Venture Capital has been slowly making its way into the field over the last several years. But just what is it looking to improve?
On this episode of Inside Reproductive Health, Griffin talks to Dr. David Sable, a retired REI and current serial investor in biotechnology and other companies that aim to make the field more efficient and accessible by the patients we aim to treat. They discuss what it is going to take to scale to a million cycles in the US and 15 million around the world. From lessons from oncology to bottlenecks holding us back, Dr. Sable shares his biggest hopes for the fertility field and what entrepreneurs need to do to get it to the next level.
Dr. David Sable co-founded and served as director of the Institute for Reproductive Medicine and Science at Saint Barnabas Medical Center in New Jersey, was founder of Assisted Reproductive Medical Technologies, and was co-founder of Reprogenetics. In addition to serving as a reproductive endocrinologist, Dr. Sable also sought to help the field as a whole by finding investors to create new technology to increase the amount of people served by the field. Today, Dr. Sable is a life sciences portfolio manager, an adjunct at Columbia University, and serves as director, advisor, and board member for a wide range of biotech and advocacy organizations including TMRW, Oova, and RESOLVE.
Learn more about Dr. David Sable at www.dbsable.com or find him on Twitter @dbsable.
Mentioned in this episode:
Episode 16, Dr. David Sable
Episode 2, Dr. Robert Kiltz
Episode 68, Dr. Robert Kiltz, Dr. Paul Magarelli, and Dr. Mark Amols
To get started on a marketing plan for your company, complete the Goal and Competitive Diagnostic at FertilityBridge.com.
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Welcome to Inside Reproductive Health, the shoptalk of the fertility field. Here, you'll hear authentic and unscripted conversations about practice management, patient relations, and business development from the most forward-thinking experts in our field.
Wall Street and Silicon Valley both want your patients, but there is a plan if you're willing to take action. Visit fertilitybridge.com to learn about the first piece of building a Fertility Marketing System--The Goal and Competitive Diagnostic. Now, here's the founder of Fertility Bridge and the host of Inside Reproductive Health, Griffin Jones.
JONES 2:32
Dr. Sable, David, welcome back to Inside Reproductive Health.
SABLE 2:39
Thank you, Griffin, always a pleasure.
JONES 3:52
I went back to--I think it was Episode 16 or 18, you were one of the earlier--so 70 some odd episodes ago by the time this episode airs--and I went back this morning, and I really listened to it and reread the transcript because I want to have a different conversation. The other one was great, but people can go listen to that one, I don't want to duplicate it. And in doing that, and having heard you speak in other venues now, I understand more the delineation that I don't think I understood about your focus before, which is I often talk about, I think of Wall Street, and I think of private equity, I think of consolidation. And in hearing you speak, you're more focused on scaling solutions that can get us up to a million cycles, at least in the US, as opposed to just you know, a quarter million and a smaller--you know, consolidating a smaller pie. You're interested in ventures that scale that--artificial intelligence might be one of those. So, first, can we just set the stage with why scaling is the bigger picture and what opportunity is there? And then we'll get to AI.
SABLE 6:59
That's a great question the--yeah, from back when I practiced I remembered very well, seeing a bunch of patients for first visits and thinking, boy, there's a good probability that they would get pregnant, they do very, very well and we would never see them again. And one of the reasons was, because the out of pocket costs were high. And just going back to, you know, my first year college economics, and the relationship between supply and cost, and it just gradually occurred to me--it took years, I should have figured this out earlier--that the IVF industry is, you know, it's selling a very, very high quality product at a relatively high price. And when you cross that with the number of people that suffered from infertility, plus the number of people that, in theory could be benefited by doing IVF to prevent genetic disease, and fertility preservation for onco fertility, we're looking at just treating a small fraction of the people that we could be helping with a procedure that's really good, that's been around for 40 years that we know is done properly is very safe. So if going back and studying other industries that are in this position and you had to scale up, one way of scaling is just to keep replicating and making more of what you've already got. It's not so easy with IVF because, you know, laboratories are expensive to build, physicians and scientists are very well trained and very good at what they do, so one of the things that we need to do is to kind of rely on some technology to do that. Just to give an idea of the scale of the problem, any piece that you read about infertility in the United States, for example, usually quotes somewhere around 7 million people with infertility. And in 2018, using IVF, which is really our, by far, our best treatment for infertility, we created 74,000 babies. And every one of those 74,000 babies is wonderful, and a miracle and as a result of great work by the industry. But that's less than 1% of the people with the problem. And I would challenge anyone who works in healthcare to come up with another area of healthcare where the number of people we're helping or the percentage of people we're helping is that low. So that's kind of our starting point. So back over the past 10 years, I've kind of looked at the bottlenecks, what's keeping people from coming into the industry or accessing the service? And, you know, that led me to study other countries and look at the per capita usage of IVF elsewhere and even look at other industries and say, Well, what would fueled scale there? And that's kind of kind of brought me to this focus on innovation, innovation capital, and tools like artificial insemination--excuse me, artificial intelligence. Once an RE, always an RE!
JONES 6:59
Yeah, that's already been pioneered! Artificial intelligence is one of the technologies that can scale. But let's identify those bottlenecks that technology might be able to solve for before we talk about the technology. I'll let you decide lab or clinic bottlenecks to talk first, but what are the bottlenecks?
SABLE 7:19
Now let's talk about two. First investment we made with the venture fund was into cryostorage. And people may know the company TMRW Life Sciences, it's a company that is tackling this problem. And, you know, it's one of those things that gradually crept up on us. Like when I started doing IVF, in the late 1980s, early 1990s, just about every embryo that you made was used sometime during the cycle or was disposed of or discarded of at the end of the cycle. We weren't very good at freezing things, and it was not a problem. Over time, we started freezing embryos, usually at the cell stage, and maybe we would put back three or four and maybe we'd have one or two or three or four left to freeze, typically done manually, we would use Dewar tanks, liquid nitrogen and label the specimen sometimes by hand, and there'd be a clipboard hanging on the wall. And it was adequate, the solution for storage and tracking and quality control was appropriate for the volume that was going through. You know, fast forward to now over a couple decades, and now we're putting back one embryo at a time, we're making many, many more high quality embryos per stimulation. We're doing egg freezing for proactive fertility management, and the number of specimens has just proliferated. So you go to other IVF programs, you've got a big high volume programs, and the number of Dewar tanks, these kind of tanks that came out of agriculture are just all over the floor. And maybe there's, you know, many clipboards or kind of rudimentary tracking systems by computer. And it's become, really, a logistical problem, not only keeping track of them, knowing which specimen is where, hoping the labels don't fall off, things of that sort. But you know, we've seen in the past few years, laboratory failures. And laboratory failures and putting the wrong specimen, the wrong patient, you know, these should be never events. 21st century technology, this should never be happening. So one of the bottlenecks was simply dealing with this kind of supply chain logistics of thousands to 10 thousands to hundreds of thousands to now millions of specimens, every one of which is dear, it really requires very, very high level care. So using robotics, using very high, high, high quality analytics and RFID tagging, we're now going after this problem. And this is good on almost all levels, you know, it's good for patient safety, it's good for scaling up the field, imagine going from the 280,000 cycles a year to a million cycles a year, just how much that would increase the number of frozen samples we had to deal with. So this is one of the areas that was thankfully more of an engineering than a science problem. But it's being tackled in a very high level way. Secondary area we're just trying to figure out is--we mentioned before using IVF to prevent genetic disease. But one of the bottlenecks there is, you know, it's not cheap to get sequenced. We can get genetic information very, very cheaply, and very easily, you know, you and I could send our saliva samples off to a numerous number of companies for relatively low amount of money, we can get sequenced, which is terrific. We can do the same thing with embryos, we're working on technology to do that with sperm kill--really fabulous work. Problem is the bottleneck there is taking that information, communicating it appropriately to the patients, so that they and their clinicians can properly act upon it. That's genetic counseling. In the United States, there's one genetic counselor for every 80,000 people. So we have the ability to reduce people's risks for serious genetic disease from times 50% to zero--just incredible technology. But in order to put it into place, we need to widen the bottleneck through the genetic counseling part. And that's something we're trying to work on. And these are things that oftentimes need not only manpower and know how, they need technology. So that's kind of two of the--you know, when I first went out to raise a venture fund to do innovation in IVF, I had my list of 18, now that this is up to 24. And, you know, a year from now if you're kind enough to have me back to talk again that this will probably be in the 30s That's the kind of thing we're trying to get chip away at.
JONES 12:06
So it might be good to give a cursory definition of venture capital versus private equity because I hear the two use interchangeably in the field. Very often I hear fertility doctor saying venture capital-owned groups, and--well, that's private equity. And I think even experts might disagree on the definition to some degree. And also, there's a Venn diagram where they overlap. But could we generally accept the definition private equity, investing in existing business, typically for majority control, to even create more efficiencies or at least create more profit to sell at an upside two to five years later? Is typically--is that typically a good definition for private equity?
SABLE 12:51
That's a better definition than the one I usually use. I get asked this a lot. And the simple I give is private equity is buying a lottery ticket after you know the numbers that won. Venture capitals buying the lottery ticket before you know what the winning numbers are going to be. So it's a very different investor profile, very different risk parameters. And it's a--you know, they're both very important in terms of growing industries and growing businesses. But it's really, you know, the imprecision of the definition that is in common use, it's really two very, very separate entities from a finance standpoint.
JONES 13:30
And venture capital is typically not taking a controlling stake in the--operating role in the new venture. Is that usually the case?
SABLE 13:42
It really depends. You know, in biotechnology and pharmaceuticals, there's been a movement lately for some of the super highly specialized venture firms to do their own company formation. And they'll bring entrepreneurs in house and incubate ideas, and then go out and, you know, kind of launch the company to have other funders come in. The issue with venture capital is, these are companies that normally are not making any money, they have no revenues, or minimal revenues. And the product development cycle, in some cases could be as long as a decade or more. So it's a very specialized type of company. Within the IVF world, we're still in a more traditional model of venture capital, where you have an entrepreneur, who is often self funded or bootstrapped, or friends and family funded in the very beginning, sometimes working out of their own garages, literally--I've seen groups that work out of basements, and whatever space they can have--and then they try to attract highly, highly risk tolerant investors to come in and buy usually large stakes of the company. But having only an advisory role to most of the companies that I've been investing in, I do speak IVF and I do speak finance. So I'll often join the board of directors or join the advisory boards, and try to be helpful, but at an arm's length way. I don't get my hands dirty. I'm not doing the experiments I'm not, you know--but I do try to be somewhat active in it. The control really depends on the individual company, how much money they need, and how much they're willing to seed. We as investors need to be careful to keep the founders and the entrepreneurs incentivized to really keep pushing and living the dream of this company. So you know, in an early stage, we don't really want to take financial control or take a majority interest because these companies will often go through serial rounds of dilution, and you don't want the entrepreneur, the founder just being like, shut out by the time it becomes profitable. But you're correct to say that in venture we usually don't take controlling interest, but it can be sold at a very large interest.
JONES 16:08
Okay, so private equity, generally purchasing something that's already making money; venture capital, typically trying to start and scale something that has not yet made money or maybe has made little money and really bring it to scale. I heard you say once at a conference that relative to our size, there's far less VC in fertility than there is in other subspecialties like oncology. Am I understanding that correctly and can you give the specifics?
SABLE 16:39
Very much so. VC in fertility is almost non-existent. There is some crossover to technology the what's generally called the femtech area often bleeds into fertility, to talk about your Venn diagrams, there's a lot of really fabulous entrepreneurs--many of them young women, which just terrific--doing work in women's health, taking technology to various aspects of women's health, including fertility. But in general, the hundreds of millions to billions of dollars that you see in oncology, and in some of the other areas in biotechnology just dwarfs anything that we do. And there's an entire infrastructure of specialized venture firms, specialized bankers--there's a real pipeline. You know, when you come with an idea that if this idea resonates with, certainly, the right group of people in that pipeline, it's a very well paved road. On the fertility side, it's very, very spotty. It's the way oncology was 15 years ago. There's a bunch of reasons for that. One is that it's easier to generate the types of data in oncology that resonates with the investor community, and it's easier to model financially where these companies can go. But the truth is, and you alluded to this before, you know, in oncology, we have 15 million people with cancer in the United States, we have about 7 million people with infertility. Oncology attracts 10s of billions of dollars of innovation capital to looking for treatments for oncology. And fertility is, you know, just a tiny fraction of that, you know, it's in the low digit millions. And, you know, people will say, Oh, that's cancer, and people die of cancer. But anyone listening to this podcast knows just how life-stopping infertility can be, you know, it's not a trivial matter. It is an incredibly life-altering event. And there's no reason--one of the things, one of our jobs as entrepreneurs and people that want to grow the industry is to grow that financing apparatus, and that's something new we're working to do.
JONES 19:06
So I still don't understand why it's so nascent, but also why is it not more involved in the practice model or the clinic model? And what you're talking about is creating efficiencies in technology and in the lab and with tank storage, and what we're going to talk about--artificial intelligence. But could VC also be applied to the practice model, where right now private equity is purchasing practices, using mostly using the existing model making some efficiencies here and there. Couldn't venture capital be used to launch a new practice model? And perhaps that's part of what kindbody is doing. But we've had Dr. Robert Kiltz on this show a couple of times and we've had Dr. Mark Amols on the show to talk about their models. And I think, isn't there a way to scale this where you're creating a new model where you have one REI for 800 people--or 800 cycles, but you've got a multitude of IVF coordinators, you have a multitude of ultrasound techs, and you have advanced providers doing things like IUIs and retrievals. And why hasn't VC come in to create a model that can get more cycles in?
SABLE 20:36
I love the question. And I like to put the word "yet" in there because one of my you know, one of my kind of dreams for as we scale this all up is I would love to create a--and you may be too young to know this reference--but I'd like to create a Bell Labs for fertility. Bell Labs is something that came out of back when AT&T was the only phone company. They funded a, essentially, was like an engineering Think Tank, where they just tackled one idea and one problem after another and put them out into the world and saw how it worked. I would absolutely love to create a well-funded, 20,000 cycles a year facility where we would treat patients and obviously, it would have to be the highest level of medical care we could and we did our work in step-by-step fashion and try to figure out what worked, what didn't, and start expanding the types of patients that have access to IVF. Now, this would likely be a very different patient experience that exists now. And you know, the patient experience right now, let's be honest, IVF is always terrible from the patient's standpoint. It's a horrible thing to go through, however, the practices that I've known well, and, you know, by and large, I think they--it's not because people don't want to make it as comfortable as possible for patients and it's a very patient-centric industry--but if we're going to do that next million cycles, for minimal out-of-pocket costs to the patients, and if we're going to find five or 6 million cycles for China, and the next several million cycles for Europe and other areas of the world, it's likely to be a very different patient experience. But that, it doesn't necessarily mean that the outcome likelihood has to be any lower. You know, I'd love to see models where we can create a very low cost model, much lower hand-to-hand touch, but some alternative method for it. And at the end of the day, the patients have the same likelihood of having a healthy baby that they would from the existing model. And I don't necessarily see this competing with the industry now. It's an industry alongside it. If you've probably heard me use the hotel example over and over and over again, which I do, like IVF right now is it's kind of a Ritz Carlton, Four Seasons model, where for 1000 or 1200 dollars a night, you get a wonderful night sleep in a beautiful setting. We need to build the Hiltons in the Sheratons and the Holiday Inns, where you still get a good eight hours of sleep, it may be a little bit more Spartan, but still clean and well run and in a well managed setting, we need that in IVF. And I would love to take a, you know, X number of millions of dollars and build a prototype for that. It's not an easy amount of money to come by to attract investors. But, you know, in the times when I sit there drawing things out and saying, What if we did this? What if we did this? What if we did that? That's certainly something I'd love to see happen. Getting from idea to tangibly putting it on the ground is not simple. But I would love to see sometime in the next five to 10 years where we have that. And that can be a springboard to using innovation capital or venture-type risk capital for the type of more patient-centric rather than tech-centric building. But ultimately, these things are going to converge. And, you know, maybe by the year 2030, we're going to have one and a half million high-quality, low out-of-pocket cost IVF cycles in the United States, that's still feeding an extremely vibrant industry.
JONES 24:24
Talk more about why venture capital has not entered the fertility field. You gave some reasons, I still am not totally understanding why not yet. So please talk a little bit more about it, because I really want to understand.
SABLE 24:41
Sure. Well think about investing in general. You know, it's like you go to what Warren Buffett does, the value investors, what they do is they look how much cash a company generates in a given year, they turn it into a savings bond or a lottery ticket type equation in a very rational mathematics driven way. They say okay, that cash flow is worth X dollars to me now. And that's how I'm going to invest in it. Very rational, very, you know, unemotional-- it's a great investing model. Now, move back as us kind of take stepwise risk, and say, Okay, well, let's say we can't define that cash flow. Or let's say it's not a very well run industry, or the industry has tremendous competition, or it's one that's very volatile, then it's a much higher risk tolerance. So Warren Buffett's not going to invest in those things. You've got a different type of investor, you've got a more risk-tolerant investor. And then you get to higher risk things where let's say you're not making money at all. That's where the venture world invests in companies that are not making any money or have no revenue. There, they don't want to do irrational investing, they still want to bring a discipline to what they do. So they want to do a different type of risk mitigation. We talked before about oncology attracting 10s of billions of dollars of risk capital. That's because in venture capital in oncology, you can actually model out with a pretty good degree of certainty and discipline, the likelihood of how much money that is ultimately going to bring back to you. Now the revenue may not come for two years, five years, or 10 years, but we've done oncology drug development over and over and over again. We can apply risk metrics in a very disciplined way, using predictive analytics, using statistics, using our knowledge of epidemiology, our knowledge of the number of patients for given entities, so that the venture capitalists can put together a portfolio of risk mitigated things, so that they can feel comfortable that they're not just throwing darts at the wall. In IVF, where we don't have those metrics yet. It's one of the areas that we really need to flesh out. So that when I go out to raise a venture capital fund aimed at IVF, and I start talking to the investors--the high-net worth investors, the pension funds, the people that put money into the well known venture capital funds--they'll say to me, Okay, well, what's your risk management strategy? And you're going to expect the same type of well-known numbers that we can plug into models that have been used over and over and over again in investing in drug development. And I can't do that. I don't have those numbers yet. IVF is still very much here. You know, I've talked about this, each lab, no matter how high functioning, they have their own way of doing things--their data management has been much more rudimentary than in drug development labs and in the biotechnology industry. So I go to these investors, I say, Well, here's the opportunity, you know, 7 million untreated people within--look at the ability, we have to grow this industry, from $5 billion to maybe $50 billion over a few decades. They love that. But the risk mitigation that these professional investors have, we don't have the inputs yet to make them comfortable enough for venture investing, we have it for private equity investing, because that comes from just good accounting. That's a pretty straightforward process. So it's a work in progress. You know, a few years ago, I talked about venture investing in the IVF world and people just didn't want to hear it. And one of the reasons we wanted to do the first fund and keep it relatively small was to proof of concept. Let's show we can do it, and you know, go out in, you know, maybe this next year, this next 18 months, and say, Okay, we showed we can do it. Let's build on that. And hopefully, five years from now, they'll be a number of, you know, well-functioning, high functioning, name brand IV venture vehicles--it'll start doing for our part of the healthcare world what's been done in oncology and inflammation and some of the other areas.
JONES 29:21
Are we in a catch-22 then David? Are we missing the funding of the chicken that would provide for the egg that might be solutions that provide us with data that allow you to have those metrics to paint the risk mitigation picture, like using artificial intelligence to get some of that data? Are we in a catch-22 where you need the funding to be able to get better data, and vice versa?
SABLE 29:52
It's our job not to make it a catch-22. So it really is our job to pick out those projects that can be really a proof of concept to show that, okay, let's stratify the needs within the industry, and start picking off the highest value ones, showing their businesses within them. Because each business we put into place, each time we take one of these analog pattern recognition, artisanal processes, and replace it with a data-driven and data-generating alternative, we make it easier to isolate and define the next one that we need to take off. And ultimately, we're going to reach critical mass where, okay, we'll be able to use the same type of analytics that the oncology industry uses to prove their value proposition and we'll be able to do the same thing. But that's the challenge now. That's frankly, what makes it a great thing to be tackling. And at this stage, we can make--you know, the incremental investor coming into reproductive medicine can potentially have a much greater influence than the incremental investor coming in oncology. You know, which is not to say that oncology doesn't remain a terrific area for investment, it does. But when you're spreading out you're triaging your capital within healthcare innovation, it's our job to prove that a lot of that capital should be flowing into Reproductive Medicine. And that's what we're doing now. We're in the early stages. And you know, if it's a chicken and egg issue, it's our job to create the chicken and create the egg.
JONES 31:37
Yeah, I suppose that might be a good summary of responsibility for the role of the entrepreneur.
SABLE 31:48
And we like eggs in reproductive medicine, too. Yeah, seriously!
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JONES 33:30
So you have 24 companies that your fund is invested in at the moment--
SABLE 33:34
No, I'm being misleading--Fund One made four investments, four very well-targeted investments. We have now 24 bottlenecks in my grand list of things--problems that I need to solve, to solve the big problem. And we're just trying to pick them off one after another. The list grows and sometimes some of the things that we felt were two problems turned out to be one. It's a dynamic thing. But I would love to be in that position where I'm invested in every one of those solutions. But it's incremental, we're starting from the beginning. And that's okay.
JONES 34:13
So if there's 24 and you made four investments in the first fund, then there's a lot that you don't like. you don't like it enough to be able to invest in it at that point. How does artificial intelligence perhaps factor into what you do like to invest in or help you start to peel away the bottleneck so that you can actually invest?
SABLE 34:40
Great question. Well, the easier that we can make it that any outside observer can see unequivocally what the value proposition of any intervention is, then the easier it is to push something along. So artificial intelligence is--you know, in its purest sense, it sees things that we don't as humans. It's smarter than we are. It is able to crunch more data, it's able to assess inputs that we just don't have the capacity to do. You know, artificial intelligence has visualization abilities that we don't. You take defense technology off the shelf that's used to scan meteorology, or satellites, things of that sort, and you apply it to the ability to assess the dynamics of embryo development, or embryo appearance, or eggs, or gene expression in sperm--there's no way that we're gonna be able to do that just watching. And then we use those capabilities to get a better outcome. Okay, let's plug it in, and see how much better we can do in the dollars per baby, and time to baby calculations that really fuel all of the throughput through IVF. So in that way, artificial intelligence can be terrific. Now the challenge for artificial intelligence--and this is a conversation I've had with so many entrepreneurs who are doing brilliant work--is we need to be able to show that it's the artificial intelligence that fueled the difference in outcome. And this is where we get down to something that I call the IVF data problem. With IVF there's a small number of things that we know how to measure: number of eggs, fertilization percent, a percentage that goes to blast, the genetics of the embryo, and then pregnancy, and pregnancy, you can break down to pregnancy and then ongoing pregnancy. There are so many confounding variables in between all of those that it's difficult to isolate any particular one. In order to show that a given intervention made a difference--you look at the two things that were adopted most quickly over the past few decades in IVF--ICSI and pre-implantation genetics. ICSI was great because he had an intervention and immediately had an answer as to whether it made a difference. I remember in 1992 when we started doing ICSI, we had these entire populations of people that we never helped before that suddenly it became routine. For one day was impossible, then it became a miracle, and then it became mundane. It was just beautiful. It was very, very rapid innovation because we could see we went from no fertilization to fertilization. It is terrific. With pre-implantation genetics, it was a little bit slower, but in the best of cases things like balanced translocations resulting in habitual pregnancy loss, we went from no normal embryos to normal embryos, no ongoing pregnancies to ongoing pregnancies. So we can match up very quickly the intervention to the outcome. With the innovations that we're doing now, since we have these small number of things to measure, an engineer will come to me with a brilliant piece of engineering and say, Okay, we're so much better at predicting which embryos should go back for example, or which eggs will be fertilized with ICSI or fertilized normally turn into blast. And that's a great piece of knowledge. But then we ask ourselves, well, is it a business? If we're going to make it a business, how do I translate that extra input into lower dollars per baby, or shorter time to baby? And that's the challenge I give the entrepreneurs as they come to me, and we try to work these things through. And, you know, it may mean that we have to string some of these innovations together before we can do the type of clinical trial that'll pass what we call the "so what test." When we walk into an IVF center and talk to the head of embryology and the head of the doctors, and they say we get it, you had me at hello, I can provide better care here. Or for the same amount of throughput, same amount of doctor hours, embryology hours, I can see that many more patients because I'm getting that many more people pregnant faster. We've got to walk it through those various steps. And it's challenging in IVF--that doesn't mean we can't do it. And the great things is--
JONES 39:11
Is a common challenge you see among your entrepreneurs not knowing exactly how the pricing will work? I've seen entrepreneurs really struggle with Okay, so we have a solution, we have an AI solution, do we charge a licensing fee, do we charge a licensing fee by clinic, by volume, by doctor? Do we do a per case price? Do we try to not go to the clinic side and offer this as an add-on that patients could opt for and it would be passed on to the patient as opposed to being incurred by the practice who would then ostensibly raise their IVF cost or not depending on how it affected productivity, not outcome? Is this how to price and who pays for it a common challenge you see among your entrepreneurs?
SABLE 39:57
Oh, absolutely. Yeah, this is one that you and I could spend a whole day talking about, you know, because pricing is such a hot issue. And it should be. You know, it's important, because we're triaging resources. What I challenge the entrepreneurs to do is to specifically define your value proposition as best you can. And then we can figure out the best way to--who's best in the position to shoulder that risk. You know, in many cases, if we show that something is universally helpful, then the IVF clinics can in all good faith and in a very patient-centric and patient helpful way, just adopt it uniformly and, you know, raise the price of their cycle a little bit, because ultimately, the cost to the baby, the cost of having a baby is lower. If we haven't stratified it--if we can only demonstrate that it helps a certain number of patients, then we need to say okay, well, let's define who we're helping and how much and then again, we can make a rational decision as to who should bear the cost. Because if it's only helping a certain percentage of the patients and we can decide who it is, then maybe we're best off charging that as--I hate this term add on because it's such a controversial term--but if it's a rational distribution of these costs in a way that ultimately helps the patient, then, you know, we should be able to run it through a financial model and say, Okay, here's the best way to market this, the same way things are done in the tech world, the same way that things are done in the consumer discretionary world. You know, pricing is just one more part of the distribution model, which comes down to who's benefiting, and who wants to pay that, who wants to buy that incremental benefit. And once we start defining these midway endpoints so we can define the value proposition, then it becomes a lot less a question of who's being exploited or an arbitrary, you know, who's making an arbitrary decision to just dump the cost on the patient, or eat the cost as a practitioner, and it becomes just much, much more of a hands and arms distance, kind of rational--it's like, Alright, well, this is pretty straightforward. Here's who we're helping. Here's the quantification of that help. And let's just do it in a way that's fair for everybody.
JONES 42:15
Straightforward if the value proposition is really compelling, and of course, this is every entrepreneur and every commercial venture's challenge but having a truly compelling value proposition because if it's not, there is not more room to just start to--providers already feel like Oh, this employer benefits company's taking 15% United or Aetna is holding us over the coals now and have dropped their reimbursements. And are we just adding this on an add on if we're talking about PGT and in the case of the patients, they're already just saddled with cost after cost. So the value proposition has to be really compelling.
SABLE 43:00
Exactly. You're preaching to the choir, because this is, you know, when you said before, they're things I don't invest in. And I tell them, it's the same way in my biotech fund that I've been running for years, is I tell the companies that come in and say, I love what you're doing. But I'm investing, I'm not writing grants. And I can't invest in science projects. And I challenge the entrepreneurs in IVF, it's like, show me and prove to me that this is a real product with a market rather than just an engineering exercise. Because the engineering is always outstanding. And I love the engineers, because they're so passionate about what they do. And frankly, they're so good at what they do. But translating that into, Okay, how much are we saving the patients? How much better are we going to do for those, you know, 7 million or 6.9 million people that aren't being treated, to get them into the fold? And, you know, it's a challenge. And what's great is so many of them--and this is just an engineering mentality to say--Okay, well, that's one more problem to solve. We're gonna get back to it, I'll get back to you. And that's the kind of energy that we're injecting into the IVF engineering world, which is--I'll tell you, it's not a group that gets a lot of attention. These are incredibly impressive people.
JONES 44:12
So the number of funds that you've invested in is much smaller, maybe one sixth of the potential problems that you could invest in? What are those that either that you have invested in or plan to hope to in the next 18 months? What are some of the value propositions that they aim to solve? Talk a little bit more about that.
SABLE 44:35
Okay. Well, you just as a correction, you said the number of funds I've invested in, I invest in individual companies.
JONES 44:42
One fund, four companies, is that right?
SABLE 44:44
Individual companies, yeah. So you know, we've invested in, you know, we talked about cryo storage, which has been terrific. We are investing in a company that's doing kind of biotech work and target discovery in women's health--people you may have heard of company Celmatix. This is a company that was putting together a fabulous data asset for a long period of time and it did not find its place in the market despite the quality of the engineering work and the information technology will be outstanding. They pivoted over to target identification in therapeutics and in women's health, similar to the fact we don't have too many targets and things we know how to measure in fertility, that goes all the way to women's health. If you look at the diagnoses we have in women's health, you know, preterm labor, preeclampsia, premenstrual syndrome, even infertility, you know, these are observations. These are not molecular-level diagnoses. And our understanding of women's physiology and endocrinology, it's been the same hormonal pathway for 50 years. No one is expanding on it, except for this company. So talk about digitizing a process to be able to prove interim endpoints that make a difference. And, you know, I was credibly impressed by the scientific work they're doing relatively early stage, but they kind of own this little area of the marketplace. We're looking at hormonal testing, alternate means of delivering that portion of the IVF cycle that involves doing one after another blood test for hormonal testing. Incredibly inconvenient for the patients themselves, extremely big infrastructure that the centers in one way or another have to set up--phlebotomists, blood drawing, running the tests, communicating the results back and forth--this is really kind of busy work that costs the cycles of incredible amount of effort and time, nursing energy, inconvenience to the patients, but still has to be done to provide a good cycle. We're investing in a very novel way of doing this--as it unfolds, completely streamline this process, it also moves into other areas within women's health. We're also looking at--we talked before about genetic counseling and trying to scale that in a tech way--this was a--pardon me if you hear the dog making noise behind--we're looking very carefully at the telemedicine and its relatives. You know, different ways of propagating and leveraging a small population genetic counselors, and, along the same lines, fertility practitioners, embryologists, in ways that lets them expand beyond the borders of their four walls, or even get, you know, beyond satellite clinics--let's leverage the cloud in ways that let us bring technology--let us take what the limiting factors are, whether it's labor, whether it's bottlenecks in interpreting information and let's let's expand that. Those are four fairly broad brushstrokes. But those are some of the areas that we're looking at. In some cases, they are direct attacks on the specific bottlenecks, for example, the cryostorage. In others, there is the enabling technology that we're trying to put together so that we can attack some of these other bottlenecks. And everybody always asked me, okay, well list the bottlenecks for me and I can't do that, because that's the basis by which I go out and I attract investors. So they don't want me going out and telling the world, but it's really kind of taking our insider knowledge of the industry and putting it to work to try to pave that road so we can start attracting those 10s of billions of dollars of innovation capital to our area of healthcare the same way it's going to other areas.
JONES 48:56
In the last example, you gave of telemedicine, how much has COVID and the restrictions that were relaxed in COVID, either accelerated that initiative or changed the landscape--before, if you practiced medicine in Illinois, if I'm not mistaken, and you wanted to see someone in Indiana or Iowa or was anyone in a neighboring state, even if they were, you know, we could say we're in Buffalo, New York, and just talking about Erie, Pennsylvania, that if they see the patient in their physical office, well, they don't need a license to practice in Pennsylvania. But if they see that same patient via telemedicine, they would normally need a Pennsylvania license, if I'm not mistaken. And then you have through the enforcement of OCR and HHS and HIPAA, it had to be on a certain number of platforms or specific platforms, those restrictions were laxed when COVID happened to the point where it said, if you want to FaceTime you can reimburse for it, if you want to do Zoom or non-secure platforms, you can. When something like that happens, how much does it change the--you're out to solve this problem anyway and then this either throws a wrench in or it douses gasoline on the fire to make it better--talk about how things like that can change the landscape?
SABLE 50:14
Yeah, no, well, you've been very on top of how COVID has affected the fertility industry, you've so well covered a number of times what's been going on there. Obviously, COVID is just a 100% awful thing and it's sucks that we have to go through this, on the same hand, it has brought to everyone's attention, that there's some really built-in inefficiencies to our delivery of healthcare that certainly filter into the delivery of healthcare in the fertility world that need to be knocked down and that anybody could see. It's like one of our companies called MedAnswers, which does, you know, physician counseling online, does genetic counseling online, clinical trial recruitment, all sorts of things and there's a lot of well-meaning regulation in place and there's also a lot of not so well-meaning use of misunderstood regulations like HIPAA, that people use to kind of get in the way of the delivery of patient care. You have something COVID come along, we have to close up offices and keep people quarantined, and keep people distanced and things like that, where an obvious answer is remote care. And suddenly, it's a lot easier to go to regulatory bodies, or whoever else is throwing up these barriers and say, Hey, what gives? We want to provide good care. You are regulating our providing good care, and yet, here where we most need it. You've got to start addressing these things, let's put this at the top of the agenda. So it's been very important that way. Similarly, you know, we talked before about alternative hormonal testing things of that sort. And a little company called Oova, which has got a technology that goes beyond just lines on a piece stick, starts quantifying things. I know the clinic owners I've talked to, they want to keep seeing patients, the patients want to keep being seen. But they want to do it where they go into the office less. So in a way it has accelerated the recognition that these alternate versions of providing care are better versions of providing care in many cases. So I will never say the pandemic was a good thing. It sucks. I hate that it ever came. And, like, if I could wave my magic wand and make it go away tomorrow, I would. But in the same way, you know, crisis comes along, it magnifies some of the inefficiencies that are holding up the marketplace. And if our goal, you and me, is a million new cycles in the US, and 5 million new in China, and 15 million more cycles a year in the world, let's start knocking those barriers down. And if it takes a crisis elsewhere in healthcare to demonstrate the need to do that, alright. Yeah, let's point to that as a reason for it.
JONES 53:07
It's certainly been a catalyst. David, I'll let you decide how you want to conclude. We can conclude with your thoughts on artificial intelligence or venture capital. You can use this as a plug, if you'd like to invite some high net worth people to participate in your next fund, I'll let you decide how you'd like to conclude,
SABLE 53:26
I'm going to conclude as a plug for what you're doing. You have provided an extremely unique cereal serial view of a tremendous number of people in this industry, that really nobody else is doing. And I think that anyone interested in this type of stuff I'm doing is best served by tuning into every Tuesday you drop a new episode? Every Tuesday, you're frequent on my playlist. So let's conclude it by plugging what you're doing and again, thank you for bringing me on.
JONES 54:04
That's very generous for parting thoughts. And good thing you said that too, because the audience is likely skeptical that I could pay you to say it. So I appreciate you giving me that plug. And as Inside Reproductive Health becomes more of a platform, you know, perhaps the same guest contributor role that you play in other publications, we might one day be able to make that happen for Inside Reproductive Health. So we'll certainly have you back next year when the numbers of issues that your fund is looking to solve is somewhere in the 30s and we'll be happy to have you back. Thanks so much for coming back on Dr. Sable.
SABLE 54:45
Always a pleasure, Griffin. Thank you.
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You’ve been listening to the Inside Reproductive Health Podcast with Griffin Jones. If you're ready to take action to make sure that your practice drives beyond the revolutionary changes that are happening in our field and in society, visit fertiltybridge.com to begin the first piece of the Fertility Marketing System, the Goal and Competitive Diagnostic. Thank you for listening to Inside Reproductive Health.