’Keefe: Maryland has a stricter application of the physician order than California does. Currently Internet
ordering with the physician on staff, director who qualifies is allowed under California law as [ph?] the conversations we’ve
had with the Medical Board of California. Maryland has a stricter interpretation. I’m not sure what New York is. New York
is currently looking at these laboratories the same as California has. We’ve licensed many of these labs in California. And
I’m not sure whether they’ve been licensed in New York.
Michael Wilkes: So I mean I couldn’t agree more. We need a strong FDA in here. I think that there are several threats to
that. The FDA clearly needs a resource to do this. They can’t rely on the existing resources. The second threat I would
point out to you is the conflict free advisory boards. You clearly need these advisory boards that are conflict free. And FDA
over the past sort of eight or ten years has been an embarrassment in terms of being at the wheel selecting advisors who
have no conflicts of interest. And that clearly needs to happen. I would also point out that the FDA has a social
responsibility to do this in our country but it’s actually bigger than that because the whole world looks to the FDA for its
guidance and expertise. The last thing I would point as perhaps the biggest threat to the FDA is not the leadership. We
have absolute leadership right now at the FDA. The problem is the legislation or the legislature, I should say. I don't know
if you’re all familiar with what used to be called AHCPR, the Agency for Healthcare Policy and Research Fund. But that
was almost annihilated and defunded because it dared to suggest that certain policies and procedures on the part of the
medical practice community were not evidence-based. And it was the American College of Orthopedic Surgeons that
sued, they lost the suit, and as I understand it they went to the legislature. The legislature in Washington went and said
either you stop this, issuing these guidelines that threaten our constituents, our surgeons or we’re going to completely
defund you. They ended up changing. The agency now is called AHRQ, the old AHCPR and it is an entirely-- its
existence depends on them not being too political, and not entering the practice advising arena. So the FDA would need
to have insurance if they enter this that they can advise and legislate in ways that protect the public which is very
consistent. That’s what the FDA is all about. But that the legislature wouldn’t be second guessing and that the money
appropriations wouldn’t have to be tied to a constant vote in either the House or the Senate for a vote.
Michael Cox: Just to clarify on New York. New York requires their own permit as their own standards for getting that
permit. And they require that the licensed physician be a New York licensed physician. So Pathway is not currently doing
business in New York but has made an application for the permitting process. Another set of standards is CAP, the
College of American Pathologists. They have another rigorous set of standards and that is the path that Pathway is
currently on now to become CAP certified. I think we were all kind of surprised by what took place this summer. I think
you know that the secretary had this advisory committee on genetics and health and society and they’ve come up with a
number of recommendations over the last several years and there have been no actions taken with regard to that. And so
while the FDA in hindsight is saying they’ve always had this discretionary enforcement power it was completely latent.
There was nothing happening there. And, I think, honestly some of this was driven by Congress as opposed to driven by-the FDA’s activities were driven by Congress as opposed to themselves. We’re having regular communications with FDA.
They want to work through this process in a responsible way. Today, they’ve not stopped any D-to-C testing. They’ve not
stopped any legitimate testing. I think they’re trying to get their arms around, as you say, this albatross of it’s not just
genetic testing, it’s all laboratory developed testing. It’s a much bigger issue. And it’s going to be interesting to see how
the kind of new Congress that may be providing some different direction to FDA, how that’s going to work out. I think you
may know that NIH, this past week, Francis Collins introduced a new genetic test registry to start trying to get some
feedback about that. I think they roll that out next spring. It’s intended to be voluntary reporting and there’s been a lot to
do about if it’s voluntary how good is it going to be? But keep in mind, the FTC is sitting in the background and can be the
enforcement vehicle for if you’re disclosing one thing and that’s not accurate, they can make a pretty good statement
about that. So I think it’s a good first step for us to-- for all of us to participate in a genetic test registry. And, I think, there
probably will be new standards around labeling and criteria. We use 1,000 cases-- we require 1,000 cases and 1,000
controls for our scientific criteria. We don’t know what others do. It would be good if we could agree on some minimum
criteria for our scientific studies <inaudible>. Even make some standards around how we calculate violation [ph?] risks. It
would take some of the variants out of our reporting. So, I think, it’s always to be expected. It’s happened throughout
history that regulation is a lost trail of innovation. You can’t stop innovation and wait for regulations and laws to catch up.
There’s always going to be this period of time where you’re trying to right size things. And it’s just a natural process that
we’re going through.
Sandra Soo-Jin Lee: I agree with everything that’s been said. I think that the FDA definitely dragged their heels, but I
think, actually it was Pathway’s roll out at Walgreens that it prompted a closer look.
Beatrice O’Keefe: <inaudible>.
Sandra Soo-Jin Lee: But I do think that the FDA could leverage this NIH registry before it’s even started.
Lisa Ikemoto: Well, here’s a question. I heard about the registry and I went to the website and there actually is a
website. And it basically says under development page so it looks good. And what is supposed to go into the registry,
what kind of information?
Michael Cox: There is a webpage that defines the criteria of downloading. I haven’t had a chance to digest it yet. But
yeah, it-- they’re asking for feedback on the criteria. Again, I think it’s going to be an involving type process. What I’m not
clear about is whether there’s a requirement for mandatory fields or anything like that. I just haven’t had a chance.
Beatrice O’Keefe: And, I think, one of the things our understanding of laboratory developed tests, for instance, if
laboratory has an FDA approved test and modifies that test, for instance, they change the amount of time the reagents are
stable or they change the specimen type that can be used in the test that becomes a laboratory developed test. So any of
these modifications if the FDA uses that terminology, lab developed test, I mean there could be thousands and thousands
of those tests out there.
Lisa Ikemoto: Great. Now, it’s your turn. Questions.
M1: In the movie that you showed, I felt there was an invisible third person, the insurance company. As the doctor
<inaudible> in giving them this advice on whether to take the test I wanted to say, if you take the test whatever we find out
might be useful to you, but if you lose your job and then you’re trying to get some insurance, that’s possibly very useful to
the insurance company as well. So are there two consumers? That’s my question. Is there the patient and the insurance
company? Do you talk to both of them?
Michael Wilkes: Yeah, there’s not for me. I mean the patient is king. And I need to know about what the insurance
companies would do. But I don’t consider the insurance company, you know, and their fiduciary wellbeing in my
responsibility at all. It is clearly my job to let a patient know that even with the new genome laws that they will protect-- that
they can’t be discriminated against with regard to health insurance that they can absolutely be discriminated against in
other social areas including life insurance and the like. So at that point after I’ve gone through a careful discussion with
them they may very well opt to go <inaudible> or one of the other commercial labs on their own, get the test anonymously
and then come back. For those of you who that are Sacramento Bee readers will know that I’ve recently written about
what in the medical record actually belongs to you and who controls that. To me that’s a much more fundamental
question. I mean the hospitals say that everything I do, everything I say has to be captured in my medical record. I
fundamentally disagree and do not keep that information. And I have what’s called a shadow chart and I keep that
because I don’t trust myself to remember it, but I keep that information filed alphabetically but there are certain things
about people’s sexuality or people’s tests that they tell me that don’t rise to the level of putting it in the chart. And they
have to understand that on one side if it’s not in the chart that means other people will not have access to that, not
insurance companies and things but other surgeons or gynecologists or whatever are taking care of them won’t know that
information unless they tell them. But they’re adults and they can decide who they want to tell them and who they don't
want to tell. So I don’t consider the insurance company a partner of me.
Sandra Soo-Jin Lee: I just had a question for Michael. So do you worry if a patient comes to you and they have one of
these reports from D-to-C company and they ask you to put it in their record and you don’t act on something that’s listed
as high risk do you feel uncomfortable with them?
Michael Wilkes: Yeah. So the question is a little bit different. That’s a great question. It is. So somebody comes to me
and they have a test that would be by medical standards considered high risk on what would I do with it? And there are
two options, I think, for me. One is that I can act on it depending on what the test is, if that act means different things. Or
fortunately I can repeat it if I don’t believe the results. And there was one of the largest suits against the-- this is a law
school, you probably know the case. But on one of the largest malpractice suits against the UC system involved an HIV
patient who came to UCLA, told UCLA that they were HIV positive and were treated for years as though they were HIV
positive and UCLA never repeated the test because they had some record that showed it was HIV positive. In fact, they
were not HIV positive. They were HIV negative and the jury or whatever found in favor of the patient. They should have
gotten that. But that’s okay with an HIV test which is less than $100. But when you’re talking about a $2,500 test do you
want to repeat that because you don’t believe the transmission from the patient it gets very complicated. And I’m not sure.
I’m a dumb doctor, not a lawyer. But the issue of who owns the medical information I must have talked to half a dozen
lawyers including hospital lawyers and lawyers here, et cetera, and it’s a very unclear area about who controls that
medical information. And it’s clear that I don’t control it. But the question is do I have an obligation on behalf of the
hospital to put everything I know and learn from a patient in the record? Or does the patient control that information? And
can they ask me not to put that into the record?
Beatrice O’Keefe: Well, two things. One, I want to address the billing. We’re always surprised at laboratory field services
at the number of complaints that we get about physician billing. And these are patients who have had lab tests done and I
assume that they have discussed with the physician the tests that are needed and understand that and understand the
cost. But after they get the results back they want to contest the amount of money that they have to pay. So I think that’s
an interesting aside for billing of these tests. And then the other issue is about consumer [ph?] preference. Under the
California law the patient has the right to the access of any of his laboratory results if he requests them from physicians.
So he can get electronic transmission from the laboratory. However, under most state and federal law the laboratory
cannot transmit it to the patient without that information from the patient that they want that result. So that is the-- there is
an exception, though, however, HIV cannot be transmitted to the patient directly without going through the physician.
Michael Wilkes: And, again, I would just ask you to <inaudible>. What’s really the difference between an HIV test and a
Huntington’s disease test from a social or anthropologic? I mean both can be devastating. Both can be lead a person to
go and commit suicide. I mean clearly one is infectious and one is not. Aside from that, I would argue that that standard
ought to apply to a lot of other tests.
Lisa Ikemoto: More questions?
M2: Michael Cox, maybe could you tell us a little bit about you sort of alluded to and referenced a couple of times on your
experience this summer with Walgreens and the FDA’s reaction. Can you tell us about what your plan was, the FDA’s
reaction and what else <inaudible> how you’re thinking about, you know, going forward in your sort of hybrid model that
you talked about earlier?
Michael Cox: So a part of my role, because we don’t have counsel on board, <inaudible> cadre of external counsels.
And I did have counsel involved in that whole process and as did Walgreens. I mean hindsight is always 20/20 but given
the facts of where we were at at that point we all felt reasonably comfortable in stocking that test on the shelves. We did
an advanced press release to writers and as you know a writer served on the FDA commission <inaudible> surprising
them, I guess and the rest is history. We attended the two-day public hearings. We had a meeting with the FDA that very
week. I think when we walked into the meeting, we were looked upon in one fashion, by the end of the meeting and in
certain subsequent meetings there’s been a great spirit of cooperation, a recognition that we were a responsible company
trying to do the right thing. We have seven Ph.D.s <inaudible> in the scientific literature, mentioned by our scientific
criteria arm. And I also mentioned how we temporarily changed our model. You know, the goal here is to as a responsible
company to work through this process with FDA. They’re not sure. They’ve set no time table for when regulations are
going to be set. They’ve got an awful lot to get their arms around here. But we’re working with them. We continue to have
meetings and written correspondence with them with regard to updating them as to where we are. So we’re trying to be
very transparent with respect to what we’re doing.
Lisa Ikemoto: I want to thank our panelist for their concluding remarks. Thank you very much.
Kevin: Well, thank you all for being here today. I think it’s been a great day, a wonderful day. I want to thank again,
Fenwick and West for their support for this program. And I hope you’ll join us in the courtyard for some refreshments in
just a few minutes after you hear from David Bell.
David Bell: I also want to join Kevin in thanking each and every one of our panelists and the other moderators that
participated today as well as the other organizers that contributed to the symposium. I think this was a very interesting
symposium. We’re in the very, very early stages of this industry but I am certain that all of you will be living with this in a
much more personal way over the next 20 years. And I do hope that this program served you well as you go to practice
and live as patients going forward as consumers. Thank you very much. End of Panel3.mov