03
Is It Science Fiction or Is It Healthcare?

Hugo Scott-Gall: Today I am delighted to have with me two of William Blair’s analysts who are experts in the healthcare industry. Tommy Sternberg specializes in a big pharma companies and has over 15 years’ experience, while Camilla Oxhamre Cruse has a Ph.D. in immuno-oncology and infectious diseases, and she specializes in smaller, faster-growing companies. Camilla and Tommy, welcome.

Camilla Oxhamre Cruse: Thank you.

Tommy Sternberg: Thanks for having us. We’re happy to share our thoughts and insight with you.

Hugo Scott-Gall: Well, let’s get cracking. Let’s get on to those thoughts and insights. So, Tommy, you’ve spent a long time looking at this very important industry. It’s important both from an investing point of view, but also from a social, societal point of view. In your long tenure, what would classify as the big changes you’ve seen?

Tommy Sternberg: So there are a lot of changes that I’ve seen over the last 15 years. And a lot of that will set the stage for how we think healthcare will progress and transform into the future. Before delving into some of those changes that I’ve seen, I think it’s instructive to always look back first and see how we got to where we are today.

And so, over the course of covering healthcare companies for the last decade and a half or so. Not surprisingly, I’ve seen a lot of changes. But what’s interesting is that many of the challenges and goals in healthcare that were prominent 15 years ago, largely remain in place today. And that’s despite the myriad of policy changes and numerous innovations that have taken place over the last decade. So it’s kind of reminds me as the talking heads song, “Once in a Lifetime.” You know, same as it ever was, same as it ever was. But just to give you an example…

Hugo Scott-Gall: Great song.

Tommy Sternberg: Yeah. And by the way, you can have the editors maybe cue in that one if it fits.

Hugo Scott-Gall: We’re still working on our soundtrack.

Tommy Sternberg: Okay, good. Good, good, good. Just trying to throw in some suggestions. But back when I first started looking at the industry in the mid-2000s, you know, there was a new prescription drug benefit for seniors in the U.S. that was being implemented known as Medicare Part-D. And it was a big open question as to what the impact would be on the drug companies. So who would benefit from increased volumes, but also likely facing a tradeoff of lower prices?

Similarly, several years later, there was the introduction of the Affordable Care Act, better known as Obamacare. And you had a similar debate with bringing more patients into the healthcare system, but again, at what cost. And that’s just some examples of what’s happened in the U.S., let alone changes in other countries around the globe.

So the major themes in healthcare don’t change dramatically. At the end of the day, we wanna see innovation to help people live longer, healthier lives, but then how do we pay for all of this? So, with that as an overarching theme, what have the biggest changes been?

For me, it’s largely been in the pharmaceutical industry where I’ve seen three major changes. No. 1) This issue of pricing and affordability of medicines. No. 2) The change in business models that have arisen. And No. 3) The approach of drug development that these companies have undertaken, where there’s more of an emphasis on personalized medicine and we can delve into that and explain what it means.

Hugo Scott-Gall: Sure. Let’s deal with each of those three in turn. So drug pricing feels like – to a nonexpert – that this is more and more center stage. You see more and more headlines around the price of drugs and that they have just risen too far, certainly, in terms of affordability. Beyond the headline, is that a fair analysis? A fair criticism of the industry? Are prices simply too high? Or are they too high in relation to what?

Tommy Sternberg: It’s a fascinating topic and debate and there are arguments on both sides. I think clearly, we have reached a tipping point where affordability is an issue for the average American. And this is largely a U.S. phenomenon. You do see it in other countries as well. But the U.S., where drugs priced here in the United States is by far, the highest. And that’s the reason why drug pricing has become a front-page issue both in the media and politically as well.

And just to frame it a little bit, the prescription drug industry globally, for branded pharmaceuticals, that’s an $800 billion industry, estimated to grow to $1.2 trillion in 2024, and the U.S. would be just under half of that. And so this is an area – it’s obviously a very large industry. And if you look at the publicly traded companies where we you know, make our bread and butter, where we spend our time, it makes up about half of the overall healthcare industry in terms of market cap or profits.

And so, what’s unique in the U.S. is that drug companies here have the freedom to set drug prices largely wherever they want, so it’s a market-based system. And also raise prices whenever and however frequently they choose to do. Now, more recently, we’re starting to see some policy changes in the U.S. that will contain drug price inflation even further. But in fact, you know, we’ve already seen a change in the industry over the last few years as this issue has been brought into the limelight. And that’s really one of the big changes here, so.

Yes, drug prices are still increasing, but the rate has actually gone down pretty substantially. So back in kind of the earlier part of this decade, 2011, 2012, net pricing – so the actual price that the drug companies were collecting, was going up by nine percent per year. A couple years later from 2013 to 2015, this came down a little bit to about four percent. But what was making the headlines were these list prices which continued to go up by double digits. But you’ve had a few developments that have caused a little bit of a shift–downward shift, in price increases per year. And in fact, in 2018, the net price increase was about flat.

So why is this happening? I mean, two main reasons. First of all, with all that media and political scrutiny, there is more self-policing going on in the industry. The drug companies don’t want to see themselves on the front cover of a newspaper or let’s say a tweet. And secondly, there’s been consolidation in the supply chain. And at the rise of the PBMs or the pharmaceutical benefit managers, so these are the companies that are negotiating prices and driving formulary decisions. So deciding what drugs will get reimbursed and which ones won’t. These companies have essentially gained more buying power over the last several years. So that’s forced a little bit of a change.

So, overall, yes, prices are high. But there are changes afoot. And that’s one of the biggest changes that I’ve seen over the past 10-15 years. I can recall going to a large industry conference that happens on the West Coast at the beginning of the year, every single calendar year. And for years, the executives of the drug companies were asked about drug pricing and how much longer can this go on, because we know the system can’t really take it into perpetuity of course.

And for the first few years, they would say, “We don’t know exactly how long it’s going to last. It’s not going to last forever, but it’s not around the corner.” And then the tone started to shift a little bit and you started to see it come more into the forefront. And it’s very different today where, again, things have changed. So that’s definitely been a big change that I’ve seen over the past, yeah, 10-15 years in this industry.

Hugo Scott-Gall: The high prices, the increase in pricing, is that reflecting greater research and development costs either because it’s getting harder – you kind of pick the low hanging fruit first. So as you try and solve more complex diseases, you have to just spend more dollars on research and development? Or does it reflect that the underlying cost of research and development rises because salaries of skilled professionals rise. Is the sort of pricing relative to the cost of developing drugs actually make more sense? The prices aren’t really running ahead of the actual underlying cost. So the returns to the pharma company actually aren’t rising that much.

Tommy Sternberg: First of all, I think it’s interesting that the question is even asked in that form. In that, is the price being set relative to the amount of money that is spent to develop a drug. Because what’s often referenced is – let’s just say the manufacturing cost of a drug, which often is not very high relative to the overall price. It’s a very high margin business. But of course, w know that it takes hundreds of millions, if not billions. Estimated to be about one to two billion dollars to develop a single new drug to bring to the market. So it is that R&D cost that does of course factor into the price of the drug. So, therefore, drug companies need to also be able to earn a profit and a return on that investment in order to keep the innovation going.

So, I think to answer your question, I do think it is some of both. There’s definitely a labor inflation component to it. And what the hope is and what might happen going forward is–to your question about the science and R&D, and is it just getting more difficult to come out with new drugs.

The hope is that with the advance in our understanding of genomics for instance. And the industry getting better about identifying targets to develop drugs. And being smarter about choosing which drugs are less likely to reach the market and be commercial successes and help patients. Then you will start to see that cost curve come down a bit. So that’s definitely something to watch going forward.

Hugo Scott-Gall: So, while we’re on research and development, R&D, let’s talk a bit about business models. In your time, you look in the industry, I guess one of the big changes is who is doing the R&D. It’s become more of an outsourced thing than in-house thing. So big pharma is sort of becoming an outsourced specialization and will do less themselves. Is that a fair characterization?

Tommy Sternberg: Absolutely. That’s another big change that’s really happened to become more pronounced, I would say. It’s very few of the new drugs that reach the market today were in fact discovered by that company that is now selling it. And in fact, only six percent of the industry’s pipeline today actually resides within the organizations of the top 10 pharmaceutical companies.

So, why is that? A number of reasons. But one conclusion of that is that the big drug companies generally have a less efficient R&D organization. Why is it more efficient to outsource functions such as drug discovery, for instance, to other companies? And by the way, this has grown to be a big industry. So drug discovery outsourcing is a $25 billion industry. And there are other functions as well that the pharmaceutical companies have decided to outsource at an increasing rate over the years.

So that includes running clinical trials with businesses getting outsourced to CROs, clinical research organizations, as well as manufacturing services. That’s an $80 billion industry. Also growing sort of in the mid-single digits.

And again, why is that? Why are these drug companies outsourcing these various functions? Now take manufacturing for an instance, there are various reasons. One of which could be sort of risk reduction. So if something happens at your plant, you want a backup or a dual source, that could be one.

Another reason is the rise of the so-called virtual biotech companies. So if you are a small biotech company that doesn’t have any sales yet, but you have a promising drug in the pipeline, it can be very risky and expensive, of course, for you to go out and build a new manufacturing plant, a drug that might not ever reach the market.

So what’s happened is you can develop a more capital light model where instead you can outsource the manufacturing function, both when that drug is in clinical trials and eventually if it does reach the market, to an outsource provider known as a CDMO. So that’s another reason.

And what all this allows is for the bigger drug companies to focus on their core competencies, which interestingly enough, has really proven not to be the discovery of new drugs. But rather the selling and the marketing of these drugs. And that’s where the focus has become for some of the larger drug companies today.

Hugo Scott-Gall: And so, almost this is a–perhaps a capital allocation story. That 20 years ago, 30 years ago, the role of the CEO of a big pharma company was all of those things. And now, actually it’s more about deciding what to outsource, who to outsource it to and maybe who to buy. If you don’t generate the raw IP in house, when do you need to buy it versus when you need to outsource it.

So is it right to characterize maybe a big pharma CEO is now more about making acquisitions then having a real raw IP generated in house? Is that a fair characterization?

Tommy Sternberg: I think so. I think in many ways it has been and that’s an outgrowth of the dynamic that we’ve seen where in fact big pharma just hasn’t been very good at coming up with new drugs. And that statistic I referenced earlier about only six percent of the entire pipeline coming from the big drug companies. And a lot of the bigger drug companies would say, you know, there’s kind of a blur in terms of whether a drug that’s gotten developed – is it in house? Is it truly? You know, did we come up with it or did someone else. Because there’s a lot of in-licensing that happens very early on.

So there are really two ways for these companies to grow. And that’s the most capital efficient way is of course, to innovate and come up with something yourself. And that’s a higher return proposition. However, because these organizations have gotten big, have gotten bloated, because the incentive structures might differ at an R&D organization at a very small biotech company versus a larger organization within a big pharmaceutical company. They just haven’t been quite as good at coming up with those new drugs.

So if you can’t innovate, then yes. How do you get growth? You get it externally via M&A. And that’s been a trend that’s gone on for years and likely to continue. Because these companies are desperate for growth. And so a lot of CEOs will in fact be evaluated on the success or failure of that M&A strategy.

Hugo Scott-Gall: And so the third of your three big changes was personalizing medicine and highlight it as an opportunity for pharma companies. As you just said, they’re starved for growth. They don’t have a lot of growth. But maybe before we talk about the opportunity, we should just talk a bit about exactly what that is. So, Camilla, can you give us a nice description of what personalized medicine means?

Camilla Oxhamre Cruse: Sure. So there’s been a huge development in personalized medicine. Just to start off by explaining what it is so we all are on the same page here. So it really is tailoring medical treatment based on our individual characteristics. So the concept of tailoring a medical treatment, historically, is nothing new. Think about organ donation. Think about blood transfusion. They all need to be tailored to the recipient in order to avoid severe reactions.

More recently, there has been a huge shift in personalized medicine based on our understanding of the human genome. So now when we refer to personalized medicine, we often refer to it as our understanding of the person’s unique genetic profile and how that is playing into the underlying disease and the treatment choices of those conditions.

Our increased understanding of the genetic profile and the correlation to various diseases and the treatment has changed the pharmaceutical industry profoundly. Historically, the industry has been focused on developing blockbuster drugs. The one size fits all kind of drugs. And think about the cholesterol lowering drug, for example. Lipitor is still one of the best-selling drugs of all time, peaking at almost $14 billion U.S. dollars in 2006. While many of these drugs will continue to be very helpful, the one size fits all approach is not optimal for all diseases. Particularly not in those where genetic background plays a significant role, such as various cancer indications for example.

Historically, we have treated these cancer patients pretty much the same ways. So you’re using surgery, radiation, and chemotherapy. But based on our understanding of the human genome, we are now equipped with better tools to better select a therapy and treatment protocol based on the individual patient’s profile. And with the aim of a more successful outcome. Less side effects. And also, more importantly or equally importantly, with better cost benefit profile.

And one of the earliest examples of personalized medicine is Herceptin. About 30 percent of patients with breast cancer are HER2 positive. Meaning that the tumor over expressed the protein called HER2, to which Herceptin treatment is targeted. And using Herceptin in HER2 patients has shown to significantly reduce the occurrence of the diseases as compared to using traditional standard of care treatments.

Since then, we have seen the approval of a wide variety of personal medicine treatments. And it is our opinion that we’re just scratching the surface here. There is a lot to do. I will talk about more of this new very interesting technology later on.

Hugo Scott-Gall: So the benefits here are pretty broad. They’re pretty broad in terms of better diagnostic, better treatment, and therefore, lower cost or certainly shorter treatment periods. So then maybe if these drugs are curative, you save on the long-term healthcare costs associated with the chronic diseases. What else am I missing from the sort of broader, sort of healthcare wide system benefits?

Camilla Oxhamre Cruse: Right. No, you’re absolutely right. So this is really a multi-facet approach to treat patients. It effects our ability to identify the best treatment. It also changed our approach to diagnostics. Diagnostics is really important here. In order to determine the best course of treatment for a specific patient, we need to develop and have developed various diagnostic tools. And these diagnostic tools, not only facilitates our ability to treat the patient, but also detect disease at an early stage. Even prevent the disease from occurring at all.

So the diagnostic tools, I would say, are as crucial for the success of the treatment, as the drugs themselves. So in recent years we have seen a huge development and emphasis in developing new diagnostic tools to fit into the changes of personalized medicine. So, there are a number of success stories in the industry here where companies have benefitted from this trend. And we see an opportunity in this trend in developing very interesting tools that we are using.

From the healthcare system as a whole, you’re right. So what it really boils down to is improving outcomes, reducing side effects for patients, and also reduce the cost burden on the healthcare system as a whole. If we can better predict and prevent disease using these diagnostic tools, this is of course, hugely beneficial for patients and the healthcare system.

So we have now developed more accurate tools, but we are also developing easier to use tools. Take colonoscopy for example that is in use to detect colon cancer. Colon cancer is one of the most common cancer indications. Huge burden for the healthcare system.

Now we have a test that we can use at home. It’s a simple stool test that we can use at home as compared to the colonoscopy that is a very cumbersome test. It takes a long time to do. You have to prepare yourself. You have to go to the hospital. And there is of course a cost to the system. The idea is, of course, that now with this easier to use test, more people will test for colon cancer. And we can hopefully detect them at the earlier stage of the disease where the disease is easier to treat. So that will be hugely beneficial both for patients, obviously, and the system as a whole.

And I think that when talking about personalized medicine, we also of course have to mention the development we’ve seen in immuno-oncology. And the recent approval of immuno-oncology drugs. So immuno-oncology drugs are taking advantage of the body’s own immune system to fight cancer. Now this is a rather delicate business, because over activating the immune system can be rather lethal. The immune system is rather complex, and in many ways, is still very opaque. It’s a mystery to us in many ways.

But in recent years, there’s been a tremendous development here and the approval of several immune oncology drugs. And last year, the scientists that detected the key mechanism behind the immuno-oncology drugs, they received a Nobel prize in medicine. Which is rather unique, because it usually takes decades and decades before a discoverer receives a Nobel prize in medicine. But in this case, it’s already recognized that the discovery has a profound impact on the treatment of cancer.

I was actually at the medical conference where the breakthrough data on one of the first immuno-oncology drugs was presented. And for many doctors present at this conference, this was really a moment of euphoria. A doctor I talked to, he’s been treating lung cancer for over 20 years and with very little development during these 20 years. And now we’re all of a sudden talking about a potential cure. So this was truly revolutionary and it’s not often we see these huge medical histories being written.

Tommy Sternberg: And just to echo that a bit, I mean I think when you talk about immuno-oncology, the innovation that’s occurred in this industry over the last decade or so. And this has been, by far, the biggest jump forward. And what’s interesting here is, even though this has been such a leap for many, many patients, and it’s leading to multiblock busters and huge amount of industry sales and quite a lot of promise, there still remains a lot of potential left.

And one of the drug companies highlighted that even with all this advancement of these checkpoint inhibitors in this immuno-oncology space, over 75 percent of patients with all these various cancers, still don’t respond to this type of therapy. So they were just trying to make the point that even with how much advancement we’ve made, how much more there is yet to go. So, the demand will continue to be there, but it is this personalized medicine approach that will help the industry treat more and more patients particularly in this area of cancer.

Hugo Scott-Gall: So, Camilla, you said that we’re still at the early stages. What is to happen to progress? Is it a matter of dollars? Is it a matter of data? Compute power? What are the impediments to making this far broader and really realizing it’s potential? And by this, I mean personalized medicine.

Camilla Oxhamre Cruse: Time. It will take time, because there are, like Tommy said, so much to do. We are just scratching the surface here. So the further we dig, the more we learn. So there are plenty of new exciting technology in development in the healthcare space. Which is one of the reasons why it’s so interesting being a healthcare analyst. It’s constantly changing and an extremely dynamic environment.

At the moment, I would say there are three big technology trends that make a huge impact on the industry. It’s gene therapy. It’s cell therapy and then gene editing. And while there is still some science fiction around this, I’ll try to sort of explain very basically what this means and why we are so excited about these changes in technology.

So if you start with gene therapy, this refers to sort of any type of treatment that adds, removes, or changes a patient’s genetic material.

Hugo Scott-Gall: What would be a good example of changing someone’s genetic material?

Camilla Oxhamre Cruse: So, we have several drugs, or a couple of drugs on the market. The most exciting one, more recently, is a drug called Zolgensma. And it was approved just a couple of months ago. Zolgensma was approved for a chronic neurological disease called spinal muscular atrophy. This affects little babies. And up until the approval of this drug, there was really nothing available for theres little babies. And it’s truly horrible disease affecting the spinal cord so that many of these babies, they will not be able to walk. They won’t be able to eat. And sometimes they won’t even be able to breathe on their own.

And Zolgensma offers a potential cure for this disease, however at the jaw dropping price of $2 million per patient. It’s raising the question of the price tag of these newer drugs. However many cost benefit statuses of this drug show, it scores extremely high because this is a potential cure of an otherwise chronic disease that causes dreadful suffering of these babies.

So the approval of Zolgensma shows also that the potential of gene therapy and is really by approval of this drug, taken a huge step forward in showing the ability of what this can do for treating rare genetic diseases.

Tommy Sternberg: So it’s really those genetic diseases that of course is where gene therapy comes in. So in the case of SMA, there’s a specific gene that was identified in these infants or in other diseases where the gene is either missing or it’s not working properly. And so gene therapy can go in. Once it’s identified, a gene can be modified, deleted, replaced. And so that can be applied and is being investigated in a variety of inherited or genetic diseases including sickle cell disease, muscular dystrophy, hemophilia, many eye diseases as well.

So those are the types of applications. And what’s really exciting, as Camilla said, is these can be curative types of treatments. They can be one-time and because you’re not just addressing the symptoms but you’re really addressing the underlying cause of the disease by changing the genetic makeup, that’s really where all the promise and excitement is in gene therapy.

Camilla Oxhamre Cruse: And the other one was cell therapy. So cell therapy, a little bit easier to explain. It involves transplantation of human cells. Bone marrow transplantation is an example of cell therapies.

So what we have recently done is developing various cell therapies primarily focusing on boosting the patient’s immune system. And one approach that is getting a lot of attention right now is CAR-T, which is a form of immunotherapy.

So basically, cells from the patient is extracted, modified, amplified, and then reinstated into the patient again. And the cells that are used are called T-cells. T-cells are basically troopers of the immune system’s infantry. There are currently two CAR-T treatments approved on the market for different types of blood cancer indications. But the attempt is of course to use the technology for several other cancer indications. And a lot of development here is currently undergoing. So I think that, again, we’re just scratching on the surface of its true potential.

The third one, gene editing, that’s another potential transformative technology. This one is earlier in the development stage as compared to gene therapy and cell therapy. And we do have a bit of a science fiction here. There are no approved treatments based on gene editing today. But the development of a technology called CRISPR (“Crisper”) has recently accelerated the development in the field.

And to explain Crisper, vary basically, it’s used to specifically edit genes. Like I said, it’s a bit science fiction. Crisper is basically molecular scissors. So it cuts open the DNA strain and then specifically edits the piece that you want to edit. And there’s huge potential here, of course. As we speak, the first patients are actually rolling to clinical trial for a specific cancer indication.

Hugo Scott-Gall: So this is preemptive.

Camilla Oxhamre Cruse: This is very early.

Hugo Scott-Gall: So, but this is – obviously, it’s very early in its development. But this is preemptive as in you would edit someone’s…

Camilla Oxhamre Cruse: Existing genetic profile. Yes.

Hugo Scott-Gall: So it’s not the same as treating faulty genetic material. This is changing it before it becomes faulty. Is that too simplistic?

Camilla Oxhamre Cruse: No. It is changing a faulty gene. A mutated gene or a genetic mutation you’re born with.

Hugo Scott-Gall: But gene therapy and gene editing are different.

Camilla Oxhamre Cruse: In the same bucket, but different. So gene therapy, you usually change bigger pieces. Here you can sort of more sort of change sort of smaller pieces of the gene. More specific. And if you have really any ambition of creating your own Jurassic Park, this would be the technology you would use.

There is, in fact, an American scientist claiming that he can bring back the mammoth using this technology. So while Crisper comes with huge scientific potential. It also comes with a lot of ethical responsibility.

Hugo Scott-Gall: Where in the world is the sort of leading edge of this? Is it in the U.S.? Is it in Europe? Is it in China?

Camilla Oxhamre Cruse: It’s at the top universities around the world. Which is really, I would say, a global platform. I wouldn’t really call the scientific world very national oriented. It’s very based on your – it’s a world community, really.

Hugo Scott-Gall: So I suppose, and you must correct me if I’m wrong because I probably will be. But if you can edit genetic material, you can stop things going wrong. And therefore you can avoid the treatment cost of things going wrong. So this could really change some existing revenue pools of drugs that are used to treat conditions. Specifically, chronic conditions. So if you stop them from happening in the first place, does that begin to start changing the make up of revenues for the pharma industry?

Tommy Sternberg: I think in certain instances that can happen. But at the same time, I don’t know that that would make it all that different from other technologies or other instances where new drugs effectively moved the needle, so to speak, or raised the bar. Drugs lose patent exclusivity after a certain number of years. New drugs come out and replace the older ones.

So it’s an interesting question because in a sense you’re sort of asking, well, if the industry starts curing everyone rather than treating everyone, does that lead to a loss of revenues? You know, in its purist form, you could go down that route, but I don’t think that we’ll start seeing that in mass in our lifetime. They’re still, I go back to the point of what we saw in immuno-oncology. And just the huge leap forward that that made and yet how much more there is to go. So I think we’re a long way out from that happening.

Camilla Oxhamre Cruse: And taking it from a scientific perspective, this is really a dynamic setting. It’s constantly changing. Take, for example, Herceptin, we talked about that earlier. And we are now finding out the tumor cells are developing resistance to this treatment because it’s constantly changing. And I think that will definitely keep us all busy for a very, very, very long time.

Tommy Sternberg: We’ll always find something to try to go fix. You know, even if we all live to 150, you know, we’ll want to start living to 200.

Hugo Scott-Gall: For sure, for sure. Let’s talk a bit more about the future then. We’re talking a lot about the future already. But some funky stuff. 3-D printing, you can get every body part 3-D printed. You can have surgery performed by a robot. Oh, yeah, are we getting close? Is that nearly where we are?

Camilla Oxhamre Cruse: Definitely possible I would say. I mean, 3-D printing, we are 3-D printing cells today. I mean, back when I did my thesis, we were growing cells on petri dishes. This was a 2-dimensional environment, which is of course very different from how the cells are working and communicating in the real setting in the body.

So what we can do now is very recent technology, of course, is to print human cells in a 3-D setting. That means the cells can now communicate with each other in a more similar environment as compared to the human body. And therefore we can extract more relevant or clinical scientific data from these experiments.

Will we ever be able to print an organ? I’m sure there a lot of attempts out there. I would say that maybe in a 10, 20 years horizon, we could be able to print a heart. It would definitely solve a lot of problems with organ transplantation. That is a very complex procedure because of what we started out talking about. That you have to tailor the procedure to the recipient. Finding the right donor. Finding the right match. Could we print them we would take a step around this problem, obviously.

Tommy Sternberg: And robotics is interesting. So that does exist today. Robotic surgery has grown tremendously. Although you’d have to more accurately characterize it as robot assisted surgery in that there’s still a surgeon at the controls, if you will. But the robot is the one doing the cutting and it’s more accurate. And it leads to better outcomes, less complications are sort of the value proposition. And there will be more and more indications, more surgeries that will open up to over time.

And what’s even more interesting thinking about the future is this idea of what I’ll call virtual robotic surgery. Whereby coming of 5G and super-fast networks, that a patient could be in one state and the surgeon could be somewhere a thousand miles away, across the country, perhaps. With his own counsel. Performing a sort of virtual surgery where the instrument is actually just doing what the surgeon is doing, again, a thousand miles away. So there are some fascinating things that we will likely see in the future.

Hugo Scott-Gall: One final question that relates to that is AI Now, AI is an umbrella term. But the application of artificial intelligence, where do you think it will work and where do you think it’s maybe overhyped?

Camilla Oxhamre Cruse: So where it’s already working is classification of imaging, radiology. So we have seen in several studies that an algorithm actually outperforms a doctor in classifying echocardiograms. So the algorithm or the machine scored 92 percent whereas a human only scored 79 percent. So it’s not only better in predicting or classifying, echocardiogra is also shown to be better at predicting heart disease.

There’s a program in the U.K. where they have used an algorithm scanning patient’s medical data, predicting which one of these patients were to have a heart attack or stroke within 10 years. And so far, the data is actually very promising. So the scientists think that this algorithm could be used in a broader sense within a couple of years.

Tommy Sternberg: So, many potential applications. I think imaging is a big one because of the enormous amounts of data that’s available. In terms of the genomics and drug discovery, helping identify targets and leading to new drugs. I think that’s an interesting application. And then even things like amending hospital protocols and just making improvements on how operational workflows work.

You know, so there are numerous types of applications and I think it will help transform many areas of medicine going forward. I think where you might have to be a little more careful is just some of the big promises that you hear about – you know, will this help cure cancer or cure Alzheimer’s disease. No I would think of it more as a tool that can help us get to some answers more quickly and help achieve that goal. But that’s some of the areas where I see more promise and other areas where maybe you just want a bit more skepticism.

Hugo Scott-Gall: Great. Well, Camilla and Tommy, thank you very much for joining me. Thank you very much for taking the time. I’m going to class this as a pretty optimistic podcast and a pretty optimistic addition to our series. So thank you both very much.

Camilla Oxhamre Cruse: Thank you.

Tommy Sternberg: Thank you.

Camilla Oxhamre Cruse: Appreciate being here.