This is the largest trade show in the world, one of the largest. About 100,000 people attend this show every year. Heres some of the programs that we taped while in vegas. And now joining us on the communicators is Andrew Thompson who is president , ceo and cofounder of Proteus Digital Health. Mr. Thompson, what is Proteus Digital Health . Guest proteus is the worlds First Digital medicine company. So we created a platform that we call a Digital Health feedback system, and the main components of that platform are an ingestible sensor that turns on when you swallow it and communicates through your body. It sends information to a wearable patch that you wear on your torso and collects information about the medicines you swallow and your physiology, things like your heart rate, your body angle, activity, sleep, temperature, quite a lot of things, actually, what we call a panel of physiological wellness messages, and then it communicates with a cell phone you carry and enables us to take that data to the cloud, process it and send it back to you as an application. Host where is this sensor stored in the body . Guest so the ingestion sensor or the patch . Guest the ingestion sensor. Guest its not stored in the body. Let me describe what it is. Its a device thats sense to the computer thats made from ingredients that you find in food. So the worlds first foodbased computing platform. Its very tiny. Its about the size of a millimeter, about 800 microns. I can show you one. Host please do, just go ahead and hold it up in your hand. Guest the green thing is sort of a fake pill. Host okay. Guest the tiny little dot that you can barely see, thats it. Thats the whole device. Host and thats what someone would swallow . Guest when you swallow it, it turns on. Now, this is a very interesting piece of technology. Theres no battery, theres no radio, this is no antenna. If you ever thought about how you might, for example, power something inside the body, i dont know if you have ever made something called a potato battery, so, its a device where you put a little bit of copper, a little magnesium in a copper, and you discover to your childs delight that you can light a diode. Well, in this case we have of a little bit of copper and magnesium, both essential dietary elements. We have about seven micrograms of copper. You need about 1500 milliyams of cop milligrams a day in your diet. So its a tiny fraction of your rda in the magnesium. When you swallow this device, you become the potato, and you turn it on. So its powered by you, and it sends a unique identifier through your body that can only be detected by the thing thats on your body, the patch. So the pill is going to say, hello, im here, im novartis, im five milligrams, im batch number 12, and im pill number two. Thats the data we collect. Host and how do you get that data into this . Guest so its a digital platform, essentially the way it works is when you swallow it and turn it on, its going to start to send a signal, and we program it so that on is one and off is zero. If you go on off 64 times, youve got a 64bit stream. Thats the data stream. Host how where do you come up with this idea . Guest so were a very lucky companiful we have of a whole team of incredibly smart scientists and Development Engineers who work with us. Most important is our cofounder martha lev lick who is one of the first people in a field of men to develop the canty lever microphone so we have a team led by mark who built this technology, and its been custom designed to solve one of the most important problems in health care which is how we solve the problem associate with the the massive burden of chronic disease. Host and how does this help . Guest so lets sort of move away from technology and go to what i call the problem statement that we started with about ten years ago as a company. We dont have a Health Care System. We have a sick care system. If you get very sick and you go to hospital, well fix you. But be you have a chronic disease and you live your life in the commitment, youre on your own in the community, youre on your own pretty much. Okay . So we need to build the Health Care System because the Disease Burden we face today is all about aging, affluence, dementia, depression and diabetes. So if youre going to design a Health Care System, whats it going to look like . Well, point number one, it must connect to the mobile internet. Mobile internet is the most important utility on the planet, its more available than water or electricity. There are nearly six billion people with a mobile phone. Point number one, going to connect to the [inaudible] point number two, it has to serve the Largest Group of Health Care Workers in the world, and thats not doctors and nurses. Theyre outnumbered 10 to 1 by informal family carers, thats you and me caring for our parents, our kids, our brothers and our sisters. So thats the group you have to address, so its really about consumers. And number three, the number one engagement transaction for consumers with their own health that they do every day that they think and believe and know maybe is going to keep them well is to swallow their daily pill. So if you think about these massive digital transitions that have occurred in Financial Services, in retail and commerce, the key is to find a transaction that consumers already engage in but its something they want or need to do. So just like in Financial Services, you dimmingtize banking by digitize banking by having people pay their bills and trade their stocks online. Youre going to digitize health care by having people swallow their medicine to see the data show up on their cell phone. Host how big is the patch, where does one wear one . Guest im wearing one right here. It looks like a little bandaid. It has some very nice Custom Electronics inside it that basically give you medical grade data. Host is it a permanent patch or is it guest designed to wear it for about a week. Its fully water proof. You can swim in it, shower in it, run a race in it. Its a very nice device designed to fit in with your daily life. And one of in the things id share with you is we built a team at proteus that was conscious of building a very desirable product, so we hired a leader from a leading design firm to help us do humancensored design. We dont just focus on wear about, we focus on wantability. Host Andrew Thorpe stomp, what does the word proteus mean . Guest it means a greek god, and you can go look that up. It also happens to be a name of a submarine in the incredible voyage, and thats how the name got picked up. Host whats your background . Guest im an engineer. I grew up in england, i went to cambridge university. I came to silicon valley, went to Stanford Business school and started to become involved in entrepreneur activity in the valley. Ive been an entrepreneur for 22, 23 years Building Technology and health care companyings. Host and why the focus on health care . Ha whats your interest . Guest im a purposedriven human being, and i want to be doing something that can have very important social impact. When im building an organization, thats what i want people to focus on. I personally and our company are tremendously focused on the enormous positive social and Economic Impacts we can bring to solving this huge problem associated with changing the way in which many, many more people can get access to health care. What i say in our company, we have a Mission Statement l, and our health care our statement for the Company Builds on something said in 1948. He said we Want Health Care for ever. And that was a great idea. And i want something a little bit more ambitious. I Want Health Care for everyone everywhere. And the reason well be able to do that is because everyone will have a smartphone. Host mr. Thompson, you began in silicon valley, you became a venture capitalist at some point, correct . Guest thats right, yes. Host are there any companies, Health Care Companies or products that you invested in early that are on the market that we might be familiar with . Guest yes. One of the very First Companies i helped start was acquired by a company now called medtronic which is the Worlds Largest medical device company. This company pioneered minimallyinvasive surgical techniques. We replaced open heart, open chest procedures for procedures that went through the arms and the groin, and now its standard of care. If you had a wide arrhythmia treatment, that was likely done by a product developed by medtronics. Host whats the regulatory path like for a product like this . Guest so thats a great question and one of the things i want to take the opportunity to say here is how terrifically collaborative the u. S. Fda and the European Commission have been working with us. What youre holding there is a cleared product by the u. S. Fda, its approved by the ema, so these products are ready to go to market. This isnt some future thing that may happen in a few years time. Its been tested for thousands of days in hundreds of people. It has an incredibly positive safety profile. Its very, very accurate. If you swallow a digital medicine, our evidence suggests that we will detect it 99. 5 of the time and identify it down to the individual pill with 100 accuracy. Host where are these manufactured . Guest so we have a manufacturerring plant in hayward in california, and its fully built. Were in the process of of driving automation in that facility, but the goal here is to be able to make billions of these products in that facility. Host billions in that one facility . Guest thats correct. Host and when do you plan on you said its almost ready for market. What would this cost somebody . Guest so thats an interesting question and one that im going to dance around host youre not going to answer. Guest well, because the answer is cost is what it costs me to make. How would i sell that to someone . And the answer is theres a lot of different ways to think about the Business Model that you would deploy here. Im going to give you, i think, a more general framing idea which is that many people think that pharmaceuticals are very expensive products, and in some cases they are. However, they represent only 10 of the total spend on health care, and the real opportunity here is not to spend more or less on pharmaceuticals, its to have them do their job which is to keep you out of hospital so we dont spend the other 90 . So the pricing models all have to be built around our ability to save the system money. Host do you need medicare and medicaid approval for this product to make it really successful . Guest no. I think that, um, its not the job of medicare or medicaid to approve things, its their job to pay for things. Host right. Guest so, look, we have clearances that enable us to go to market. Its our job now to build evidence, particularly medical economic evidence that suggests that the use of these products and services really makes sense. And im just going to really emphasize here that the benefits that you get from providing patients and families with Digital Health feedback go very, very deep. Lets just imagine you have a son whos 20 years old who has bipolar disease. If that was the case and hes going to college, youd be a worried dad. And youd know that he needs to be on his antipsychotic every day, and youd probably know that you have to be careful about his sleep patterns because if hes up all night, thats mania, and if hes sleeping all day, thats depression, and you might want to know whether hes talking to his friends. And you could measure that indexing his phone because you can measure talking, texting and moving. If you had an application that enabled you to see, okay, my son is on drugs, hes sleeping okay and hes socializing, youd be a happy guy. Thats nice, but even for your son its nicer because that gives him back his relationship with your dad because you would stop being the drug police. So these are very powerful systems, and when we do the debrief with patients and their families who have been experiencing our products, then you get very strong emotional responses. So an old lady whos got Heart Failure will say this makes me feel safe. And if youre a tb patient who would otherwise have to go to a clinic so someone could watch you take your pills, youd say this gives me dignity. Theres a lot of emotional benefit with people taking control of their own Health Situation being able to appropriately use their medicines and enable them to do the job for which theyre designed. The way we talk about this is this is designing a Health System powered by you, literally and figuratively, as opposed to being powered by them. Host Andrew Thompson of proteus digital, when you think about the growth in health care technology, what are your general thoughts . Guest i think one of the most important lessons we can lesh particularly learn particularly at a show like ces is the definition of the word innovation. What we see is innovation being delivered so that products get better, cheaper and more plentiful every year. In the world of health care, weve built a Business Model in which innovation is defined as Getting Better but more expensive and less available every year. That cant stand. And the job of Health Care InnovatorsGoing Forward is to embrace the idea that the purpose of innovation is to make things better and cheaper and more available for everybody everywhere, not just for rich people. Host one of the conversations we have in washington or have been having the last couple of years is about Electronic Medical records. Guest yep. Host and privacy issues. Guest yep. Host what are your thoughts . Guest well, its a good point. Its a very bad place to start in terms of thinking about the Digital Journey in health care, and youll notice that theres two Big Companies that tried to do that, microsoft and google, who havent necessarily managed to get a lot of traction. Now, the problem here is not that thats not a good idea, but lets use an analogy and go back to Financial Services. I dont think we would have been successful in changing Consumer Behavior around Financial Services if wed digitized their Bank Statements because people dont look at their Bank Statement every day, most people dont look at it ever. What we did was to digitize the engagement transactions that people do every day. Now, at that point once you turn that digital hinge, you can go a lot of places. So Electronic Health records will come, but they respect the hinge. They are in the space and will emerge once weve figured out the reasons why people will shift their behavior. By the way, this is a very major trend. Its the shift from the 20th to 21st century. 20th century everything is about buildings, people and products. So you go to a bookstore, you see a [inaudible] and you find a book. In the 21st century its about software, services and mobile platforms. So you go to your tablet, you fiddle with a piece of software, and you download content. Theres no building, person or product. It creates a radical shift in availability, price, productivity, all kinds of really good things. Those are things we need in health care, and we know its going to happen. Its only a question of when and what the important engagement transactions will be that cause that shift to occur. Host have you addressed private concerns when it comes to this guest so privacys a very big issue. Of its going to be an issue for us for a very long time. But the way that we frame it is to say many people thought that privacy would be a big issue in Financial Services. I wonder how many people watching this show use a credit card. Many people thought that privacy would be a big issue when it came to, for example, certain types of activities on the internet. How many people watching this show use google . So privacy is a very big issue, but what weve learned about privacy is that if you can provide sufficient benefits, then people are willing to make trades or take certain risks. Now, as a company we have to be very, very careful about managing, mitigating and reducing those risks. But we know clearly that can be done. Host this product, this digital pill, as you say, do you would you sell it to the Drug Companies to insert in their medication . How does that work . Guest so i want to step back. We dont have a product thats a digital pill. What we have is the worlds first and so far only fdacleared ingestion center that enables a platform called a Digital Health feedback system. So one way to think about this is to say a song to apple is a drug to proteus. We are making something into digital content. Apple took a library of music, they made it more relevant, much more personal, highly customize bl, much more affordable as well, by the way. So drugs are nice, but theyre part of the 21st century because theyre a product. Whats really important or hoar is whats going to happen in the 21st century which is these things that we swallow will create data, and well have analytic, and those analytics will drive servi