OneMedRadio interviewed, Andrew Senyei, an MD with an interest in individualized DNA sequencing and gene therapy for heart disease. Dr. Andrew E. Senyei serves as the Managing Director at Enterprise Partners Venture Capital. Dr. Senyei joined the life science practice in 1987 and focuses on investments in pharmaceuticals, biopharmaceuticals, diagnostics, medical devices, and consumer healthcare sectors. He also serves as Venture Capital Advisor at Correlation Ventures.
In January, 2006, Dr. Senyei was named one of the Top 100 VC’s in Forbes Magazine’s 2006 Annual Midas List. He holds 20 patents in healthcare related products and services including the first and only biochemical test that predicts preterm delivery. Dr. Senyei completed his residency in Obstetrics and Gynecology at the University of California, Irvine. He holds an M.D. from Northwestern University and a B.S. from Occidental College.
Click below to hear a full audio interview and see transcript that follows.
Brett Johnson: Welcome. This is Brett Johnson in New York with OneMedRadio. Today, I’m with Dr. Andrew Senyei, who is the managing partner of Enterprise Partners, a La Jolla, California-based investment fund that’s in the IT and life sciences space. Thanks for joining us today, Drew.
Dr. Andrew Senyei: Thanks, Brett. Great to be here.
BJ: So, Drew, in addition to being a doctor, you’ve also been an active investor involved in a number of companies in the diagnostics and personalized medicine business. Can you tell us a little bit about how you got into this area and the things that you’ve been doing in the business?
AS: Well, I was trained as an obstetrician/gynecologist and one of the big problems in that space has been predicting premature birth, which is about a $20B problem. I happen to come across some technology that eventually resulted in the first FDA approved test to predict preterm birth two weeks ahead of time. That was a company I started called Adeza Biomedical. It went from conception, no pun intended, to IPO and then to sale. So we had a test that could actually tell women if they were in true labor or false labor and we took that up to about $150M in sales before it was bought.
BJ: Terrific. That sounds like impressive. Did you stay in diagnostics in the prenatal area?
AS: I have but I’ve also branched out to other places. Diagnostics are the key to a lot of the healthcare dollars today. They control about 40% of what we what we actually spend our healthcare dollars on. Without the proper diagnosis or triage of the patient, it’s very difficult to prescribe the right treatment so I’ve always been fascinated with and felt that diagnostics could be a real cost saver in the system. Whether it’s making the right call for example for the right drug for chemotherapy or making the right call in infectious disease, it’s essential to have the correct diagnosis before expending treatment dollars.
BJ: So in terms of the amount of money spent on diagnostics itself, it’s a relatively small number, is it not?
AS: It’s about 7%, 6% of the healthcare budget, but it controls a very large portion of the other piece of the budget because it directs the utilization of dollars for whatever the diagnostic outcome is.
BJ: So now, diagnostics has been emerging significantly in recent years with the genome sequencing so on and so forth. Can you talk a little bit about how the diagnostics business has evolved?
AS: Sure. So the way to think of diagnostics is really to find something that you can perform some action after you perform the test. We call that actionable tests. It’s great to have knowledge and it’s great to have an understanding of what’s going on but without it being actionable, at least today, it has relatively little value. So many of the tests we do today especially in infectious disease space are actionable. Some of the tests we do in genetics are actionable and some of the things that we test are not. But I think it’s rapidly changing and one thing that’s changing that is the rise of whole genome sequencing. We have now the ability to take your individual DNA down to the single base level and predict what your software code is that builds your body, that controls your body, and that makes you susceptible to disease or respond to certain drugs. This is going to be a remarkable revolution. I think it’s at the cusp of it. It’s being hotly contested by several companies, but I think it’s going to be something that eventually every newborn will have his or her genome sequenced so we know how to do preventive care for that individual.
BJ: Interesting. So what advice would you give to investors that are looking at recognizing that this a growing area? What advice do you give to investors on how to intelligently approach this?
AS: Well again, I think make sure that what the company is producing is actionable from a diagnostics standpoint and also really understand the technology platform on which that diagnostic is being performed. This may require a little bit more in-depth probing than the press releases that some of these companies do. But I think you have to understand the limits of what the technology can and cannot do. So in particular in the sequencing space, I have an investment in Complete Genomics. We have one of the most accurate genomes today and that’s based on third party, peer-reviewed publications and I think it’s something that sometimes is overlooked in the excitement of trying to derive the information that you have to have accurate information to make the test valuable.
BJ: So how many companies now that are out there trying to do something like what Complete Genomics is doing?
AS: Well Complete Genomics is a service company as opposed to a product company and there are several of those. I think no one to this scale of Complete Genomics in terms of whole genome sequencing. Other companies like Life and Illumina sell the instruments that are used for sequencing in laboratories but the Complete Genomics business model is really a service, CLIA lab model that we think is more appropriate for the type of diseases that we’re targeting.
BJ: Are you seeing a lot of new private companies springing up around this space?
AS: There are various small companies springing up that will be taking the genetic information generated by Complete and Illumina and Life and offering interpretive services around that for sequencing results. They’re just in the beginning nascent phase. This is one of the great challenges in this space is to really understand what the whole genome is saying in terms of the sequence that it’s producing. There are also technologies, small technology companies that are trying to develop the next next-generation of sequencing, Oxford Nanopore being one, where there is what I call a race to the bottom of for the cost of sequencing and the thousand-dollar genome will eventually become the hundred-dollar genome. But the real value will be in its interpretation and that’s why we’re building a CLIA lab at Complete Genomics.
BJ: I see. So in simple terms, it’s one thing to sequence the genome, the second thing is now that you’ve got that, what do you do with that information, how you interpret that information. So those are sort of the two big building blocks of this industry?
AS: Yes. And then there is sort of the unknown variable, which is the regulatory environment and there’s a lot of debate now at the FDA. There is a bioethics presidential commission looking at the implications of falling prices and whole genomic data that basically is producing a molecular crystal ball of your future and what does that mean, who has access to that, who has the information, who does not. But I think in general, the industry is at a very exciting inflection point. I think we’re going to see an explosion of the number of genomes that are being done simply because the amount of utility and value knowing your particular genes.
BJ: So if you were to give guidance to an investor, I mean kinds of suggestion would they make? I mean I guess there’s public investment opportunities as well as private and are you sensing that there’s going to be more companies becoming public in the coming years?
AS: I think the technology space is fairly difficult for a young company just because of the insurance players. I think the interpretive space, the CLIA lab space and the specific applications space, I think you’ll have more companies that are coming forward in terms of being independent companies. But I think the real challenge now is to make sure that the information we derive from sequencing can be utilized cost effectively.
BJ: I guess that’s where there’s hope that this is going to lead to a reduction in healthcare cost or will this create more? What are the dynamics in terms of the overall sort of cost of healthcare and the quality of healthcare and what implications do these advances have on that?
AS: Well I think it’s tremendous. I think if you look into the future and see what could optimally be done to lower cost, ideally we’d like to be in what Lee Hood has called the P4 world, predictive, preventive, personalized and participatory medicine. In particular, the predictive part is where I think the significance of cost savings are. One very simple example that has been the use of Pap smears, which have cut the rate of cervical cancer about 70% since the instillation of Pap smears. Now imagine doing that instead of with cells doing that at the molecular level for all sorts of cancers and you can see there would be a tremendous benefit to the system to prevent and treat early especially cancers.
BJ: Interesting. So going back to Complete Genomics, what was it about that company and when did you get involved in that company and what was it about the company that you liked and felt it was worthy of your time and money?
AS: Well we got involved, we were the founding investor along with Olympic Ventures, OVP. The company appealed to me for two reasons. One the technology I thought was extremely unique and had the potential to become very cost effective and very accurate, which is indeed happening at a very rapid pace. The second was the business model. I felt that the service model rather than the product model was going to win primarily because the technology changes so quickly that the rate of developing new instruments and new models is almost prohibitive because they become obsolete within a few months after they’re introduced. So we have what we jokingly call as the ugliest DNA sequences on the planet in our factory in Sunnyvale, but they’re under constant improvement and constant upgrade to take advantage of the latest advances. So we have the ability to keep pace with the technology and with the necessary analytics that come with generating more and more information.
BJ: Are you seeing an increase of companies coming to you looking for capital investment? Are there companies that are spinning out of other companies or where is some innovation coming from on? Is it the universities? Can you talk about the deal flow that’s going on in the space?
AS: Yes. I think it’s mostly in the interpretation of genetic information specifically with respect to DNA. However, there is lots of startups in the personalized medicine space that involves some genomics but they can also involve proteomics and other technology platforms that can give you insight into the individual’s personal health status, which is important in terms of both diagnosis and treatment.
BJ: Interesting. So any other final thoughts that you would share with someone, an investor who’s looking to make an investment in sort of the diagnostics area?
AS: Well besides just really taking a close look at the technology, I think today especially, you have to look at cost effectiveness. It must be cost effective in today’s healthcare environment. Whether that prevents disease or treats disease earlier or applies the appropriate treatment like in the case of companion diagnostics for cancer, I would take a hard look at the cost effective equation on the value proposition that that particular test is offering.
BJ: Terrific. Well thanks for joining us today.
AS: Well thank you, Brett.
BJ: So that was Dr. Andrew Senyei, M.D. who is a managing partner of Enterprise Partners in the San Diego area talking about the diagnostic space. Thanks again for joining us. This is Brett Johnson in New York, OneMedRadio. Good day.
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