Technion, Israel Institute of Technology is one of the few universities in the world led by a president who is both a world class scholar and has a proven track record in entrepreneurship and innovation, Professor Peretz Lavie, Technion president since 2009. You're about to see some of his insights about the link between academic research and technological entrepreneurship based on his own experience. >> It started when I was in a student in Tel Aviv University, one of the lectures in the Department of Psychology, Professor had an interest in dreams. I'm talking about 1968. And at that time, the area of sleep research was born. The turning point was 1953 when Nathaniel Kleitman discovered that when you record brain waves and eye movements during sleep, you can identify the periods when people are dreaming. And slowly, this field of sleep research emerged. And Wilse Bernie Webb at the University of Florida, he was the chairman of the Department of Psychology, established one of the first sleep laboratories. And I heard about it, and together with Tel Aviv University, we established a very small sleep laboratory. And when I thought about a graduate program, I decided to continue in sleep research. I was simply fascinated by the finding that you stand next to a machine and you can identify when the person in the next room is dreaming, and you can wake him up and you get the dream in the smallest details. So this is how I found myself in Wilse Bernie Webb Laboratory in University of Florida in Gainesville. In between Florida and Haifa, I also spent a year in San Diego in the Department of Psychiatry of University of San Diego, California specializing in, again, a new field, sleep medicine, where I was exposed to the use of sleep laboratory recordings in order to make diagnostic procedures regarding sleep disorders. How we started business, it was almost a kind of byproduct of the activities that we had. Sleep recordings was at its infancy. We needed to provide some home solutions to some of the devices and gadgets that we used. This led to the establishment of SLP, Sleep Laboratory Products, that specialized in building sensors for the sleep laboratory. This company is now, again, it's a Technion company, which means 50% owned by the company and 50% by me and my partners at the time. And we are now selling to the sleep market a variety of sensors, and our newest product is the sleep strip, which is like a mustache that is taped under the nostrils in order to record breathing. I don't remember the date, but it was the late 70s that we started this commercial activity. This was my first commercial activity. The second one was, I came to the Technion and I said, look, I am seeing patients. We are the only ones in Israel who can provide some consultation about sleep. Let me open a clinic. This will be the Technion Sleep Disorder Center. I have physician, so I'm ready to be the clinical director, since I'm not an MD, but they rely on me for the diagnostic procedure. And we started to see patients on a routine basis. Then we opened a laboratory or a clinic in Tel Aviv, and then we opened a clinic in Jerusalem, and we open a clinic in Holon. Now, we have three clinics in Haifa, in the Rambam Hospital, in Wolfson Hospital in Holon, and in Hillel Yaffe in Hadera. I would estimate that up to now, some 200,000 people spend at least one night in the Technion Sleep Disorder Center. And this was one of the first in Israel, and it became a model for what we did in the US later on. One of my areas of research was sleep apnea syndrome. Sleep apnea syndrome is a disease or a syndrome that is characterized by breathing arrests during sleep. The patient goes to sleep. The moment he falls asleep, or she, stop breathing. And this can happen recurrently throughout the night. Severe patients have at least once per minute an apnea or a breathing arrest. These patients are not aware of their breathing disorder. They come to the clinician complaining about fatigue, a tendency to fall asleep during the day, snoring. I would say, very, very disturbing and loud snoring. Many of them suffer from hypertension. And at that time, one of my postdocs, Dr and me started to look into the issue of hypertension and sleep apnea. And it was obvious to us that blood pressure increased during sleep. When we have the apnea, once you resume breathing, there is a sharp increase in blood pressure. The problem is that to measure blood pressure continuously during sleep, you have to go into the arteries with a very invasive measurement, which is very risky. So we decided to develop a methodology or a device that will allow us to measure blood pressure continuously during sleep, and from the finger. A device sensor that is mounted on the finger and impose on the finger a uniform pressure that allow us to measure the changes in blood flow in the finger in a very, very sensitive way. And we decided to look for investment to build a blood pressure monitor based on this device. One day I got a telephone call from somebody I didn't know. His name was who was an entrepreneur, a physicist, who was the CEO of IndiGo, and before that of National Semiconductor, and he told me that he heard about our device. He heard that we are looking for money to develop the device, and he would like to meet with me to tell me about a different application of our sensors, and this is something that is looking almost for two years to solve a technical problem. I remember when I asked him, when would you like to meet? He said in 30 minutes, I'm in your office. And In 30 minutes he was in my office, and he told me that he was working with a cardiac surgeon that noticed that while he was doing an open heart surgery, and you look at the fingers of the patient, he noticed that the finger turned blue. Which mean that blood is squeezed out of the fingers and his hypothesis was that the body will move the blood to the heart in order to protect the heart during the heart surgery. And he believe that if we use a measure it will provide us with a very sensitive indicator of ischemia or blood supply to the heart. I said, this is very interesting, and it was very easy to test the hypothesis. When you do a balloon procedure, when you try to open a blocked artery with a balloon, you put the balloon into the artery and then you inflate it. For the moment of inflation, you block blood supply to the heart, and you cause ischemia. According to his hypothesis, we supposed to see it in the finger, and I remember we did 40 patients, and in 13 line we saw a sign in the finger of ischemia. This was enough to convince them that our technology was the right technology to detect ischemia, and we started up the company. We started to build a device to detect ischemia. So this was the start of my third company. The fourth company, I remember I was on an ATS mission. ATS is the American Technion Society mission. Usually they used to send me to do fundraising, because sleep is a very sexy subject. And I gave a talk in Boston in a house, and I spoke about sleep apnea, and what we are doing and the model that we develop with clinics in Haifa, Jerusalem, Tel Aviv. And somebody raised his hand, and he said my name is David Bourne, I am a technical graduate from double E. Is there anything in the U.S. similar to what you are doing in Israel? I said, yes and no. Yes, there are sleep clinics that are doing diagnostics, but treatment unlike in my laboratory that treatment is done in house, in the U.S. there is a separation between treatment and diagnosis. And then he ask, would you mind to open something like this in the U.S.? Said, I don't mind, but I'm not a businessman. And he said, but I'm a businessman. About a month later I flew back to Boston and I met, his name was Professor Sam Thear. He was the head of Partners. Partners is the holding company of all the Harvard Medical School hospitals. He was a nephrologist, and I remember that the previous dean of medicine in the Technion was his friend, and he arranged for me to meet him. And I met him and I told him about the Technion Sleep Disorder Center. And he said I can't believe. You came from the Middle East and you teach us about sleep medicine. And he gave us permission to team up with which is the flagship hospital for Harvard Medical school. And we opened Sleep Health Center, which was a service model after the service that we had in Israel. And I remember my contribution in the addition to everything, was the data list. Because we bought a database at that time of more than 60,000 patients, that was invaluable with respect to how to run such a center, what are the distribution of sleep disorders, what are the percentages, etcetera., etcetera. So, this is the story of four different companies. SLP that started because of needs, and our conviction that you can do things better because we are part of a technological institute. A sleep disorder center that, again, came because there was an unmet need for diagnostic procedures and treatment. And medical, that resulted from basic research. We were looking for the physiology of sleep. We didn't believe that one day there were going to be a device, and the story of the device went many, many unexpected turns over the last 15 years. And Sleep Health Center that, at its peak, had 33 clinics in five different states. Introducing a medical device Is a torturous procedure. And you learn while moving and sometimes it costs you a lot of money. You know, I started by telling this story of that we decided to build a device to measure ischemia. We invested many millions in building a medical device to measure ischemia, that was supposed to be an add to an exercise stress test. But then we discovered that it doesn't have any commercial value, because exercise stress test is so inexpensive. But even if you double the price, you wont be, have a profitable device. And I remember at that time, I introduced to the company, diary of sleep, and they took, marketing, company and they ask the marketing company to provide us with some data, what is the size of the sleep market? And I remember the meetings with Wilkinson. This was the name of the marketing company, Wilkinson. They came back and they say, you know guys, we have usually three responses to a customer. First, drop it, there's no market. Second, it's okay Mark. And the third one is the big wow, this is the big wow, and I'm talking about the early 2000s. And then we moved to the sleep market. And we though we are going to build a device that will provide all the information about sleep from the finger. The structure of sleep, deep sleep, dreaming sleep, every time you stop breathing, every time you wake up, we'll pick it from the finger. It was a perfect device. Only thing we have to do is to get an FDA, and then immediately to the market. Getting FDA was very easy. Immediately. Once you show that this is correlated with the goal standards, which is the laboratory recordings, and you get the same results, you are in business. But they realized that in order to use it in practice of physicians, you need what is called the CPT code. The CPT code is the endorsement of the insurance companies to use the device. Nobody will use a device that doesn't have a CPT code, because he won't get the reimbursement for the insurance company. Now to get the CPT code, you negotiate with the medical societies. You have to get the approval of the neurologist, and the internist, then the autolaryngologist, and the psychiatrist. And then you realize that some of them has sleep clinics. What you are doing, you're cannibalizing the sleep clinic market. I remember in Boston, we used to charge $1,300 a night. And I always joked, that this is the eight star hotel. You are coming, you are sleeping in a very uncomfortable position and you pay $1,300 for the mattress. Here we provided the same service for 300, 350, $400. Sleep laboratories will lose the clients. Getting the CPT code after lobbying with with each one of the medical societies was a torturous procedure. It took us several years and finally we got it and then the insurance companies, of course, suggesting s price for the test and then the market is open. So whenever you have a medical device, you have to think about, not only getting the FDA approval. You have to think who is going to earn and who is going to lose by introducing this device to the market. Somebody's going to lose. By the way, we paid the price, personally I paid the price. Sleep Health Center, this is the sleep disorder center we opened in the US, under the umbrella of Brigham and Women Hospital in Boston, had 33 clinics. We had clinics in Massachusetts, in Rhode Island, in Connecticut, in Arizona, and New York. We came, I think, at a peak to revenues of something like $30 million. And then one day, or more accurately one night, the three major insurance companies in Massachusetts decided no more laboratory recordings, only home monitoring, using one of the devices was our device. This one, the one that was developed in Itamar Medical. This killed sleep center overnight, finito, no more sleep studies in a laboratory. By the way, before I became a president of the Technion, I was a board member of Sleep Health Center and I warned them every board meeting, I warned them. Beware, the date come closer that there will be no more sleep laboratory recordings. You should be prepared for it and they didn't listen. But in the last few years when I became a president, there was a Chinese wall between me and my companies and overnight the company was closed, completely overnight. Right now there are not a single chain of sleep clinics in the US. In Israel, we went down from five to three. We specializing in very unique, very complex sleep laboratory recordings that are needed in some cases. But most of the studies are done at home. Many are using our device, the watch part, the PAT stand for P-A-T, peripheral anterior telemetry, which measure tone of the blood vessels in the finger. The information is stored here and in the morning, in a minute and a half, you have the sleep structure, you have the sleep disorder properly diagnosed and you don't need much more than. Not only identifying unmet need but trying to predict once you supply the need, I'm sure that somebody must start thinking about the next step. I mean, having a diagnostic procedure for $2,000 a night doesn't make any sense to any reasonable person who understands sleep. Somebody has to think how to do it less expensive, more open to the public, etc., etc. So I think in Sleep Health Center, the Board failed to see the future. In Itamar Medical, I'm happy to say that once Richardson identify sleep as the market, immediately we shifted attention and we built the watch part, and this is now a very, very useful device all over the world. The question is how you penetrate a market before you have a CTP code, how you introduce the device. I mean you have to feed the company, you have to make sure that there are salaries. And you cannot wait to two or three days and say to your people, hey guys, next salary's after we have a CPT and we start to sell. And then you have to identify within your universe an entry point. And the first entry point that we identify was a dentist. Dentists have a captive audience. When you're sitting in a chair, and the dentist is drilling in your mouth, you cannot run away. He can tell you any story he want. He can ask you any question he want. He can ask you, do you snore at night? I mean are you fatigued through the day? Do you fall asleep unintentionally through the day? Do you suffer from hypertension? And if you say yes, yes, yes, well in between these, you say ha, maybe you have sleep apnea and I have a device that can help you tell you whether you have sleep apnea or not. Now, usually the patients pay out of their pocket for the dental treatment. So what is $200 for an extra test for such a patient? And the first subspecialty that we addressed was the people who dealt with sleep. One of the treatments for sleep apnea, in addition to CPAP, the continuous positive airway pressure that you sleep with a mask during the night, is a dental device. This is like a false teeth arrangement that is put in the mouth during sleep and push the lower job forward in order to leave better air space during sleep. So they produce this device, tailor-made on you. Before that they have to prove that you have sleep apnea and then they have to prove that you improved. So we found this niche ready and we introduced the watch part through the dental market. Most of my patents are with my colleagues, it's not only me. Usually it's a group work, students and technicians and postdocs, and the number of sleep apnea patients is enormous. We are talking about millions and millions. In the US alone about a 30, 40 million sleep apnea patients. Even using all the home monitoring device there is no way we can accommodate all of them. And my idea was we need something to do screening, to do some first line differentiation between those with high risk and low risk. You can use questionnaire but these are very unreliable. And then in SAP we build sleep strip which is the form of a mustache that you just tape below the nose when you go to sleep. In the morning if the LED is red, go to see your physician. If it's green, you don't have sleep apnea. Now again this is a question, is it a consumer product? This is some of the issues that we are dealing right now. Is it a consumer product? Can you sell it over the market like, let's say, a pregnancy test or a cholesterol test? Do we need a prescription of a physician? With respect to interpretation, do you need the whole data? Is there any need for the whole data? All these issues are issues that will have a major, major impact on the distribution, on the penetration. Right now we are running a test study in an area in the US with a very large pharmacy network. I won't mention names because they didn't give me permission. But this is a very interesting experiment. The models that we read about in the paper are of the huge exit. I mean, the people became billionaires overnight. Give the impression that you woke up in the morning, Bingo. You have an idea and within a week, you have a company that was millions of dollar. This another case. The timeline is much longer and you need patience. You need to have some time, everybody else, I remember decisions along the way that weren't crucial to be or not to be, if you do not have this tenacity and if you don't believe in what you're doing, there's no way you're going to be successful. I believe it's a combination of, there are many reasons. There is no one reason. First, I believe it has to do with the national character, not only of but Israelis in general. The need for achievement. The ability to take risks and to sustain failures. The social distance. The experience in the army of having independent decisions and risk taking behavior. The impact of education and I think that in the Technion, first we have a very selected, a population of students, we have the best students in Israel. And second, we give those students not material to rehearse, but to teach them how to learn. When I meet technical graduates 10 years, 12 years, 15 years after their graduation, they tell me, you know the most important thing that I get from the Technion is the ability to master many, many things horizontally. I know how to learn, I know how to think. It's not the equations, it's not the raw material, but it taught me how to learn. Now, regarding the Technion, it's very interesting. Menachem Ussishkin was one of the leaders of the Zionistic movement, was the keynote speaker in 1924, when the first class started in the Technion. And he started his speech by the following words, applied research and basic research are the two sides of the same coin. This is unbelievable. We, in the last few years, enhanced the ability of technical faculty to do applied research and to commercialize their products and I think that this is not only for the benefit of the Technion, it's the benefit of mankind in general. One of the most satisfying feelings of having started with Medical, is that every night, about 20,000 people are going to sleep with this device on their hand. And to know that you have part in developing this device is wow, exactly. Thank you
