Blue Insights #5
First and Foremost
Thinking big is the first step to achieving big things.
Thinking big is the first step to achieving big things. Without the ability to dream and imagine a better future, entrepreneurs would never have the drive and motivation to take the risks needed to start a new business.
An entrepreneur needs to be optimistic, dreamy and self-confident. However, he or she must not be blind to market changes and customer reactions. It is important to stick to a defined strategy, to avoid the butterfly strategy of adopting a new strategy every day because yesterday's didn't work. Stay focus, on your principal, your strategy and goals, observe and listen to the feedback of potential customers, and you will make the impossible possible.
Is it tougher than I expected? Absolutely. Have I figured it all out? Definitely not. Being an entrepreneur is like permanent roller coaster where every piece of good news makes sends you into a frenzy, and the slightest bad signal demolishes your morale for the rest of the day. I learn every day, I meet fabulous people that lights up my day, but also people who are negative and discourage me from moving forward. However, at the end of the day I remember only the first one because I am a dreamer, and I am thinking big. Maybe too big, as some people say, we will see. Anyway, Blueballoon Capital was incorporated In March 2023 in Paris, France. During Summer, Blueballon Capital expanded into Montreal, Canada and Denver, USA. In September, Blueballoon Capital signed its first engagement letters and there are still plenty of prospects.
I would like to thank our first customers for their confidence in us. Thanks also to all the team members who played a pivotal role in achieving that success. More success to come in the coming months.
In this latest issue of the newsletter, we focus on AI, digital mental health, and cancer vaccine.
AI is still a very hot topic, for example the New York-based market intelligence platform?AlphaSense?raised $150 million in a Series E led by?Bond Capital?that raised its valuation a whopping 30% from its Series D less than six months ago. Unfortunately, it should be noted that Europe is lagging behind the USA in the field of generative AI. In Europe the top 3 cities are London, Berlin, and Amsterdam followed by Stockholm.
Human intelligence is the lever we have used for millennia to create the world we live in today: we have used our intelligence to increase our standard of living by some 10,000 times over the last 4,000 years. With the help of AI we should be able to continue to increase our standard of living significantly according Marc Andreeessen interesting paper about why AI will save the world. Please read the resumé further down in this newsletter. You will also find a view from Eric Schmidt on how AI will transform the way science gets done.
After the last issue devoted to Femtech, I would like to address the issue of digital mental health. Between now and the end of the year, we will be tackling the following themes about Digital Health: Remote Patient Monitoring (RPM), Digital Pathology, Digital Surgery, and Digital Ophthalmology.
It is encouraging to see that innovation continues in healthcare. It seems, for example, that a vaccine is on the way to curing lung cancer.
In the “Top insight from the financial market” section, you will see that the future of healthcare is bright, as Europe’s largest market capitalization is a healthcare company, new funds continue to be created to invest in healthcare and the Nasdaq could once again welcome major VC-backed startup.
In conclusion, a promising future for health. The future looks bright for Blueballoon Capital!
I hope you find this newsletter inspiring.
Follow your dream, wake up, get up, get going, dream big and big things will happen. Don't wait too long to take the plunge - you'll always find a good reason not to.
See you next month.
Jan Eryk
TOP News
An interesting view from Marc Andreessen on why AI will save the world
Andreessen is a Cofounder and General Partner at the venture capital firm Andreessen Horowitz.
First let’s start by a short description of what AI is. AI is the application of mathematics and software code to teach computers how to understand, synthesize, and generate knowledge in ways similar to how people do it. AI is a computer program like any other – it runs, takes input, processes, and generates output. AI’s output is useful across a wide range of fields, ranging from coding to medicine to law to the creative arts. It is owned by people and controlled by people, like any other technology. An even shorter description of what AI?could be: A way to make everything we care about better.
According to Marc, AI will not destroy the world, and in fact may save it. Why? Because AI can make everything we care about better, AI will not kill us all, AI will not take all our jobs. On the contrary, it will boost employment and wages.
Why AI Can Make Everything We Care About Better
Anything that people do with their natural intelligence today can be done much better with AI, and we will be able to take on new challenges that have been impossible to tackle without AI. AI is quite possibly the most important – and best – thing our civilization has ever created, certainly on par with electricity and microchips, and probably beyond those. Every person will have an AI assistant/ coach/ mentor/ trainer/ advisor/ therapist.
Productivity growth throughout the economy will accelerate dramatically, driving economic growth, creation of new industries, creation of new jobs, and wage growth, and resulting in a new era of heightened material prosperity across the planet.
Scientific breakthroughs and new technologies and medicines will dramatically expand, as AI helps us further decode the laws of nature and harvest them for our benefit.
AI will not kill us all
It's a myth that scientific progress only comes with high risks. After all, fire can be used to burn down entire cities. But just as fire was also the foundation of modern civilization as used to keep us warm and safe in a cold and hostile world, this mythology ignores the far greater upside of most new technologies, and in practice inflames destructive emotion rather than reasoned analysis.
It is math – code – computers, built by people, owned by people, used by people, controlled by people. The idea that it will at some point develop a mind of its own and decide that it has motivations that lead it to try to kill us is a superstitious handwave.
In short, AI doesn’t?want, it doesn’t have?goals, it doesn’t want to?kill you, because it’s not?alive. And AI is a machine – is not going to come alive any more than your toaster will.
First, recall that John Von Neumann responded to Robert Oppenheimer’s famous hand-wringing about his role creating nuclear weapons – which helped end World War II and prevent World War III – with, “Some people confess guilt to claim credit for the sin.” What is the most dramatic way one can claim credit for the importance of one’s work without sounding overtly boastful?
AI will not take all our jobs
The fear of job loss due variously to mechanization, automation, computerization, or AI has been a recurring panic for hundreds of years, since the original onset of machinery such as the?mechanical loom. Even though every new major technology has led to more jobs at higher wages throughout history, each wave of this panic is accompanied by claims that “this time is different” –?this?is the time it
No, that’s not going to happen – and in fact AI, if allowed to develop and proliferate throughout the economy, may cause the most dramatic and sustained economic boom of all time, with correspondingly record job and wage growth – the exact opposite of the fear. And here’s why.
The core mistakes the automation-kills-jobs doomers keep making is called the?Lump Of Labor Fallacy. This fallacy is the incorrect notion that there is a fixed amount of labor to be done in the economy at any given time, and either machines do it or people do it – and if machines do it, there will be no work for people to do.
The Lump of Labor Fallacy flows naturally from naive intuition, but naive intuition here is wrong. When technology is applied to production, we get?productivity growth?– an increase in output generated by a reduction in inputs. The result is?lower prices?for goods and services. As prices for goods and services fall, we pay less for them, meaning that we now have?extra spending power?with which to buy?other things. This?increases demand?in the economy, which drives the creation of?new production?– including new products and new industries – which then creates new jobs for the people who were replaced by machines in prior jobs. The result is a larger economy with higher material prosperity, more industries, more products, and more jobs.
But the good news doesn’t stop there. We also get higher wages. This is because, at the level of the individual worker, the marketplace sets compensation as a function of the?marginal productivity of the worker. A worker in a technology-infused business will be more productive than a worker in a traditional business. The employer will either pay that worker more money as he is now more productive, or another employer will, purely out of self interest. The result is that technology introduced into an industry generally not only increases the number of jobs in the industry but also raises wages.
To summarize, technology empowers people to be more productive. This causes the prices for existing goods and services to fall, and for wages to rise. This in turn causes economic growth and job growth, while motivating the creation of new jobs and new industries. If a market economy is allowed to function normally and if technology is allowed to be introduced freely, this is a perpetual upward cycle that never ends. For, as Milton Friedman observed, “Human wants and needs are endless” – we always want more than we have. A technology-infused market economy is the way we get closer to delivering everything everyone could conceivably want, but never all the way there.?And that is why technology doesn’t destroy jobs and never will.
Eric Schmidt: this is how AI will transform the way science gets done
If we play our cards right, with sensible regulation and proper support for innovative uses of AI to address science’s most pressing issues, AI can rewrite the scientific process. We can build a future where AI-powered tools will both save us from mindless and time-consuming labor and also lead us to creative inventions and discoveries, encouraging breakthroughs that would otherwise take decades.
Within health care, the US Food and Drug Administration has already cleared 523 devices that use AI—75% of them for use in radiology.
At its core, the scientific process we all learned in elementary school will remain the same: conduct background research, identify a hypothesis, test it through experimentation, analyze the collected data, and reach a conclusion. But AI has the potential to revolutionize how each of these components looks in the future.?
AI can also spread the search net for hypotheses wider and narrow the net more quickly. As a result, AI tools can help formulate stronger hypotheses, such as models that spit out more promising candidates for new drugs. We’re already seeing simulations running multiple orders of magnitude faster than just a few years ago, allowing scientists to try more design options in simulation before carrying out real-world experiments.?
Moving on to the experimentation step, AI will be able to conduct experiments faster, cheaper, and at greater scale. For example, we can build AI-powered machines with hundreds of micropipettes running day and night to create samples at a rate no human could match. Instead of limiting themselves to just six experiments, scientists can use AI tools to run a thousand.
There is a lot of tacit knowledge that scientists learn in labs that is difficult to pass to AI-powered robotics.
Unfortunately, Europe is lagging behind the USA in the field of generative AI.
More than $22 billion has been invested by VC in generative AI and only 5% has gone to Europe according to Dealrooms data.
U.S.-based Open Ai partly explains the situation, with $12 billion invested there.
London took fourth place. GenAI raised around $36 million, led by the $101 million investment in Stability AI, which makes the text-to-image conversion model Stable Diffusion.
Three European cities rounded out the top 10: Berlin ($141mn), Amsterdam ($238mn), and Stockholm ($100mn). Where is Paris?
If you have a real AI project in Paris, give us a call.
Digital Mental Health
More than 57 million adults and 7 million children suffer from depression in the USA. Between 2010 and 2019 there is a 40% increase in "persistent feelings of sadness and hopelessness" among young Americans and a 31% increase in mental health-related emergency room visits by adolescents during the pandemic.
Making matters worse, one of the leading contributors to the mental health epidemic is a lack of access to care. Most Americans with mental illness go untreated altogether, and members of racial minorities get help in even fewer numbers. A 2022 survey found that 42% of Americans with behavioral health issues did not seek out care because of barriers like costs and limited insurance coverage.
In Europe, mental health problems affect?about 84 million people and only 1 in 3 people living with depression receive the care they need. 3.9 % of all deaths?in the EU in 2017 resulted from mental and behavioral disorders. In 2019, there were 73 psychiatric care beds per 100 000 inhabitants in the EU: this ratio ranged from a high of 141 beds in Belgium down to a low of 8 beds in Italy.
Nearly half the world's mental health patients have no access to treatment, but more than half of those diagnosed with a mental illness have access to a smartphone. This highlights the paradigm shift in psychiatric care and the emergence of digital mental health.
Digital mental health technology offers the potential to break down barriers to outpatient care such as accessibility, wait times, and costs. As soon as lawmakers, payers and providers embraced digital mental health technology during the pandemic, millions of Americans who had never sought counseling before did. Several early promising studies examining smartphone-delivered psychological interventions have found them to be efficacious.
What Are Mental Health Apps?
Mental health apps are mobile technology applications that offer clinical and non-clinical methods of offering mental health support. There are three categories:
The line between wellness and mental health care can often be blurred from both regulatory and clinical lenses, and the same challenges exist in the mHealth space.
Patients and clinicians should consider all apps, regardless of their claimed category, and assess their suitability based on app features, patient needs, and compatibility. FDA approval is one point but not the sole indicator of app quality or effectiveness as there are concerns about loopholes in the approval process.
The mHealth App Landscape
The app ecosphere is constantly evolving, with 90,000 new digital health apps released in 2020 alone and over 10,000 related to mental health. Most of them are general wellness apps that claim to offer medical strategies to help with certain mental health disorders, but the apps themselves might not offer treatments based on evidence.?One study from 2017 found that none of the most popular apps rated highly by consumers for treating anxiety related symptoms were?evidence-based treatments.
More than 95% of clinical psychologists now offer at least some services remotely. And 60% to 80% of Americans support digital mental health services and are open to using them.
Industry reports found that funding of behavioral health startup companies exploded during the pandemic with?$588 million?invested in the first half of 2020, many funded by private equity firms.
FDA approval
At the start of the public health emergency (PHE) declaration, the U.S. Food and Drug Administration declared they would not “object to the distribution and use of” computerized behavioral therapy devices and digital health therapeutic devices for psychiatric disorders during the duration of the PHE. They also did not intend to enforce regulations for “low-risk general wellness” apps and functionality. Many federal and state healthcare requirements were “waived” in an attempt to expand access to digital behavioral health services such as mental health apps.
During the COVID-19, the FDA noted that it would allow apps—what it terms “Software as a Medical Device” (SaMD)—to make medical claims without any data if they are related to a psychiatric disorder and are seeking a lower-risk 510(k) approval.
The FDA had plans for an entirely novel regulatory system called PreCertification, but in September 2022 announced the pilot was over without concrete next steps.
领英推荐
The PHE ended on May 11, 2023 but for example the telehealth flexibilities will remain intact until at least?November?11, 2023. The FRDA guidance on mental health is intended to remain in effect until November 7, 2023, unless superseded by a revised final guidance before that date.
EU approval
In Europe, the regulation of mental health applications is determined by agencies similar to the FDA. In France, the Haute Autorité de Santé (HAS) is responsible for regulating mental health applications. The HAS follows guidelines similar to those of the FDA and European agencies, with a particular focus on patient safety and app effectiveness.
The American Psychiatric Association App Evaluation Model
The American Psychiatric Association’s provides guidance for psychiatrists and other health care providers when choosing an app to recommend for patient.
The important items set in the evaluation are:
These categories are meant to be considered in a hierarchical order with the intent that if an app is not accessible, then further considerations do not matter. By the same logic, if privacy and security protections are not acceptable, then the evidence, engagement style, and interoperability likewise do not matter.
Because providers and patients may have differing needs and priorities, the guidance does not necessarily restrict or set quantifiable measures. Further, the high frequency of updates for consumer- available apps can lead to outdated ratings. It can also be difficult to quantify many of the metrics around apps that matter the most. For example, we want to find apps that are easy to use, but ease of use will vary from person to person (as outlined in the digital inclusion sections above). As a further example, the degree and nature of evidence required for an app in one use case are likely very different for a second use case.
In general, it is important to bear in mind that commercial rating systems are user-driven rather than reflective of any expert or objective measures of effectiveness or usefulness.
Payment Models, Billing, and Coverage
Payers are beginning to adopt reimbursement models that include the use of technology in reimbursement and may reflect any improvements in health outcomes that arise from the incorporation of technology into care.
In the USA, there are still only a limited number of use cases where various mHealth solutions are specifically enumerated in medical coding for reimbursement via Current Procedural Terminology (CPT?). New proposals such as draft federal mental health legislation and various local and state efforts suggest that there is interest in soon beginning to reimburse clinicians for the incorporation of apps into care delivery. With broad changes in regulations around telehealth, it is likely there will be rapid progress in this area.
In development at the AMA are “Category III” CPT codes that seek to address how mHealth technologies might be reimbursed in future CPT publications. Category III codes are those which are created to track the utilization of emerging technologies, services, and procedures. In the future, these might be used to set reimbursement policy for the use of certain apps. Also, it remains to be seen whether current RPM codes might be used for monitoring symptoms or physiologic states specific for mental health.
The U.S. Agency of Health Research and Quality recently proposed a framework for evaluating apps based on efficacy, privacy and clinical relevance. The Society for Digital Health is currently convening experts, practitioners and policymakers to refine this work with an eye toward establishing standards and a pathway to reimbursement.
The U.K., the Netherlands and Australia all currently fully reimburse for digital mental healthcare.
Ethical and legal consideration
Patient’s privacy and confidentiality
The majority of mHealth app suffer from privacy flaws.
Government entities enact fewer privacy and security regulations around these apps, especially if self- declared as a wellness app. However, in September 2021 the Federal Trade Commission (FTC) noted it would begin to hold even wellness apps accountable under HIPAA laws.
There are many types of data that apps can capture including active and passive data. Active data refers to data that are only collected when someone actively and purposefully engages, like populating a mood journal. Passive data are different in that they may be collected without active engagement, like step count.
Care provider and patient engagement
Barriers to utilizing apps in the inpatient setting currently exist, as most psychiatric inpatient units restrict patient use of mobile phones and computers.
Studies have found that adoption of apps in outpatient psychiatric clinic settings remains low. One consideration is that mHealth apps are not being widely recommended by clinicians to their patients. A survey of mental health providers found that although providers report a high level of interest in using websites and mobile apps to support mental health treatment, only 19% recommended use of apps in practice.
Safety concern
Does the app tell patients to seek professional help in case of an emergency or suicidal ideation? Does the app provide a working suicide crisis line number? Does the app have a disclaimer stating that this app is meant to complement not replace professional health care? Apps that do not include these disclaimers are at increased risk of jeopardizing a patient’s safety.
Specific case of specific population
Child and Adolescent Psychiatry
Mental health apps offer hope to address a growing mental health treatment gap for children and adolescents. Numerous Digital Mental Health apps targeting younger patients have flooded the market. Researchers are exploring the use of gamification in developing digital therapeutics for conditions such as attention-deficit/hyperactivity disorder (ADHD) in children. In 2020, EndeavorRx became the first FDA-approved ADHD auxiliary treatment via video game after a randomized controlled trial showed clinical improvement in attention- related impairment.
As with apps for other patient populations, there remains a need for more evidence-based interventions. Special considerations include data privacy as well as assessing the need for parental consent and involvement before recommending an app.
Geriatric Psychiatry
There exists an urgent need for support for patients with dementia. With the aging population on the rise, the prevalence of dementia is expected to triple by 2050. Hospital settings can be particularly challenging for older patient populations, who are more susceptible to changes in environment. Digital solutions can help meet this need by providing scalable interventions that do not require the use of pharmacologic medications with heavy side effect burdens. A small-scale study examined the feasibility and acceptability of an iPad intervention referred to as “Simulated Presence Therapy” to support dementia care in an inpatient psychiatric hospital by showing patients prerecorded video messages from loved ones. Novel technological solutions are being explored to monitor behavioral symptoms in the home, including motion sensors and smart home technologies to monitor sleep disturbances, agitation, and wandering.
Special considerations for this patient population include age-related limitations in geriatric patients’ ability to adopt new technologies such as smartphones and tablets, and the creation of easy-to-use features for tasks such as video conferencing. Such interventions will need to consider additional factors such as adequate staff assistance to be successfully implemented.
Serious Mental Illness
Those with serious mental illness own smartphones and are as interested in apps as the rest of the population. There are fewer apps designed directly for conditions like schizophrenia or bipolar disorder, but some do exist. Apps for wellness, anxiety, and depression are all relevant and have roles in care for those with serious mental illness. There is also substantial research around apps for these conditions, and FDA studies to assess the role of these apps in care are underway.
Emergency Psychiatric Settings and Patients in Crisis
Digital Mental Health has a role in crisis care as well. Suicide is the 10th leading cause of death in the United States, affecting all age groups. In Europe, every year, 0.9% of reported deaths are the result of suicide.
Digital tools offer the potential to create novel approaches to suicide prevention by 1) identifying people at risk, 2) creating scalable prevention programming, and 3) increasing access to real-time interventions.
Not all apps are created equal, though. While a dearth of apps targeting suicidality have emerged on app stores, studies have highlighted the potential dangers of such apps. One systematic review of 126 suicide-focused apps identified that many apps were not consistent with best-practice guidelines for suicide prevention at best, and at worst, were potentially harmful, even encouraging risky behaviors in a crisis.
Success in cancer vaccine.
Ose Immunotherapeutics’ Tedopi vaccine, currently on Phase3 clinical triel, has been shown to reduce the risk of death by 41% in people with certain types of lung cancer, while improving tolerance scores and maintaining quality of life.
The Tedopi vaccine is effective in patients with the HLA-A2 gene, which is present in about half the population.
Tedopi is a therapeutic cancer vaccine, not a preventive measure. Therapeutic cancer vaccines aim to train the immune system to specifically recognize and destroy tumor cells. In other words, they use the patient’s own defense system to fight cancer.
Ose Immunotherapeutics is a French biotechnology company listed on the Paris Stock Exchange.
Top insights from the financial market
Europes largest market capitalization is a healthcare company.
The healthcare sector is well represented in this back-to-school season, with a healthcare company as Europe's leading capitalization.
Danish drugmaker Novo Nordisk unseated LVMH (LVMH.PA) as Europe's most valuable listed company.
LVMH, the world's biggest luxury retailer, has been hurt by growing concerns about the outlook for the Chinese economy.
Novo is meanwhile riding a wave of demand for its highly effective diabetes and weight-loss drugs Ozempic and Wegovy, which has sent its earnings and shares to record highs.
Novo Nordisk ($412b) vs LVMH ($406b) as of Octobre3rd, 2023.
Debiopharm Innovation Fund launch a seed fund.
On September 28, 2023, Debiopharm Innovation Fund, the strategic investment arm of Swiss biopharmaceutical company Debiopharm, with $150 million under management, announced the launch of its new seed funding initiative. It plans to deploy additional capital to support up to 15 seed-stage startups each year with the ambition to transform pharmaceutical R&D and advance digital innovation in cancer care.
Investments will focus on the next generation of pharma R&D to accelerate drug development, on new technology solutions enabling a more patient-centric approach in clinical trials, and on digital platforms uncovering new insights from clinical data for more personalized care pathways.
The first two Seed investments include Tune Insight, a Swiss-based startup offering a privacy-preserving data collaboration platform enabling the training of AI models through secure federated learning, and Neuroute, a UK-based startup that develops a no-code AI clinical development platform streamlining critical processes of clinical trials, such as study design and site selection.
Keensight Capital as raised circa €3 billion.
Keensight Capital, one of the leading European Growth Buyout firms, has raised circa €3 billion to invest in European Technology and Healthcare companies with a ticket size of between €10 million and €400 million.
Around 90% of subscriptions come from institutional investors (asset managers, pension funds, insurance companies, banks and sovereign wealth funds) and around 10% from former CEOs of holding companies and family offices.
For the startup, everything is down except interest rates. This is the time to make acquisitions.
For startups, funding is down, and the number of M&A has slowed. According to Crunchbase data, only 200 transactions have taken place so far in 2023, compared with 443 for the whole of 2022 and over 500 in 2022.
Rising interest rates, funding uncertainty, pressure to conserve cash and cut expenses mean that acquisitions are no longer a priority, especially when you consider the risk involved.
However, some are still moving forward. Some still have the entrepreneurial spirit.
Making an acquisition is the best way to increase revenues, acquire a valuable asset or talent, enter a new market or expand into new geographical areas.
Startups continue to hire more business development people to explore M&A opportunities. So, volume should therefore pick up in 2024. All the more so as there are more and more opportunities on the market, prices are coming down and it's even possible to buy cash-strapped companies at knock-down prices.
Give us a call if you consider making an acquisition in Europe or in the US.
Nasdaq, the home again of major VC-backed startups?
Instacart, a food delivery company, has raised some $2.9 billion from venture capitalists. Instacart is one of more than 1,400 highly valued unicorn startups that have collectively raised nearly $900 billion from venture capitalists. It raised its last funding in 2021, at the height of the financial boom, with a high valuation of $39 billion. But as the consumer habits of the pandemic era fade, Instacart has repeatedly revised its internal valuation downwards, most recently to $13 billion.
The company went public on October 3 and closed up 12%, valuing the company at around $11 billion.
The offering follows the listing of chip designer Arm Holdings last week, and marks the first major IPO of a venture-backed startup since late 2021.
This successful offering could restore investor confidence in new technology offerings, reviving the late-stage funding market and encouraging more high-value startups to venture onto the public markets, following a nearly two-year hiatus in IPOs.
Instacart's performance on the Nasdaq will be particularly closely watched, given that many of the 2021 IPOs were not very successful as public companies - almost half of the 171 companies that went public in 2021 at valuations of over $1 billion and are still operating are now worth less than $500 million, according to a recent analysis by Crunchbase. The few companies that ventured onto the public markets this year also posted very mixed results.
Other startups that could soon go public include marketing technology company Klaviyo, which aims to go public this month too, and peer-to-peer car rental platform Turo, which recently presented updated IPO plans. Business travel platform Navan (formerly TripActions) and online discussion forum Reddit have also filed plans to go public in 2021 or 2022, before the market stalls.