Q&A: MDisrupt Founders on the State of the Health-Tech Industry, Avoiding Another Theranos 

With just a few drops of saliva, DNA genome company 23andMe told customers that its “Spit Kit” would test for diseases like diabetes and breast cancer.

But in the first several years since its 2008 founding, it lacked the kind of peer-reviewed proof that the Food and Drug Administration (FDA) required to vet whether the science behind the claim checked out. In 2013, the FDA issued a letter demanding that the Sunnyvale-based startup stop advertising saliva testing for “personal genome service” until it cleared regulatory hurdles to do so.

Enter Ruby Gadelrab and Jill Hagenkord, who were hired by 23andMe to set the company back on the right path. The gene-testing firm has since rebounded from its missteps, making it one of the all-too-rare exceptions in the ascendant health-tech industry. The duo has distilled those lessons in a new startup, MDisrupt.

Launched just about a month ago, the health-tech consulting venture bills itself as as the world’s first “medical diligence company.”

A seasoned executive in the health-tech sector, Gadelrab brings the business chops to complement Hagenkord’s experience as a pathologist and chief medical officer at multiple firms. Together, they claim decades of experience in the field, where they’ve witnessed one aspiring health-tech startup after another crash and burn.

The most famous example being, of course, blood-testing behemoth Theranos. But plenty of others have met similar, but less prominent, fates: the FBI raided uBiome earlier this year over its allegedly fraudulent billing practices, while Outcome Health got hit with claims about deceptive marketing.

Through MDisrupt, Gadelrab and Hagenkord hope to steer health-tech companies in the right direction, helping them navigate the labyrinth of regulations and profound ethical considerations inherent in the field. By vetting companies’ claims with sound science, MDisrupt hopes to help investors and founders avoid the blunders that sank Theranos.

We caught up with Gadelrab and Hagenkord just weeks after they unveiled MDisrupt to hear their insights about the health-tech industry and their hopes for their latest venture. Below is a transcript of the interview, which has been edited for clarity and brevity.

What were your takeaways from FDA’s warning letter to 23andMe?  

JH: Could you see the FDA warning letter coming? Absolutely. It wasn’t a matter of if, but a matter of when.

RG: We were both hired after the FDA checks and balance. Jill was hired to fix that and figure out the proper medical strategy. 23andme was trying to do the medical due diligence after the shutdown. And they did a great job and made a great comeback.

Not all companies can make that great comeback.

By the time you get to that point, you have spent tons and tons of money and you’re not sure if investors will give you money anymore.

Founder of Theranos Elizabeth Holmes is now charged with fraud and felony conspiracy for misleading patients, investors and healthcare professionals in one of the biggest scandals in Silicon Valley startup history. Has the health-tech industry learned much from the mistakes of Theranos? 

JH: I have not seen any evidence of any real learning. They [companies] are aware of Theranos and they know it’s a bad thing. I’ve had conversations with entrepreneurs about Theranos. And their companies would be doing things very similar to what Theranos did. But they don’t exactly understand what they did wrong. They will talk about it, completely oblivious to the fact that their companies are overstepping similar bounds.

There’s a slippery slope that gets you there [Theranos]. A lot of them are on that slope, whether they have weak analytical validity, can’t substantiate their clinical validity or their commercial collateral doesn’t match the actual ability of what their product can do—those things are all still very common. It’s a “fake it till you make it” marketing strategy. That’s pervasive in the health-tech industry.

Can you elaborate on what you mean when you describe a clash between the Silicon Valley culture and that of the healthcare industry?

RG: In healthcare, the number one ethos is: do no harm. In Silicon Valley, we say: let's move fast and break things. Those are two contradicting terms. But if you can get the best of both worlds, you can actually get products to the market faster and more responsibly.

JH: [In Silicon Valley], you also want widespread adoption faster. But to do that, there are steps you cannot skip. Everybody plays by these rules. You need to have analytical and clinical validity, clinical utility, a health economic model, clinical trial and real world evidence study. At that point, if the data looks good, you will get professional society guidelines. And you won’t get widespread adoption until you get those guidelines.

Health-tech companies have used myriad misleading marketing techniques for their medical devices. What are some of the most egregious examples you’ve seen after working in the industry for decades, and how can companies do better?

RG: We have seen medical officers not even included in any of the marketing conversation. There’s a big division between commercial and medical teams, and they’re seen as two separate parts of the house.

When you are marketing to the healthcare audience, you have to work very closely with the chief medical officer or your medical affairs team. They have to be a part of guiding the message and make sure the data is accurate.

Over the last eight years that Jill and I have been working together, she has always been the physician and the chief medical officer. I’ve been the head of marketing in the organizations that we’ve worked together. The thing people find really surprising is that we work very closely together. I take the lead on marketing tactics but Jill takes the lead on the marketing message. That way, we’re always putting out the most appropriate message and claims about the product.

JH: The initial problem is that [companies] probably don’t have a medical person at all. They have some PhD research scientists. And they almost can’t tell the difference between the two [medical doctors versus scientists]. It’s really surprising but fair. When I came to Silicon Valley, I just called anybody who worked with computers—IT people. I didn’t know the difference between a program engineer and a backend engineer.

What is the difference between an MD and research scientist, then? 

JH: An MD ultimately memorizes algorithms about how you diagnose and treat patients. A research scientist tests new ideas, specializing in hypothesis-driven research. It’s almost the opposite skillset of what an MD learns how to do: to memorize an algorithm that have been proven safe and effective to answer a clinical question and manage the health of this patient.

RG: Research that’s done in a lab is not always suitable to be done on a patient immediately.

JH: If I were to set up a health tech company, the majority of my engineering, product and design talent would come from the tech industry. The majority of commercial and marketing team would come from the medical industry. You want cross-pollination.

What do you primarily aim to do with MDisrupt? 

RG: We share the mission of both healthcare and health-tech. We want to get the most impactful products to patients faster. We believe that one of the reasons that there have been so many missteps along the way for many health-tech companies is because there is not a defined process of medical diligence when a health-tech company is creating a healthcare product.

Whether an investor is thinking about investing in a company or a retailer is thinking about adopting the technology, you need to be able to differentiate what’s real or not.

For someone who’s investing in a health-tech company, they will do financial, legal and technical diligence. And we believe that medical diligence needs to be a key part of that process. The community of healthcare and health-tech sometimes don't speak the same language. For us to do better, we have to learn each other's language. We’re not going to be the police of the industry. It’s about uniting the healthcare and health-tech industry.

Nicholas Chan is a journalist who covers politics, culture and current events in Silicon Valley. Follow him on Twitter at @nicholaschanhk.

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