At Biomed Israel conference, medical start-ups discuss challenges in reaching success

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Companies dealing in life sciences and technology face tougher times ahead due to global economic uncertainty and political crisis at home

The worldwide economic downturn and Israel’s internal political turmoil have investors sitting on the fence about funding local tech companies. However, that did not prevent thousands of industry leaders from 45 countries from attending the three-day Biomed Israel 2023 conference this week in Tel Aviv to learn what Israeli scientists, engineers and physicians have to offer.

Despite the evident enthusiasm for Israeli start-ups’ innovative strength in diagnostics, medical devices, biotech and digital health, there was much discussion of the challenges Israeli companies face in successfully commercializing their groundbreaking technologies. Relatively few have yet figured out the secret sauce for bringing their products to market and ultimately to patients. The challenge is unlikely to get easier given the current downward investment trends.

“Innovation moves forward, but access [to patients] is not catching up,” Ajay Dhankhar, managing director of the healthcare group at the Lazard asset management firm said in a plenary presentation.

For some Israeli healthcare start-ups, the problems come during the years-long and expensive research and development phase.

“So many companies end up in the ‘Valley of Death,’ as we call it,” Ron Lahav, executive director of research & development at the National Institute of Biotechnology in the Negev, told The Times of Israel, using the industry metaphor for development being delayed or even halted because of a lack of funding and support.

For other companies, the challenges come later on, when they can’t figure out a clear commercial pathway. Some of the obstacles are common to start-ups in other countries, but others are the result of the specific Israeli ecosystem and approach to innovation.

“One of the gaps that I feel we have within the industry in Israel is that we have great science and a very strong operative-oriented culture, which brings us to develop products quickly,” Ofer Sharon, CEO of OncoHost, told The Times of Israel.

“But when it comes to taking those technologies to the market, actually bringing them to patients, and climbing above the others by defining the clinical value proposition, we aren’t so strong,” he said.

“We aren’t great at following through on the required regulatory processes, as well as the reimbursement processes to make those technologies available for patients that cannot otherwise pay for them. And there’s also the matter of educating the market and convincing clinicians of the efficacy of using the products,” he added.

Sharon’s company, OncoHost, has managed to gain some traction. It was founded in 2017 and develops personalized strategies to maximize the success of cancer therapy by using proprietary proteomic analysis.

On the first day of the conference, Sharon co-chaired a session focused on precision oncology titled, “Can We Successfully Diagnose and Guide Patients’ Optimal Cancer Treatment.” He invited a handful of other companies in more advanced stages to share their technologies and experiences toward commercialization. He also invited representatives of precision oncology giants Guardant Health and Johnson & Johnson to talk about what they are looking for in start-ups they decide to partner with.

Several presenters, including Dean Bitan, co-founder and CEO of Imagene, emphasized the importance of convincing physicians of the clinical value proposition of a company’s product. In Imagene’s case, it is technology that leverages artificial intelligence to profile, within minutes, a broad range of biomarkers from an H&E (the most widely used stain) pathology image.

“It is so important to gain doctors’ trust and confidence,” Bitan said.

Aharona Shuali, VP of medical at Nucleix, which recently received FDA approval for technology that can detect bladder cancer recurrences, spoke of the need to think intelligently about how to reach the market.

“It’s not just about the science. You need to have the logistics in place to deploy. For instance, we can use PCR labs, and we can take advantage of the fact that so many of those exist now because of COVID testing,” she said.

Avi Veidman, CEO of Nucleai, a company bringing AI-powered spatial biology to precision medicine, shared that his company made the decision to pivot from clinical to pharma because the former did not present a sustainable business model.

“We were working with labs, and then we wouldn’t get paid. That’s why we switched to working with pharma. Someone has to pay for the technology,” he said.

At the end of his talk, Veidman summed up the repeating theme by screening a humorous but pointed video clip. It showed two mixed martial arts fighters in a ring. One dances around the ring like a hot shot, making a series of fancy moves — which Veidman labeled with terms like “R&D” and “elevator pitch.” But then the other fighter titled “the market,” who had been still, comes along and knocks out the show-off in one blow.

Hannah McEwen, head of engineering sciences at the Johnson & Johnson Lung Cancer Initiative, spoke about innovating with strategic partners to address unmet needs. When it comes to the start-ups her company works with, they must meet four criteria: They must have crack teams and excellent science and technology — which Israeli companies generally have — but they must also meet a clinically unmet need and a solid market opportunity must be identified.

Sharon suggested that it is time to start thinking of a different paradigm. Almost all Israeli start-ups partner with large international companies to bring their products to market. Sharon would like to see start-ups keep their intellectual property and build themselves up into large companies here in Israel.

“Partnering with large international companies to bring our technologies to market creates a vicious cycle. It doesn’t create a stable industry of companies that are sustainable over time and create workplaces for employees beyond those with advanced degrees in quantum physics,” Sharon said.

“We’re kind of stuck. This is why you don’t see big drug companies other than Teva coming out of Israel. We are not educating the new generation and introducing the knowledge and capabilities for developing the industry into the country,” he said.

Sharon warned that this failure prevents Israel from accessing human capital and expanding to other countries.

“We can’t rest on our laurels. Until now Israel has maintained a scientific advantage, but other countries are catching up. Without the ability to move from the science to the market, we will fall behind in all respects,” he said.

Dr. Sigal Meilin is chief scientific officer at MD Biosciences, a contract research organization (CRO) in the neurology field. She agreed that Israelis, strong on innovation and collaboration, have a way to go in adapting the mentality necessary for the slow slog through the process toward commercialization.

“Drug development must go through mandated regulatory processes. We just don’t have the outlook needed for going step by step. Israelis are always looking for the big exit and wanting to move on to the next exciting thing,” she said.

Meilin has seen a change beginning over the last decade. “There is progress happening, but in my view, it’s too little and too slow,” she said.