SoftBio - Of Animals and Atoms

In 1963, two years before receiving the Nobel Prize, Richard Feynman proclaimed to his Caltech freshman physics class, “Everything is made of atoms… Everything that animals do, atoms do… There is nothing that living things do that cannot be understood from the point of view that they are made of atoms acting according to the laws of physics”.

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Feynman’s reductionist genius ultimately led to the most successful and stringently tested theory in physics – quantum electrodynamics, which describes the fundamental interactions between photons and charge-carrying particles like electrons to an experimental agreement of one part per billion! However, sixty years on, despite our deep understanding of particle physics or our ability to fabricate devices at nanoscale, we still struggle to reliably tame even the simplest of living systems, whether viruses, cancer cells or the human immune system.

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Evidently, understanding what atoms do provides only a limited practical understanding of what animals do. ?

Life’s Incomparable Complexity

Dating back at least to the first documented cadaveric dissections in 3rd century BC Alexandria, the study of living systems has largely taken a reductionist (one might say, Feynmanian) approach, discovering life’s building blocks at ever finer scales – think organs, tissues, cells, organelles, proteins, amino and nucleic acids.

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In stark contrast to physics and chemistry, biology is distinguished by the vast complexity of systems under its scrutiny. Consider that the human body is composed of 100 trillion cells of 200 different types, each cell containing 40 million protein molecules of 10,000 types, each protein molecule consisting on average of 500 amino acids of 20 types, and each amino acid composed of 20 atoms of primarily 8 types – all told, ~10^27 atoms arranged in a highly structured and tightly coordinated hierarchical system of molecular machines, built from surprisingly few atomic elements, and all supervised by a DNA ‘code base’ of a mere ~10^12 atoms.

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Compare this to today’s most complex human designed systems - microprocessors composed of 10^10 transistors, the Linux operating system built from 10^7 lines of code (10^10 bits), or the 10^7 parts currently under assembly to create the ITER experimental fusion reactor. Perhaps this is not so surprising, considering that life has evolved over a billion years and human technology over only a thousand years. It is the brutal force of evolution that has rendered the incredible structural complexity and diversity of living systems, fundamentally owing to life’s defining ability to withstand the second law of thermodynamics - the law of ever-increasing disorder that insatiably devours inanimate matter.

In the long arch of biological science, we presently find ourselves at the bottom of A U-shaped learning curve, having rendered a detailed understanding of the molecular basis of life but still lacking a reliable means of predicting the collective behavior of biological systems.

Biological Complexity Translated to Industry Economics

It is the unique complexity of living systems that has shaped the 100+ year history of the healthcare and biotech industries, impacting everything from how therapeutics, diagnostics and biomedical devices are financed, developed, marketed, and distributed, to how healthcare services are administered and reimbursed to how regulatory oversight is applied. The entire ecosystem is oriented toward managing risk and uncertainty, both of which ultimately arise from our immaturity in taming biological complexity.

For example, the FDA approval process is rightly rooted in avoiding adverse therapeutic impacts and misdiagnoses. Currently, a new therapeutic requires 10-12 years from inception to reach market, with less than a 10% success rate through clinical trials. Worse yet, the number of new drugs approved per $1B of industry-wide R&D has halved every 9 years since 1950, though has flattened out over the last decade to an average of $1.6B per approved drug. These sobering statistics are not a consequence of overly burdensome regulation, but rather the immense challenge in developing novel, safe, and effective drugs that address large enough patient markets to justify investment. Moreover, this challenge is compounded by two growing factors:

• The therapeutic low hanging fruit has been well harvested over many decades, requiring increasingly advanced methods to reveal new biological pathways, targets, and drug candidates that materially outperform current standard-of-care.
• The trend toward personalized medicine implies smaller addressable patient cohorts (and thus, market size), which in turn requires higher clinical success rates to recover R&D investments.

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Given the state of the industry, it should come as no surprise that investment in the life sciences has historically been dominated by biotech venture firms with the scientific expertise and fund sizes necessary to generate competitive financial returns in a world ravaged by biological complexity. The entire biotech investment ecosystem, from venture through public markets, has evolved to monetize the high-risk, high-reward nature of innovation in life sciences, and often through means counter-intuitive to the broader financial community. After all, it was our biotech investor colleagues that introduced the world to the pre-revenue public offering in the 1980s, something that tech investors only recently emulated with SPACs! However, the sustainability of the biotech investment model will remain under increasing pressure unless clinical success rates materially increase. ?

Further upstream in the healthcare supply chain, medical service providers genuinely focus on preventive care and outcome-based performance, aiming to minimize the likelihood of emergent conditions requiring costly surgical treatments and hospital stays. Nevertheless, preventive care accounts for less than 25% of the $3.6T in annual US healthcare expenditures while 75% still funds the reactive management of chronic and emergent conditions, which unsurprisingly also happen to be large revenue drivers for otherwise ailing medical systems. The macro trends point in the wrong direction too; US healthcare costs rise annually at 5% while GDP and population growth eke out 2-3% and 0.5% respectively.

Finally, and perhaps most viscerally, life expectancy exhibits similar economic behavior, generally increasing with per-capita healthcare expenditure, but plateauing around 80-85 years and even decreasing thereafter in the case of the US.

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Fundamentally, the pharmaceutical and healthcare industries suffer from diseconomies of scale that must be overcome to pave the way for sustainable future growth. But how?

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In the next part of this blog, we’ll look at how other industries have evolved to benefit from economies of scale in their supply chains, and what lessons can be gleaned to avert an economic singularity in the healthcare industry. We’ll see that the historically reductionist approach to biology must be complemented with what one might term a ‘holistic’, or systems-oriented methodology. Central to achieving this will be investment in computational design platforms for biology, what we term SoftBio, for without it, true mastery of nature will remain forever elusive.

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“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled”

– Richard Feynman

Naimish Patel is a Boston-based entrepreneur with operational, investing, and board experience in telecom networking, smart grid, enterprise software, and life sciences. Naimish was one of four founding team members of Sycamore Networks where he was the architect of Sycamore’s products from inception through IPO. Subsequently, Naimish founded Gridco Systems, a provider of intelligent power routing and regulation solutions, enabling electric utilities to reliably integrate renewable energy, serve electric vehicles and enhance system-wide energy efficiency. During this time, he served as board director for the Advanced Energy Economy, an association of businesses committed to secure, clean, and affordable energy, on behalf of which he delivered expert testimony before a Congressional committee on national energy security. Naimish is currently an investor with Hyperplane VC, a seed stage venture fund, serving as board director for portfolio companies in the telecom, IoT, and bioinformatics domains.??