Janke Dittmer is a partner with Gilde Healthcare, a transatlantic growth capital investor. Prior to joining Gilde, Janke was a Venture General Manager and Head of strategy and new business development with the Philips Healthcare Incubator. Sapiens SBS is Gilde Healthcare’s sixth exit within the last 12 months. He spoke with science writer Jonathan Marks from his office on High Tech Campus Eindhoven.
“The acquisition by Medtronic of Sapiens is very significant. There is so much synergy between the two companies. Sapiens has patented breakthrough technologies and a unique team, Medtronic has an established market presence with existing global sales channels in Deep Brain Stimulation. That’s the ideal scenario to bring this next generation technology within reach of millions of patients worldwide.”
“This is by far the fastest and the best way forward.”
Understanding Sapiens’ next generation technology
“I have been following Sapiens’ team since its inception back in 2006. I was part of a small team who built a corporate venture unit in Healthcare within Royal Philips and was responsible for new investments.”
“In the period, 2006-2011, we had several meetings on how to fund the project. Philips, although it saw the potential of the technology, didn’t have the ambition to bring a Deep Brain Stimulation (DBS) system to market on its own. We could see that the best way forward would be to find an external investor.”
“Back then, US based Medtronic dominated the market. They didn’t have a competitor yet, so it was always going to be a challenge to breakthrough into the market, especially as an actual product was several years away.”
“At the time we met with Professor Alim-Louis Benabid, who is the French inventor of DBS to treat Parkinson’s disease and other movement disorders. I realised then that what Philips had at the time was truly unique.”
“In 2011, I joined Gilde Healthcare, a transatlantic growth capital firm specialized in the healthcare sector. My partners and I continued to monitor the team, which by now had spun out into a separate company called Sapiens Steering Brain Simulation (SBS).”
A venture not for the faint hearted
“DBS requires the use of miniature, complex technology as well as a highly invasive surgery. Despite the fact that Professor Benabid and others had shown the procedure was beneficial to advanced Parkinson’s patients, making DBS more broadly available represented a substantial challenge. To put it in the words of the CEO Jan Keltjens: “Sapiens was definitely not a venture for the faint hearted.”
“Developing and testing this new approach to DBS was always going to be capital intensive. Finding those kinds of funds meant having to look beyond the borders of Europe. And there was still the question whether the technology would work in the clinic.”
“In 2013, one of the founders, Sjaak Deckers, approached us for advice on a senior management position. That’s when I learned that Sapiens had completed their first acute clinical study and the results were promising. That was the point at which Gilde Healthcare stepped forward to lead the next round of financing.”
“We realised early on that this investment was going to be very strategic, as we had worked with Don Deyo, the former head of research and development at Medtronic’s Neuromodulation group, during our due diligence. He joined the supervisory board soon after our investment. Sapiens’ investors were prepared to take Sapiens all the way to market, but an early successful exit was always a possibility, and the offer from Medtronic has turned out to be a win-win situation for everyone.”
“As well as an all-cash transaction of approximately US $200 million, Medtronic gave a public commitment at the end of August 2014 to establish a global research and development center for Medtronic’s Neuromodulation business. It will be based at Sapiens’ facility on High Tech Campus Eindhoven.”
“They’ve realised that what Sapiens has created is unique and that the team of just over 50 people are the world’s best in this field. My expectation is that they will probably expand as they finalize product development and apply the Sapiens know how more broadly in neuromodulation. Sapiens’ technology has the potential to be taken beyond the treatment of Parkinson’s disease.”
Why are people excited about this new phase in DBS?
“What you’re trying to do with Deep Brain Stimulation (DBS) is suppress certain electrical signals in the brain in very specific areas. The existing stimulation products from Medtronic and other parties use four relatively large ring-shaped electrodes. This makes it possible to stimulate a spherical area of the brain from each electrode. You do this on both sides of the brain in most patients.”
“Suppose the target that you want to stimulate was spherical in shape, it would just be a matter of accurately positioning the electrodes. But if the target is not a sphere, but has some other oblique shape, then you may end up stimulating other parts of the brain resulting in unwanted side effects.”
So you end up with a small “therapeutic window”: As you increase the size of the sphere, you will first get the therapeutic effect, but then the unwanted side-effects will start to dominate. In a few patients, the side-effects start before you see the therapeutic effect. Depending on exactly where the electrode is placed, this could mean difficulty with walking, speech or changes in a person’s behaviour.“
“Sapiens has addressed this challenge by using an array of 40 tiny electrodes, allowing them to carefully shape the electrical field, thus only stimulating the area of the brain that needs to be treated.”
“The other major challenge is that this operation takes a long time – typically one full day. The patient has to remain conscious, as the surgeons need to test certain brain functions while the patient is awake. Especially for older patients, there are always concerns whether they are fit enough to withstand such an invasive procedure.”
“There has been a large randomized, controlled study in Germany and France that show this DBS procedure would bring benefit to more patients if it was applied at a much earlier stage. But for DBS to be more broadly used, it has to cause less side effects and the operation has to become shorter and thereby cheaper.”
“A time consuming part of the procedure is the accurate positioning of the electrodes. The Sapiens solution uses a diagnostic technology which has the potential to speed up the positioning process. There are also indications that, in future, the patient will not have to be kept awake the whole time.”
A Growing Market
Global numbers in brief: (Source: Sapiens SBS)
Currently, the global market for deep brain stimulation is about US$ ~500 million and growing.
There are around 6 million people in the world diagnosed with Parkinson’s disease.
About 1 million would be eligible for the current treatment of deep brain simulation, of which 115,000 people to-date have already received treatment.
Other potential indications for deep brain stimulation include chronic pain (140 million patients), refractory depression (i.e. depression that does not respond to anti-depressant medication, affecting 18 million patients) and incontinence (18 million patients) just to name a few.
Parkinson and Beyond
“Of course Deep Brain Stimulation is not a simple procedure and you always have to weigh the benefits carefully, but for the severe cases there have been many dramatic benefits.”
“This technology is going to improve the quality of life of millions of people, by helping them to remain active and suppress the disease symptoms. There is also emerging evidence that patients on DBS live longer.”
“It turns out that Parkinson’s is not the only disease that can benefit from deep brain simulation. There is ongoing research into several other types of neurodegenerative diseases, and neurological disorders. They range from major depressive disorders, to epilepsy, eating disorders, and dementia. So there is an ever growing list of disorders that could one day profit from the technology being developed in Eindhoven.”
Sapiens is Fresh Proof that Open Collaboration works
“Having worked on the High Tech Campus Eindhoven for the last eight years, I have always been impressed by the open, collaborative atmosphere. It’s really reached a tipping point in less than a decade.”
“I believe the key to the success has been the mix of large and small companies, start-ups, as well as specialised test facilities. The campus ecosystem is connected to all kinds of support services and knowledge clusters in this region of the Netherlands and around the world.”
“It’s driven by the shared belief on campus that everything is possible. Even if you’re missing one piece of your particular puzzle, there’s often someone within walking distance who has a relevant answer.“
Why does it take time to develop this technology?
“This next generation procedure requires that a lot of complex technologies and different skills have to come together. You can’t make an array of 40 tiny electrodes, which will perform flawlessly in the human body for decades, from a standard metal electrode in use today. You need more advanced materials.”
“You also need to find the right partners for the next stage of development. That includes people with a deep understanding of thin-film electronics, bio-compatible materials, the workflow of a neurosurgeon, plus experts who understand how electric fields propagate inside human tissue.”
“Then, there is also the international regulatory environment so that such a procedure can get approved for use in hospitals in target countries.”
“And then the user interface design has to ensure that the device can be programed by the clinician and ultimately by the patients themselves.”
“That’s why it makes so much sense for Medtronic to tap into the existing ecosystem that Sapiens has already established on the High Tech Campus Eindhoven. The Philips heritage, as well as connection with other Philips spin-outs, all gives Sapiens a very distinct advantage.”
“This is a classic “textbook” case of a successful high-tech medical startup acquisition. And, I see no reason why this region of the Netherlands cannot be the source of many more.”