Insights on Digital Health Venture Capital with Edward Kliphuis, Investment Director at M Ventures

Outcomes Rocket - Edward Kliphuis

Insights on Digital Health Venture Capital with Edward Kliphuis, Investment Director at M Ventures

Thanks for tuning in to the Outcomes Rocket podcast where we chat with today's most successful and inspiring health leaders. I want to personally invite you to our first inaugural Healthcare Thinkathon. It's a conference that the Outcomes Rocket and the IU Center for Health Innovation and Implementation Sciences has teamed up on. We're going to put together silo crushing practices just like we do here on the podcast except it's going to be live with inspiring keynotes and panelists. To set the tone, we're conducting a meeting where you can be part of drafting the blueprint for the future of healthcare. That's right. You could be a founding member of this group of talented industry and practitioner leaders. Join me and 200 other inspiring health leaders for the first Inaugural Healthcare Thinkathon. It's an event that you're not going to want to miss. And since there's only 200 tickets available you're going to want to act soon. So how do you learn more? Just go to outcomesrocket.health/conference. For more details on how to attend that's outcomesrocket.health/conference and you'll be able to get all the info that you need on this amazing healthcare thinkathon. That's outcomesrocket.health/conference.

I really thank you for tuning in again and I welcome you to go to outcomesrocket.health/reviews where you could write and review today's podcast because we have an amazing guest and an outstanding contributor to Health Care. His name is Edward Kliphuis. He's the investment director at M ventures. In fact he out of the four business units that they have there he is the investment director for new businesses. And so with that his responsibilities involve identifying key leaders, key talent's, key systems to help them elevate technologies that will help improve outcomes worldwide. He's also a board member at several different companies including Biolink, Wiliot, Medisafe, Akili and others. But I wanted to just give you a sneak peek into what he's doing and also just help you understand a little bit more about what Edward is up to by opening up the mic to him. So Edward welcome to the podcast my friend.

Thanks. Thanks. Great to be here.

It's a pleasure. Oh and the one thing that I did forget to mention is that Edward is in the fantastic country of the Netherlands. My heart, I left the piece of my heart in the Netherlands. Did some studies there and Edward, one of the most innovative countries in medicine overall I believe.

Yeah it's a small country. It's a rainy country. But I agree. I mean it's it's not a bad country to be in.

Very humble very humble. Anything that I was just in that intro.

Not at all not at all. I was just going to say maybe indeed for clarification purposes the new business' team indeed within adventures we are actually not affiliated with one of the business units of Merck. Basically we are affiliated sort of with the innovation side of things and scouting for all these blue sky opportunities. Basically if it's if it's crazy and if it's cool then and this the team you want to be with.

I love it. Well on the outcomes rocket Edward the listeners love crazy and cool and there ends for some really good stuff. So excited to dive into some of the the topics that we're going to cover today but before we get started I want to ask you what got you into the medical sector to begin with?

This is very good question and the answer is probably going to sound a little bit like do Guti or just like the fact that we can ultimately our product will further outcomes and hopefully make humans live longer make use of it better. And of course we want to make money along the way with our investments. But for me personally having a product that just does something good is very important.

Totally agree. You know it's doing the right thing and getting rewarded for it. So you guys work with a lot of companies there. How many companies do you guys work with.

In our portfolio, we currently have 35 active investments. We have about since we started in 2009 probably done 45 investments in total.

Amazing.

So it has been accelerating quite a bit in the last three years.

Amazing. So you're working with all these companies you've got the finger on the pulse on on different angles of healthcare out of all the things that you see this should be very interesting. What do you think is a hot topic that needs to be on every medical leaders agenda today?

Just speaking from my own agenda technology enabled healthcare. I'm a massive fan with the new business fund. We do quite a bit in digital health or as we go into technology enabled health care. If we think of a world that is moving towards outcome based payment I mean I know people have been saying this for the last 10 years but just with the Global Health conundrum aging population versus rising cost of healthcare technology is definitely the solution we believe. And so anything that basically furthers that the ad by smart TV stations around that's a data driven diagnostics smarter patient management different mood therapies to treat patients. All these things are a common theme for us. So technology with healthcare is definitely one of the key areas I would say to keep an eye on.

And Edward what a great topic. When you take a look at the different companies that are coming through the fund and who to pick who not to pick what do you find are some of the common challenges that the companies face with having a technology that's actually going to be adopted in scale? A common challenge?

To really quantifiably be able to improve patient outcomes in this sort of hybrid field but technology meet Healthcare there's a lot of wellness plays out there. There's a lot of really hardcore clinical plays out there. But in order to sort of circumvent those federal Trade Committee claims that went against the most of these for example by saying you make claims that you really can't prove we need to be able to prove the claims that we make and that in the end will really be sort of like proof of the pudding. And so that is oftentimes a challenge because as we know the regulators at this point are literally dropping regulation. How are they going to handle neural networks. It's not like with a small molecule where the chemical entity is fine. And we know exactly what we're pushing through a clinical trial. Here you have a diagnostic for example if you use a neural network to sort of like create a class of iron that constantly changes. How will the regulators handle that? I mean there's president but it's still fairly uncharted territory. So that is definitely a common challenge how to handle and how to navigate that that regulates ... to also get the claims proven in a correct way.

Yeah because at the end of the day you can't just go out there folks and say that you're doing something you're going to have to prove it and you're going to have to have those clinical trials you're going to have to have the evidence based results that Edward is talking about. I think that's a really, really great point Edward that you know oftentimes tech people that come into health care don't realize. So if you're a tech entrepreneur or even a large company wanting to get into this business think about what Edward just shared with us. You've got to be able to prove your results you can't just say that you have the results and then you've got to navigate the regulatory environment. So can you give us an example of of how your organization is creating results Edward? And maybe you could use a company that you're working with and what they're doing to do that?

I was hoping you were going to ask me this is a perfect perfect set up. So exactly I was going to use Akili as an example. I think these guys have executed at this point to, let's say the highest standard that is that is available in this industry.

And this is Akili right. So maybe you could give us a little bit on the background of Akili and then we could dive in. So the listeners know exactly where we're going with this. Akili is A K I L I. Right?

That's right.

Okay.

A. K. I. L. I. Akili interactive Labs based out of Boston and San Francisco. The company is essentially developing a digital therapeutic and it should become the first fully standalone FDA approved digital therapeutic route. The way it's presented to patients is it's a computer game so it's an action video game and the idea is that it targets cognition and it modulates cognition. We have now proven in six different sets of patients in a quantifiable manner and so the first indication we're going for the label of a class to medical device is in ADHD, pediatric ADHD. So the company basically set up the technology in a way that it could be tested in a number of feasibility studies. The technology is essentially as I said a computer game that creates a close feedback loop between the game and the brain and thereby provides a very powerful stimulus on a continuous basis through multitasking intervention that creates neuroplasticity. So you could see this as as learning on steroids. So by playing 20 minutes a day, we are able to have regulate cognition with this potential FDA approved intervention. Now the founding research was published on the cover of Nature in 2013 under the title game Changer. And that was sort of, that serve as founding research for this company. So after that we deployed technology to a number of other indications. Going from a therapeutic to a potential disease management solution to a diagnostics device and the initial indication that we're going for approval for now is a therapeutic targeting cognition and A.D.H.D. And so what we've done here is a massive pivotal trial with 330 patients. It read out in December of last year and it shattered the primary endpoint.

Wow.

That was brilliant because this is unprecedented it's never been done before.

Amazing.

And it autoregulate cognition. Now the difference between this for example and something like Ritalin is that Ritalin subdued patients like let's say across the board. So joining sits in his chair but he doesn't really is joining anyone.

Right.

With the game like this, we see that the journey is still a journey so he still might run around but he's able to concentrate and he's able to actually perform at task. This case it was over. That is the the variability of attention that was one of the points of the trial that is super boring. But he was able to actually perform this task and perform it in a significantly better manner than he was able to do before.

Wow.

So what this suggests to us is that we are able to increase cognition in patients that are suffering from really impaired cognition.

That's so amazing. So OK Edward this is pretty awesome right. I mean. And to be honest with you this is one of the things that my wife and I talk about. I've got a son he's one year old. We think about how Ritalin is being prescribed like it's candy on Halloween. And to hear that there is an alternative in video game form to help them, these kids be able to concentrate better. I mean I got to tell you when you were telling me about this I got goosebumps. I just kept getting goose bumps.

I have to tell you I mean I've been playing the game and it's got to be prescription only. But I've been playing the game that is under development. But also let's say to follow on solutions and it's really cool. Like if people tell you it's a medical device you think to yourself is this really going to be a game? But this company is really build as a hybrid between a medical device company and actual gaming studio. So there's the gaming development team that have been poached from all the best game developers such as EA or iDOS. And so the game really feels good. It really plays well and that it's supposed to do good for you as well. I mean it's the best worlds.

That's outstanding. OK. Fantastic listeners if you want to learn a little bit more about this. The website is akiliinteractive.com. We'll post a link to that in the show notes here on on Edward's podcast so that you could go and click on it because it is fascinating. They've got super talented team over there and they're doing some pretty cool things. Edward, thanks for walking us through that. That's pretty amazing.

Yeah. You're welcome.

So that's a fantastic example of what you guys are up to. Can you share of a time when you guys made a mistake or had a set back and what you learned from that setback?

Yeah I mean the whole game of venture capital you're supposed to have setbacks right? I mean otherwise I think the doctrine is that you don't take enough risk. So yeah we've had setbacks luckily not so much in the digital realm yet. I will not name any companies because I don't think it's fair that some of the learnings that we had is that there is especially in the digital side of things. There's definitely a thing called the silicon valley effect. So oftentimes if you think about the monetization of a product if you think about how to monetize a service or a product a lot of Silicon Valley based companies aim to do this through for example larger corporates. Now then they're able to sign on the Ubers and Facebooks at this world and maybe the YouTubes. And that's interesting and that works. But then if you go to a company in the Midwest all of a sudden there is a different risk appetite in those firms for whatever solution this particular company will be offering. And so we've seen a couple of times where you know these outstanding digital solutions were just too far left field for some of these more traditional firms. And then the growth curve just strands.

So that's an example of okay you know what you have this very limited monetization strategy. What else can you back that up by it like are you diversifying your monetization strategy?

Right and maybe we use some of your heuristix for this internally. We like to think that that for us an ideal solution ideal quote unquote of course. I mean there's different shades of grey but an ideal solution quote unquote is something that would for example be able to be monetized through an entity with an economic interest in the offering. What I mean by that is something like a payer system.

Yes.

Pharma company that ultimately would drive this because there is either a cost saving or revenue generating potential but it's quantifiable and in the second part of it is we like solutions that for example generate unique first party data but also provide stickiness and stickiness breaks you to third part because that stickiness is often dance is only achieved when there is a real improvement in the outcomes. So whatever the offering is if it is like a prediabetes solution for example targeting behavior change then we need to see that actually change is behavior is changed in certain populations and thereby for example people who were obese will drop in their BMI thereby going off the prediabetic scale and ultimately not becoming diabetic and that means that to date oftentimes is missing or has not been achieved yet. And then the risk is if we invest every works with diabetes companies the risk is that you're investing in maybe a company with a number of very good sales people because the real proofs let's say the solution is independent of the renewals.

Totally totally it goes back to the topic that we started talking about right? The whole proving your outcomes.

Right. Yeah absolutely.

Very cool. No that's that's a great callout Edward. Let's take a look at the other side of the coin here. Tell me about one of the proudest leadership moments that you've experience in this realm of investing and in the medical field?

That's actually an easy one again. I won't I won't call out the exact company but what happened was we were leading an investment in a company. We're based in Amsterdam and this was in a different time zone. So there's quite a difference. Co-leading in investment and through serendipity our co-lead unfortunately in last minute couldn't commit or couldn't step up. So we'd like to see ourselves as founder friendly investors. We back teams and entrepreneurs. First and foremost I mean technologies are also important of course but it's mainly the people for us that really make or break gates. So we were able to basically say to the team calm down. Nothing is going on here. We will make sure that we get this deal done. We get the investment done. We opened up our network and we managed within two weeks to basically get their routes filled out to the extent that it was something that was workable for everybody and the company is flourishing at the moment.

That's awesome.

So now we like to think that that was definitely a success story.

That's awesome. And Edward it oftentimes seems that it's those times that almost not going to work out that you have to get creative and figure it out that those moments are the ones that become your proudest moments.

Yeah absolutely. And this is also another thing we place particular emphasis on sort of like having this M. Ventures family if you will of all the companies and trying to get cross-fertilization between the different technologies and entrepreneurs. And we find that it's especially at these moments that really work well with making sure that there is ample attention for people's technologies for people's wishes and also for people's reward. Because in the end we want to repeat business with those people that have cooked up these brand new technologies.

Yeah for sure. I think that's smart. I think that's really smart. You guys are no doubt doing some really great things Edward. Tell us a little bit about an exciting project or focus that you guys are working on today if you can?

Yeah I can definitely as I mentioned I mean the field of biomarkers. And with that that's a novel biomarkers it's very very exciting. Biomarkers traditionally have been of course fairly straightforward from molecular biomarkers to things like movement or sweat or whatever. But the fact that we are now on the brink of being able to use voice for example as a biomarker or with a Akili where we use cognitive patterns as a biomarker or a company that actually I met today that is using smell as a biomarker but not just computerized like actual broken down on infection like that receptor level.

Wow.

Those things are very exciting because ultimately this could prove to be one of these cases where you can have something in the background of let's say you've been diagnosed and now we need to know how you're coping with your drugs and with the state of your disease. You have your Alexa in the background in your room and Alexa that tracks whether you're doing well or not so well and before you have an event which could have not been presented before we get prompted or not. But the caregiver gets prompted. I managed to present that. So if it comes to outcomes we think that these things are definitely very interesting to sort of close to the ground patient.

That's pretty interesting Edward and listeners something to think about right. This realm of biomarkers is changing. You know it's no longer just samples that are taken from you in a test tube. This is expanding beyond what we all have traditionally thought about. So let's take these words from Edward and incorporate them into our day to day and just know that this realm is expanding and we're in a new age in technology, in health care and so that's pretty exciting Ed. Thank you for sharing that.

And if you'll allow me to add to that one of our portfolio companies Biolink is developing a micro needle based sensor patch. So this is a patch. It looks cool it doesn't look like a medical device. You jab it on your shoulder. The guys are coming from San Diego so they put on their wet suit they go surfing with it. It's there for a week and it basically sends us throughout this week number of biomarkers continuously in your interstitial fluid which is a proxy for blood. So in the first use case were going off with their glucose so you could think of instead of having to prick your finger with a finger stick or having to put the device on there like the above livre or the Dexcom device which are still rather invasive. You now have a simple factory calibrated patch that you put on that sentence continuously year trends and ultimately that gives insights that it could have never been given before. And this is something that we are very excited about. So it's not only to mobile biomarkers it's also to continue biomarks. So for the first time we get there's longitudinal data that we actually haven't been able to sort of gather before in some patients.

So rather than stick yourself to get the sample of blood it's a patch that monitors your glucose non-invasively?

Yeah that's right. And now I hear people thinking on the other end of this line probably that we've done before. But the thing here is yes it has been done before but not as easy as these guys, not factory calibrated and not as good looking I mean the devices just look damn sexy.

Is it comfortable.

It Is. It is absolutely.

Very cool. Very cool. Another interesting company folks that one's that biolinq, with the q, biolinq.me. Check them out. Edward, no doubt. You guys are doing some cool things. We're getting close to the end here. This part of the podcast is where we do a lightning round. Let's pretend you and I are building a medical leadership course on what it takes to be successful in the business of healthcare. The ABCs of Edward. So I'd like to write out a syllabus. I've got four questions for you followed by your favorite book and your favorite podcast. Are you ready.

Oh boy. Let's go.

All right. What's the best way to improve health care outcomes?

Prevention.

Get it taken care of before it happens. What's the biggest mistake or pitfall to avoid?

Not being able to execute.

How do you stay relevant as an organization. Despite constant change.

Getting young people and people coming in we do that here as well. Kick the tires and question things and ask why the hell you do certain things?

What's one area of focus that should drive everything in a health focused organization?

Again execution just get shit done and of course there is always a focus on. Don't get me wrong. Don't go too fast but don't get sidetracked. Either have an objective and go for it.

Excellent. And what book would you recommend to the listeners?

Okay this is going to be controversial and what one of my favorite.

Bring it on. Bring it on Edward.

Is the Fountainhead. Now I know a lot of people think oh my god. Ayn Rand. What does he say. But the reason why is because it has a very I think interesting message and that is that the only way to really drive progress is to do something that you yourself believe in and if you translate it even a bit further. Those who want to be successful have to really out of the crowd. That is the incentive of the crowd to get that person down to make the rest of them. Again having the ability because everybody who was then mediocre is then all of a sudden as successful as the rest and has potential to be successful. My point of that is don't be afraid to be successful don't be afraid to be different. Don't be afraid to go into a direction and to fail and that is something that ultimately drives and creates this change.

What a great message Edward listeners do not be afraid. You've got to stick to what you're doing. Be strong in your in your efforts. I think that's such a great message Edward. What podcast would you recommend.

Of course this one. How could I recommend another one.

Thank you. Thank you. This is awesome thank you so much for that listeners. Don't worry about writing any of this down. Just go to outcomesrockets.health/mventures and you're going to find all of the show notes as well as links to the fountain head. Links to the companies that Mr. Kliphuis talked to us about. And so just go there and check it out outcomesrocket.health/mventures. Edward, before we conclude I would love if you could just share a closing thought with the listeners. And then the best place where they could get a hold of you.

So the closing thought will be and that is something a quote that is very big on our wall here in Amsterdam, "Feel the fear and do it anyway". That is definitely a mantra of our team. In terms of contact details. Feel free to e-mail me at edward.kliphuis@m-ventures.com. If that was true fast please go to our Web site, www.m-ventures.com and you will find all the contact details there.

Beautiful. Edward, This has been a blast. We really appreciate the insights that you shared with us your passion for technology and health care and I'm really excited to keep up with you and the companies that you're working with so keep up the great work and let's stay in touch.

Absolutely fantastic. Thanks for having me. And this has been very fun.

Thanks for tuning in to the outcomes rocket podcast if you want the show notes, inspiration, transcripts and everything that we talked about on this episode. Just go to outcomesrocket.health. And again don't forget to check out the amazing healthcare Thinkathon where we can get together took form the blueprint for the future of healthcare. You can find more information on that and how to get involved in our theme which is "implementation is innovation". Just go to outcomesrocket.health/conference that's outcomesrocket.health/conference. Be one of the 200 that will participate. Looking forward to seeing you there.

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Recommended Book and Podcast:

The Fountainhead

Outcomes Rocket

Best Way to Contact Edward:

edward.kliphuis@m-ventures.com

Mentioned Link/s:

https://www.akiliinteractive.com/

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