Hannes Holste, Director, Life Science Investments & Data Science at Thiel Capital, spoke with Michael Blue, Chairman and CEO of HistoSonics, about the process of developing a breakthrough technology, the obstacles to commercializing the technology, and the lessons to be learned from the process for the broader MedTech industry at the LSI Emerging MedTech Summit. They discussed the creation of new treatment categories, how traditional models may fail to recognize the value of such treatments and the development of a business on an entirely new surgery model.
So, how did Histotripsy become a new treatment category?So, how did Histotripsy become a new treatment category?
Histotripsy was developed at the University of Michigan where researchers in the ultrasound field were interested in creating a small opening in cardiac septum without surgery. Since their application was not suited to thermal effects, the researchers turned to high amplitude, short-duration ultrasound pulses that might be able to mechanically destroy the targeted tissue.
The research sparked the development of a new technology called histotripsy, which is based on the principle of acoustic cavitation.This study resulted in the development of a new technology called histotripsy, which is an acoustic cavitation technology.
They eventually developed the method to turn specific tissue into a liquid and in 2002 they invented the term, “histotripsy,” Blue said. “Mechanically destroying and eventually forming a liquefaction, which then is absorbed by the body.”
This technology was then investigated in various application areas such as blood clots, tumors and gall bladder stones. But, it was not easy to take the discovery of the science and make a commercial treatment.
HistoSonics began with a concentration on benign prostatic hyperplasia (BPH). However, its study on 28 patients in the U.S. under the Investigational Device Exemption (IDE) was unsuccessful, presenting major hurdles for the company. Blue started in 2017 at a time when investors were weary of the idea of another new medical technology and the uncertainty that histotripsy could be made safe and effective in the human body.
Instead, HistoSonics repurposed their work to focus on abdominal tumors, and then onto the liver as their first target.
This shift allowed for a more defined direction for the technology in terms of clinical applications. It also brought up a more fundamental strategic issue: is HistoSonics a technology designed to supplant procedures or a technology designed to offer new possibilities for treatment?
The latter had the upper hand, and preferred blue.
“New category we don’t know yet, we’re working on that,” Blue said. “Early stage patients, we believe, can use it and replace all of the above including, at some point, when there is sufficient clinical evidence, surgery.
In fact, his viewpoint was a key tenet of the company’s growth: a non-invasive treatment platform may eventually become more than a substitute for certain procedures, but a new way to treat certain conditions.
What’s next for MedTech? Conventional market models may underestimate MedTech innovation.
This is just a glimpse of the bigger issue Holste faces as an investor in MedTech. Economic potential of traditional market evaluations is typically based on patient incidence, procedure volume and pricing. These are all factors that still play a role, but may not fully reflect the opportunity afforded by technologies that create new treatment categories.
Where does a life science market get to be much bigger than this modelling foresaw when you are considering building a generational company? Holste asked. “Sometimes I believe the key to that is in the qualitative, non-obvious, insights.”
With HistoSonics, some of those insights were only realized when the technology was used in clinical use.
We had talked about our experience of treating patients who had big tumors, numerous tumors, and tumors close to critical anatomy, said Blue. He also noted the use of histotripsy in palliative care, which could be considered a “second target market” that goes beyond the traditional target market definition.
“Many, many times,” Blue said to our company, “if all we ever did was palliation, then sign me up for that.”
These experiences also emphasized the need to consider a technology when examining the procedures it could replace, as well as the patients’ needs it could meet in a way that other treatments could not.
The company also streamlined its investor communications. Blue didn’t just label itself as a developer of an unknown ultrasound-based treatment, but as a non-invasive surgical robotics company.
The evolution of open to laparoscopic to minimally invasive robotic to single to completely non-invasive robotics was planned for us to do,” Blue said. We’ve accomplished that by the foundation of our company: histotripsy.
This positioning placed histotripsy within the context of surgical care and led to develop a technology that was different from the traditional thermal ablation and invasive technologies.
The conversation was a timely reminder to companies pitching at the LSI MedTech Summit that it might be necessary to venture beyond existing market segments and inject context into the discussion about clinical and commercial value of new technology.
Clinical studies remain a primary focus for the wider uptake.
Regulatory clearance was a key step for HistoSonics, but wasn’t enough to build clinical confidence over a broader spectrum of applications.
All medical oncologists seek a ton of long-term clinical data when considering new treatment strategies, Blue said. HistoSonics got to market via a Class II De Novo pathway, supported by a targeted investigation of safety and effectiveness, which will be followed by studies to establish the technology in other patient populations and clinical settings.
The company is still investing in provide the evidence required for wider use.
“We’re dedicated, we’re committed,” Blue said. We have a great group of investors who are very dedicated and passionate on building the clinical evidence we need to build a paradigm changing new category in healthcare.”
This separation is relevant for newly established MedTech companies. While regulatory approval can provide evidence that a technology is able to meet the appropriate criteria for market entry, broader clinical use may require other evidence, clinical experience, and greater clarity regarding the appropriate role for a treatment within a known care pathway.
HistoSonics’ experience also highlights the importance of keeping clinical development in sync with long-term commercialization goals. While further studies can help answer some key questions, they are just one component of a sustainable healthcare business.
The MedTech Industry can learn from HistoSonics.
Holste’s thoughts don’t end at histotripsy. He said that those companies that are creating a new technology that could transform the industry should consider not only building up assets that can be sold, but also building a business.
“We’ve forgotten as an industry as well that we’re in the business of building businesses, not crafting assets to be packaged up and to be sold for a predictable multiple,” Holste said.
This applies especially if the company is trying to develop a new class of treatments. Their business model may be different from what’s already available, and their clinical journey might need continued investor backing until clinical data becomes available, physician confidence is established, and relevant market knowledge is developed.
The evolution of HistoSonics’ program, from its original focus on BPH to a broad liver program, reflects the need to adapt to changes in the market. It also underscores the importance of embracing clinical insights, challenging market perceptions, and engaging the healthcare community, investors, and clinicians with a technology’s capabilities in a way that speaks to them.
What the wider LSI-MedTech community has to take from this is not the power of every disruptive technology to generate a bigger than anticipated market. Instead, it is the common notions that need to be challenged by the new clinical data and practice as a technology brings in a whole new way of treating something.
Looking Ahead: The Possibilities of Non-Invasive Surgery
However, Histotripsy still has significant clinical evidence, adoption and further validation questions. The long term effect will depend on the success of HistoSonics in overcoming these challenges and proving the value of the technology to patients.
The company’s development, however, provides an interesting case study of how scientific research, strategic shifts and a mindset of ‘re-thinking the boundaries of the market’ can influence the direction of a MedTech business.
In that spirit of ongoing discussion, as people fight to determine what the future of healthcare innovation will look like, HistoSonics is a good case study in how to create a business around a new space in treatment.
The key question for the MedTech business is not just what procedures can be replaced by an existing technology. It’s also the potential for new clinical opportunities, a solution to an unmet patient need, and a future sustainable service.
